Do You Need To Generate Passive Income Now ,these 8 Steps Turn A Home Mortgage Into A Money Machine

Do You Need To Generate Passive Income Now ,these 8 Steps Turn A Home Mortgage Into A Money Machine

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This article is for those who will accept risk but would like to build a series of safety checks into the investment to manage risk effectively.

Rule No one.

Your home Mortgage will provide the needed investment funds to buy an investment and finance it in the short term. You should avoid any debt financing.

Do not risk savings, superannuation, saving account, your home, nor should you borrow money from others, family and banks. So where does the money for the investment come from? Your home mortgage.

Rule No two.

Establish the dollor amount you will need to buy the investment and to support and subsidise it for 12 months.

Rule No three.

Lets say you need $50,000 to buy a small, profitable, stable, debt free retail business that is delivering $30,000 in net profit per year over a number of years.

Contact a Mortgage Broker who will take you through their software and mortgage calculator to establish
how much you will need to deposit into your mortgage to generate the investment money you will need.

Rule No four.

Pay into your mortgage an additional payment over and above your existing minimum mortgage repayments.

This additional payment is what reduces the mortgage balance. If you keeping putting it in, it will reduce the mortgage balance and redraw to the amount you need for the investment.

Rule No five.

Have patience. If you have to wait 18 months to 2 years for the balance to get down. This will give you valuable time to plan, read, and study all aspects of the endeavour you are looking at. Once you have made the decision this time tempers the excitement and puts you in a position to make better decisions. Set the business up in a legal entity that does not allow you to lose your house or any other asset.

Rule No six.

Have a professional manager run the business on a retainer plus share of the net profit. Do not reward on turnover or sales. Make them responsible for your income which is net profit.

Keys in selecting staff. Do what the banks do when they are looking to lend funds.

1) Stability in employment.
2) Stability in residence.
3) Financially sound, do a credit check (no bankrupts under any circumstance).
4) Good character do a Police Check.
5) Check references that are not friends or relatives, past employers are best.
6) Wants to make above average income.
7) Experienced in dealing with staff.

Rule No seven.

Accounting.

1) Daily reporting with breakup of product.
2) Monthly profit and loss.
3) Do not allow the manager to do the books, pay salaries, pay any tax or superannuation or pension funds or suppliers.
4) Have an independent bookkeeper who is not known to the manager or has dealings with the manager.
5) The Manager is to run the store, manage the staff and increase turnover.

Rule No eight.

Put all the profits back into the mortgage, so you can repeat the process.

To conclude:

Let us examine if something goes wrong. Change the manager. If the business does not work its ok, that happens. That is the risk you accept. But in this case have you have not threatened your home or any other investment. Your mortgage has not gone up and you have not got a massively increased debt load.

Contact a mortgage broker today to ensure that your current mortgage is suitable to become a supplier of investment funds. If it is not, change it. If it is suitable allow the mortgage broker to use their software and mortgage calculators to tell you what is possible in creating investment funds for the mortgage.

The mortgage broker will be happy to do this. If you are successful you will be buying a lot of real estate as an investment. So you will be a good long term client for the Mortgage Broker.

About the Author:
John E Edwards explains how a mortgage is a wealth creation tool, and how to use the mortgage effectively to start creating wealth in your life now. Contact a specialist to get you on the right path now.
Mortgage Solutions or Mortgage Answers



Article Originally Published On: http://www.articlesnatch.com


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