Work Your Assets Off

People often say that their primary residence is their biggest asset. Granted, accrued equity in your home is technically an asset, but only under certain circumstances. Many people have recently learned this lesson the hard way. They purchased more house than they could really afford, and when the real estate market tanked, they wound up owing more on the home than what it was worth. A working asset puts money into your bank account. If an asset costs you money every month to maintain, it’s a liability. It takes thought and planning to ensure that your assets are working for you.
A good example of how an asset can work for you is a nontraditional approach to home ownership. Let’s say that instead of investing in a single family home, you purchased an entire duplex, a four-plex, or even a small apartment building. In a duplex, you would live in one side, and rent out the other. In a four-plex or an apartment building, you would carve out your living quarters, and rent out the other space. They key to this approach is cash flow. If the rent you charge for the other living spaces in the property exceeds your mortgage and other costs, your cash flow is positive, and you will essentially be living rent free. Your primary residence is now a working asset, because even if you merely break even between your rental income and your monthly payments, you are building equity every month, effectively putting cash back in your pocket.
Another example would be when your child goes off to college. Room and board for a college education makes an already steep tuition bill even more expensive. But let’s say your child lives off-campus. By investing the down payment for a property in the college town, you could buy a house. You would rent rooms in the dwelling to other college students-perhaps friends of your son or daughter-at Real Estate Developer Uk a rate sufficient to cover the mortgage. The author has direct experience with this approach, except from the wrong side of the equation. Living off campus throughout college, rent was paid to a friend and roommate who had purchased the building. Today, the roommate still owns the building-and is still making money off of it-while the author simply racked up a pile of rental payments.
If your child would have spent $500 per month for 10 months out of each year on housing while at school, that equals $5000 per year. Over a four-year college education that’s $20,000. But by renting the other rooms in the dwelling, the mortgage and expenses are covered, and your child effectively lives for free. This saves you $20,000 right off the top over the four years. If upon graduation, you then turn around and sell the home at a profit, you’ll not only have saved $20,000 in living expenses, but you’ll realize a net gain on the house as well.
These are examples of making assets work for you, and it’s an important Property Survey Records lesson for anyone interested in building long-term wealth.

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