Whether you own investment properties in Los Angeles or not, you’ll be happy to know the advantages of owning one, just in case you’re interested in buying one as investment yourself one day! If you’ve been keeping up with Alexis Hall Inc., then you’re already aware of the first three advantages of buying an investment property. Catch up now and continue reading more benefits you can look forward to if you decide to invest in a property in LA.

The tenants you choose will amortize your mortgage for you!

Did you know that the most popular loan is the 30-year fixed rate mortgage? This type of loan will have the same interest rate during the entire duration of the loan. However, in the beginning of the loan, a significant amount of money that is put towards the mortgage will be paid towards to interest rather than the principal, but by year 15, it is about at 50/50 split between interest and principal. So, the more principal you have the tenants pay for, the more equity you are creating for yourself. Let’s say that you have a $90K bank loan that has a monthly mortgage payment due each month of $500. During the first year, approximately $385 of each payment will be put towards paying the interest of the loan, while only $115 will go towards paying the principal on the loan. So by year 15, approximately $270 of your mortgage payment will be going towards interest and the remaining $230 will be put towards the principal. You can look at it this way, every year that you own this property, you’ll be using the tenant’s money to pay off the loan and more importantly, the debt. You’ll be able to reduce the amount of the loan significantly, and eventually, you’ll be able to access the money of built wealth either by selling the property or refinancing the loan.

Don’t go anywhere just yet, learn more about the investment properties available in Los Angeles and stay tuned for one more advantage of owning an income property.

Are you thinking about buying an investment property in Los Angeles? If so, you’ve come to the right place to learn about all of the perks of buying an investment property. To make sure we’re all on the same page, income properties were developed or are bought to earn income, and while there are many different advantages to doing so, you also need to learn what the risk factors are. To get started, here are the advantages of buying an investment property:

You are the boss.

It’s nice to be your own boss. You’ll get to make the decisions when it comes to your income property, like which property you want to invest in, how much you will end up charging for rent and how you manage or maintain it.

Potential appreciations of a highly leveraged asset.

Investment properties are said to be highly leveraged because you’ll purchase a property that uses significantly more debt than equity. Often times, you invest a small amount of your own money and then borrow the rest from a lender. So, this is where you are able to turn the property into an investment. For example, if you buy a property that costs $100,000 with $10,000 of your own money and borrow the rest, at year 10, you will have gained over $60,000 in appreciation. Although all property and numbers are different, this example may be able to help you learn the potential you have when buying an investment property.

Rental income is just money in your pocket.

Although you’ll have bills to pay on your rental, the money you get from the renters will be able to pay off your initial investment sooner than if you were living in it yourself. Not only that, but on a monthly basis, you will be able to put some extra cash in your pocket.

Don’t go anywhere just yet, stay tuned for more investment property benefits in our next blog!