We hear it all the time. Debt is bondage. Pay off your mortgage as quickly as you can. You will never be financially free until you are debt free. It all sounds good on the surface when you think about not having to pay that $2,000 mortgage every month but the truth is, bank money is cheap.
This is what I mean.
Investing in a real estate syndication can net you an average cash return of 7-10% with an additional 3-5% return when you factor in the equity gained by reducing the principal balance on the loan. So, after a holding period of 3-5 years, it is extremely common for these investments to return an average annual return of 15-17% with a real possibility of annual returns of over 20%.
So, you have to ask yourself, “Do I sacrifice financial gain for the financial security of not having a mortgage?” One thing is certain, the equity in your home is DEAD EQUITY. It isn’t doing anything for you. The returns on your money if you invest it wisely will easily be higher than the interest the bank is charging you for it and can even be enough to cover your mortgage payments entirely.
Yes, you need to take unexpected events into account that would reduce your monthly income, diversify your investments etc. but, again, make your money work for you.
Want to take the next step and make your first real estate investment? Read about why I think multifamily assets are superior to single-family homes.
Don’t have the time to source and manage an investment? Reap Capital specializes in sourcing passive investment opportunities for investors. Fill out the form on the contact us page for more information.