What separates the millionaire real estate investors from the average?
- Reinvest their income
- Take things to the next level each time by increasing in quantity or size
- Do an analysis on investment properties before investing
- They find better ways to spend their rental income (see below)
What Do You Do with Your Net Rental Income?
- Going back to the mortgage issue, if you have a lot of money left as net rental income, you can consider rescheduling your bank loan. The idea is that you can pay more per month to the bank so that you finish a few years earlier. This should save you (potentially big) money from interest payments. Although that banks charge a fee for rescheduling loans, it is still more beneficial if you can pay your loan faster.
- Alternatively, you could spend some money on improving your income property to make it bring even more income. You don’t have to spend all your net rental income on upgrading your rental home. Maybe you can renew the bathrooms and buy a few new appliances – remember, tenants pay a lot of attention to these two! Or you could replace the old carpet with linoleum. Really, anything that will make your income property look shinier and newer.
- If you realise that being a landlord is not the right job for you as you are getting more and more tired of looking for new tenants, fixing up water leakages, etc., you can use some of the rental income to hire a property manager like Khai Rambo. Although this will cost you some money, such a professional will take down a lot of the pressure from you. Actually, since these are professionals, they should be able to find you tenants faster as well as benefit from discounts from service providers. So, think about it!
- Maybe one of the best ways to spend your rental income is to re-invest… in real estate, of course. You can save up your rental income and once you have enough for a down payment, you can replace your current income property with a bigger/better one or buy another rental property to expand your portfolio. Although a fancier property will bring more expenses, it should also bring more income. Moreover, your first rental property will teach you many of the important lessons on managing an income property and being a landlord, so it must be easier when you decide you are ready for a better or a second one. If you opt for this choice, remember that you can always use Mashvisor to analyze real estate markets throughout the US.
- Let’s face it. You will not be young and working for the rest of your life. Sooner or later, you will need to retire. Maybe you are already enrolled in an employee’s provident fund – that’s great! But why not secure some more money for when you retire? You can use some of your rental income to enter a private retirement scheme to complement your provident fund savings. Ideally, your rental property should bring you rental income even after you retire, but it doesn’t hurt to secure yourself through a retirement scheme too.
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