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Buying A Second Home And How To Pay For It How does an average homeowner become a real estate investor? Certainly, owning a home is an investment in real estate. However, this guide discusses the next step for many to become a real estate investor. This is to buy another property and use it for a commercial purpose. Owning another home is less of a burden when an investor finds a way to make the home pay for itself.

Here are some tips on how to help a property generate cash flow:

Renting Out A Home

Renting the home to others may be an effective way to pay for it. To do this well, a real estate investor looks for a home with special characteristics. The home is for sale at a low enough price and can be financed well enough so that the cash flow coming in for the rent will be equal or more to the expenses of owning and managing the property. It is terrific if the property makes a positive cash flow each month, even if only a small amount.

If a property has a $50 per month positive cash flow, then that small amount builds up over time. Adding more properties with positive cash flow increases the investment portfolio value quicker.

Home Office

Using all or part of a home as an office creates special tax deductions for the expenses that cover the portion of the property used for business. Even if a homeowner does not have enough money to buy another home, starting a small business by using a home office may help create the money for the investment needed as a down payment on the second home.

Renting A Home Out As A Vacation Rental

Many like to rent homes in nice areas for vacation purposes. The home can rent out as a full home or as individual rooms in the home. Airbnb is a useful web-based service that can bring rental customers for those interested in doing this.

Bed & Breakfast

Another way to make money by owning a property is to turn it into a commercial enterprise as a bed & breakfast. Depending on the location, and the number of tourists attracted to a particular area, a bed & breakfast business can be profitable.

Tax Implications

Even if owning a second home does not make positive cash flow, it can still be financially beneficial when it reduces the tax burden. Work with an accountant and/or investigate the tax implications of owning the property. It may be possible to take deductions such as for property expenses and non-cash deductions such as depreciation, which when combined with other income, reduces the overall tax liability.

If owning a second home reduces the taxes to be paid, this is a financial benefit that offsets any negative cash flow. Tax savings is money in the pocket, so this counts as part of the positive cash flow that comes from owning a property.

Summary

These are just a few ideas to consider that may help pay for a second home and make it easier to become a real estate investor.

When you are considering the purchase of a new property, be sure to partner with a trusted mortgage professional.

9 Strategies to Handle Home Maintenance Costs Maintenance is an important part of home ownership. Improper care compromises the safety of your property and can result in big repair bills. Include these strategies in your maintenance plan to reduce your out-of-pocket costs.

Educate Yourself

It’s usually cheaper to do most home maintenance jobs yourself. Teach yourself some basic skills to save yourself from professional fees.

Take some classes. Community colleges and hardware stores often host community courses that help you plan projects, get familiar with new tools, or gain more value from property assessments.

Invest in beginner books on carpentry, electrical work, and plumbing. These will be invaluable references throughout your home ownership journey. Online versions allow searchable access to necessary information.

Experience is the best teacher. Start with small, decorative projects to hone your hand skills. As confidence increases, you can try more difficult builds and repairs.

The right combination of knowledge and skills means you realize minimal maintenance costs.

Make Maintenance A Routine

Preventive maintenance catches small problems before they become big, expensive ones. Schedule essential tasks to ensure all the important parts of your property are monitored consistently.

Perform a perimeter check when the seasons change. Walk around the outside of your home. Examine the grounds and exterior for signs of wear-and-tear or degradation. Take pictures and make a plan to address the damage.

Have your HVAC system professionally serviced once a year. For those with allergies or other adverse respiratory conditions, have your ducts, vents, and filters cleaned every six months.

Practice good property hygiene. Keep your landscaping, exterior, and storage spaces clean and uncluttered. If a problem does occur, an unkempt environment can complicate repair efforts.

Incorporate maintenance into your regular routine to circumvent emergencies.

Prepare Financially

Make sure you’ll always have enough money to fix your home with these tips.

Decrease the deductible on your home insurance policy. You pay slightly higher premiums. However, the extra funds could come in handy if a big claim occurs.

Start a home repair fund. Aim for an amount equal to 10% of the value of your property.

Establish a relationship with a local contractor. Your friendly relationship and loyal patronage could earn you some valuable discounts in times of need.

The cost of maintaining your home doesn’t have to be a mystery. With these tips, you can keep a safe and healthy home without draining your bank account.

If your home maintenance or improvements require a bigger budget, it may be time to inquire with your mortgage professional about financing options, like a refinance or a home equity line of credit.

Buying A Second Home And How To Pay For It

9 Strategies to Handle Home Maintenance Costs

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