increasing your down payment could potentially increase your cash flow. While this is true, understanding real estate with less initial investment and maximizing leverage often leads to more productive investing. I don't recommend always maxing out your real estate investments with leverage. I've seen investors heavily rely on borrowed money (OPM - other people's money), only to face challenges when interest rates spike, making it hard to cover costs and repay lenders. For instance, the prime rate surged from 2.45% o m 2.45% on March 30, h 30, 2020, to 7.2% on July 12, 2023. Th y 12, 2023. This represents a significant 4.75 percentage point increase over that period, signaling a substantial rise in interest rates. Relying solely on leverage like this can create an unstable foundation for your portfolio, increasing the risk of losses rather than growth. Instead, I suggest exploring alternative strategies that could help you develop a more sustainable income stream. Let's take a closer look at the potential benefits of investing in multi-family properties. Investment Property Analysis: 8-Plex Multifamily Property (This is our purchase last year)
Property Details:
• Purchase price: $2.5 million • Appraised value: $3.02 million • Loan-to-Value (LTV): 85% • Monthly mortgage payment: $11,000
Rental Information: • Monthly rent per unit: $2,150 in average • Total number of units: 8 • Total monthly rental income: $2,150 x 8 = $17,200 Vacancy Rate:
53
Powered by FlippingBook