I have an easy way to explain investment properties– that even my kids can understand.

IT STARTS WITH AN APPLE 🍎

We’re going to pretend an apple is a home. You need 20% down to purchase the apple. If you cut up the apple, that means you need 2 slices of the apple. Over time, that apple with appreciate. Eventually, when you go to sell the apple, for about 30 years, when the mortgage is paid off (by the renter), you’re left with two apples. So while you have to pay for two slices of an apple, you really get two apples.

LET’S TALK ABOUT ACTUAL NUMBERS 💰

Leaving the apple analogy behind, here is more of a real-life example.

You want to buy an investment property for $100,000. You put  20% or $20,000 down. In 30 years, after the mortgage is paid off, and the property has appreciated, you sell it for $200,000. So your original $20,000 turns into a profit of $180,000.

I know what you are going to say, “Emily, I don’t have 20%.” Maybe you don’t in your bank account, most don’t, but I bet you do in other ways. Here are three ways you can find that downpayment.

HOME EQUITY LOAN

First, you can take out a home equity loan. That means you are borrowing against your current property.

401K

You can also borrow from your 401K and pay yourself back with interest.

NEW PROPERTY OWNER

This next idea is a little out of the box. If you have never owned property, you can buy a home using a first-time homebuyer program, and live in in for a year. Then, 12 months later, you rent out that home. In that case, you will only need 5% down for the next property.

This is the critical part of this plan. In order not to be financially strained, you will need to become a landlord. You will need tenants to pay your investment property’s mortgage or loan with their rent.

Currently, it is a good time in the Twin Cities to get into real estate investing. There are great condos and townhomes on the market I can show you ASAP! Reach out today to schedule a buyer’s consultation.*

*Right now, when you schedule a buyer’s consult, you will receive 7 hours of work with Simple Home Organizing.  They can declutter and organize any room in your home. They’ve done my Hall closet, Kitchen Pantry, and Foyer. My 9-year-old daughter has been begging Madi and Amber to organize her room. We’ll see.