We recently mentioned that the Empowered Investor Network believes in a real estate strategy that is exactly opposite of flipping. We think that the strategy of buying and holding prudent rental properties over a long period of time offers tremendous advantages, one of which is the ability to refinance your loan mortgage time and time again.
“But wait,” you say. “I thought the goal was to pay off the mortgage.”
Not so fast. That’s what most people think – and that is not it at all. As you property gains value (typically doubling every seven years), you can refinance the loan for more than the original purchase price and use the additional money to re-invest in even more rental properties, thus increasing your portfolio by leaps and bounds as the years roll past.
The key to the whole thing is that the net proceeds are not taxed! The reason for this is that you are not required to pay taxes on loans. In a refinance situation, you are taking out a loan, not selling a property. Voila! No taxable event has occurred. Take the extra money and use it for living expenses so you don’t have to work. Take a vacation. Do whatever you want, though we think it’s a great idea to plow it right back into more income properties.
The Platinum Team
