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I think you are completely confused about what "capital" is.
Some landlords make little profit on their rentals, so no capital there. And they had to have capital to buy their first property, so paid rents didn't help them there.
Again, you paying rent is NO different than your employer paying your salary. That's where a lot of business owners get their capital.
Keep in mind most of the rental investment wealth is pay down of the principle and appreciation.
I know a guy who has 13 units in NJ. Every month his outstanding debt goes down $2,000 in principle reduction, and around $1,000 goes into his pocket (which really goes toward his emergency funds to fix broken things). This will only increase over time barring unforeseen economic calamities.
He has 15 year mortgages with around 10 left on them. After that, he'll have over a million in paid off properties (assuming no change in value) for which he can turn around and sell and purchase an annuity (ie buying a pension) or keep and collect the rent as another form of income.
He did this with little out of pocket. He basically paid a token amount on the first one, refurb'd it, and took out a mortgage for a higher amount of the new value and used that to purchase the next one. And so on.
Keep in mind most of the rental investment wealth is pay down of the principle and appreciation.
I know a guy who has 13 units in NJ. Every month his outstanding debt goes down $2,000 in principle reduction, and around $1,000 goes into his pocket (which really goes toward his emergency funds to fix broken things). This will only increase over time barring unforeseen economic calamities.
He has 15 year mortgages with around 10 left on them. After that, he'll have over a million in paid off properties (assuming no change in value) for which he can turn around and sell and purchase an annuity (ie buying a pension) or keep and collect the rent as another form of income.
He did this with little out of pocket. He basically paid a token amount on the first one, refurb'd it, and took out a mortgage for a higher amount of the new value and used that to purchase the next one. And so on.
People have been doing things along those lines for years when it comes to rental properties.
If you know what you are doing and especially how to wisely use credit/financing then the properties work for you. OTOH far to many do not know or understand and end up working for the properties or worse going into debt.
Examine the business habits of well off and or savvy business persons and you'll see they rarely use their "own" money to finance more than initial investments.
Keep in mind most of the rental investment wealth is pay down of the principle and appreciation.
I know a guy who has 13 units in NJ. Every month his outstanding debt goes down $2,000 in principle reduction, and around $1,000 goes into his pocket (which really goes toward his emergency funds to fix broken things). This will only increase over time barring unforeseen economic calamities.
He has 15 year mortgages with around 10 left on them. After that, he'll have over a million in paid off properties (assuming no change in value) for which he can turn around and sell and purchase an annuity (ie buying a pension) or keep and collect the rent as another form of income.
He did this with little out of pocket. He basically paid a token amount on the first one, refurb'd it, and took out a mortgage for a higher amount of the new value and used that to purchase the next one. And so on.
There are so many small investors in this sweet spot as your acquaintance. Of that $1,000/month that goes into his pocket, I would hazard a guess that a lot of it is tax deferred as depreciation.
The pay down of principal is a non-taxed event. The appreciation (capital gain tax) is deferred until he sells and even then it is taxed favorably or can be further delayed/eliminated. With 13 of them, he is doing pretty well. Why stop at 13?
The full tax benefits come from holding individual properties. Not REITs. Not private partnerships (although I do have both). And not even Self Directed IRA rental ownership (which I do not own). My wholly owned rentals are my best investment class.
The trick is to have good properties and good tenants. Both are doable with proper research.
Keep in mind most of the rental investment wealth is pay down of the principle and appreciation.
I know a guy who has 13 units in NJ. Every month his outstanding debt goes down $2,000 in principle reduction, and around $1,000 goes into his pocket (which really goes toward his emergency funds to fix broken things). This will only increase over time barring unforeseen economic calamities.
He has 15 year mortgages with around 10 left on them. After that, he'll have over a million in paid off properties (assuming no change in value) for which he can turn around and sell and purchase an annuity (ie buying a pension) or keep and collect the rent as another form of income.
He did this with little out of pocket. He basically paid a token amount on the first one, refurb'd it, and took out a mortgage for a higher amount of the new value and used that to purchase the next one. And so on.
I paid off my landlord's mortgage and all I got was - heck, I didn't even get a crummy shirt.
People have been doing things along those lines for years when it comes to rental properties.
If you know what you are doing and especially how to wisely use credit/financing then the properties work for you. OTOH far to many do not know or understand and end up working for the properties or worse going into debt.
Examine the business habits of well off and or savvy business persons and you'll see they rarely use their "own" money to finance more than initial investments.
While their rental serfs use their own money and at the end have nothing to show for it.
I paid off my landlord's mortgage and all I got was - heck, I didn't even get a crummy shirt.
And you deserved nothing other than that which you paid for whic was a place to stay. Your landlord had the ability to make or lose money however you entered into a contract to occupy space for a set payment. You didn't deserve anything else
I paid off my landlord's mortgage and all I got was - heck, I didn't even get a crummy shirt.
what did you expect to get for it? if you wanted to own the place, then you should have bought it and not rented it.
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