Everyone that owns real estate, either for investment purposes or just their primary residence knows that an additional payment towards principle once or twice a year has a dramatic effect.
With an increased monthly rental income, you can easily apply an additional amount every month or just once or twice a year and thereby reducing your principle.
Remember, interest is charged against the unpaid balance, and is front loaded for real estate mortgages.
Consequently, the entire mortgage is paid down sooner, thereby increasing your equity position.
Now consider the opportunity that the increase revenue stream from transitional housing can provide.
(To learn more about Transitional Housing see the resource box below).
Often 3 to 4 times more cash flow than normal market rents can produce.
One of the options offered to the savvy transitional house landlord may be to choose to take a healthy portion of the increase monthly cash flow and pay down the principle amount at a much faster rate.
A goal of the investment real estate property owner is to, not only profit from rental income, asset depreciation, and tax credits, but from the properties market appreciation.
The underlining mortgage payoff, deducted from properties future retail value is one of the facets of calculating the total return on investment.
What would be the result of putting and additional $300 to $700 a month towards your mortgage's principle? There are online calculators that will let you figure out exactly how much you would save on mortgage interest and the resulting future year mortgage payoff.
Do yourself a favor and check it out.