The real estate business market is a highly complicated entity, but once one begins to master the intricacies of this profession, it provides a chance to earn quite a bit of money and also stabilize one’s financial status by making useful investments. While most people invest in houses to earn a quick profit by selling them, others can even rent out their houses for a passive income source. Renting of property is a good idea, as it is a good way to receive an additional income while waiting for the value of the property to rise. As the value of a property continues to rise year after year, due to appreciation of the value, renting the property out for a few years before selling it is a good way to make some extra bucks.
Renting out a house, instead of selling it, is a good way to be able to purchase more properties in the future. If you are not looking for getting a large amount of money immediately, then it is better not to sell the house. When the house is rented out, you get a fixed amount of money every month. It is a good supplement to your income, while at the same time still retaining the house in your name. Renting out the properties is becoming more preferred these days with reluctance of people to invest large amounts of money.
If you are looking to buy a house, then it is not necessary that you need to sell your previous home. Banks are offering an option, in which loans are provided to people by mortgaging the first home. For people, who already have equity in their name, the bank performs an evaluation of the property’s cost and then offers up to 80% of the value of the property as a loan amount. This can then be used to buy a second home, while the first one can be rented out to gain money for the monthly mortgage payments. This is a good way to buy a second house without having to sell the first one.
If you do sell the first house, then the amount of equity that you have will decrease significantly. While getting a loan on the amount of your property is a good deal for any lender, there is also a bit of risk involved. In case you are not able to make your payments regularly, the bank has the option to seize any of your properties to make up for the amount lost. This can cause you the risk of losing your home, with which you may have emotional and sentimental attachment.
However, if things go the way you thought they would and you do pay your mortgage payments on time, then after a while you will be the owner of two properties, with both of them providing you a passive income. Your equity value will further increase, making you eligible for more loans and making it possible for you to purchase more properties. By enabling this situation, you are laying the foundations towards a comfortable life of financial stability.