Currently reading: Hack Your Wealth
What is the difference between cash flow and appreciation?
These are the two things that you want to think about when investing in property.
Cash Flow refers to the net amount you, as the landlord, get per month after considering tenants and any other associated costs such as property tax or maintenance.
Appreciation refers to the risker method of investing in property. Here, you may have positive or negative cash flow. If you, as the landlord, decides to focus 100% on appreciation, it’s possible that you would have to pay out of pocket in addition to anything you get from your tenants to keep up the costs of the property.
Should I go for cash flow or appreciation in the bay area?
Looking into this.
What is house hacking?
House hacking is when you get other people to pay all or most of your housing expenses. Article on how to house hack. TL;DR, buy a bunch of units and rent it out to people so that you live without paying for anything.
What is proposition 13 California?
What is a mortgage?
It’s basically financing a home. Don’t meet your monthly mortgage payments? Then you risk the lender taking your property. Of course, there’s interest on this. There are many ways to lower this interest such as proving to the lender that you’re a reliable person or providing a larger up-front payment. More info here.
What’s the timeline for something like this?
Say you’re looking at a house that cost $1,000,000.00. Pretty typical for a place in the Bay Area, I’m probably even undershooting it.
Yes, you’ll take out a loan for most of that cost, but there’s still the down payment that’s needed. I think that’s typically 20%. In dollar amount, you’ll need to fork up $200k.
Let’s then say you manage to save up about 20k a year. If we’re talking about just you, it sounds like you need at least 10 years before being ready to invest in a place. Of course, I’m not taking into account what happens to that 20k every year while you’re saving. There are many other investment options you can do in the shorter term that will help you reach this $200k starting point for property investment. Take stocks for example. Say you get 30% returns on something over 1 year. For $20k, that $6k returns. Not to mention you’ll be continuously pumping money into the stock market. Really accelerating your growth here. (insert equation to estimate time to hit $200k goal here).