Long Term Planning for your Family

Most people have lots of things to save for but not always enough discretionary income after the family essentials have been met.

A relatively small investment in a rental home can control a good home that will easily rent, generate positive cash flows and pay for itself. The borrowed funds create leverage that earn a return on the total value of the home and not just the amount of cash you have invested.

The strategy is simple. Find a slightly below average priced home that will rent well. It will appeal to a larger group of people while it’s rented and when it’s ready to be sold.

Rent the home and maintain its condition over the years. As the loan amortizes and the value increases, the equity will grow. When your student is ready to start college, you’ll actually have several options.

You can sell the property; pay the tax on the gain at the reduced capital gains rate and fund the education. Another option would be to refinance and take the proceeds to pay for the tuition. This would allow you to continue to own the asset but would free your equity and under current tax laws is a non-taxable event.

Regardless of whether you’re trying to plan for your children’s education or your own retirement, rental property offers many solid investment opportunities. Contact me if you want more information.

About thomasjthompson

Tommy is the youngest of eight children, born in Memphis Tenn. He moved to Dallas in 1977 to major in business at Southern Methodist University. After graduating in 1980 with a B.B.A. degree from the Cox School of Business, he was torn between two professions, banking and restaurants. He is a "people person" and enjoyed several years of managing Steak and Ale restaurants. Upon starting a family, he and his wife, Debbie, decided it was time for a career change. In 1986 Tommy knew Real Estate would offer the best of both worlds for him. His great success in Real Estate is a direct result of his continued education, experience, people skill and personal high standards. Tommy is the proud father of three wonderful children, and avid tennis player, recreational cook, enjoys playing the guitar and competing in Triathlons events. His family always finds time for community service. He's involved with the real estate industry on the local, state and national levels. Tommy has earned the distinguished award for "Realtor of the Year" for both the Collin County Association of Realtors and the Women's Council of Realtors. Voted One of Dallas' Best Realtors for 2009 by D Magazine.
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