Principal Reduction
Some people are nervous about investing in real estate if it requires a loan. But the good news about a mortgage on a successful rental property is that the rent you collect from your tenants is used to make the loan payments. The loan payments include interest, of course, but they also include principal reduction which reduces the amount you owe.
Part of the rent collected from your tenants will be used to pay off your mortgage. In other words, your tenants are buying the property for you! And, even better, depreciation can shelter the rent from income tax.
Ask someone who’s currently renting, "When did you decide to buy a building?"
They’ll probably answer, "We haven’t decided to buy, we’re renting."
But, think about it… Whenever someone is renting, they are buying the building — they’re just buying it for someone else!
Let’s rejoin the live seminar for a discussion of principal reduction. It’ll introduce you to topics such as debt service, amortizing, interest payments, principal payments used to pay off your mortgage and so on.
"Principal Reduction"
(If you’ve already seen Tom’s introduction and want to jump straight to the "Principal Reduction” topic please fast forward to 2 minutes, 50 seconds.)
My Audio Seminars go into much greater detail. They include Worksheets, Case Studies with Answer Sheets. Get your Real Estate Investment started the right way, here.
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Tom Lundstedt "Principal Reduction"
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