You have now made £6,400 profit from an initial investment of £12,000 pounds. That is over 50% return on your investment.
Tenant pays for your investment
The tenant provides the rental income for your investment properties, providing ample financial cover to meet the initial mortgage payment, management and maintenance each month. In real terms, you have any appreciating asset that has been purchased in the main through someone else’s money, and is maintained on a monthly basis by the income from your tenant.
Summary
In this section you need to have understood the following:
• The 5 factors that increase house prices in the long term
• The 5 factors that reduce house prices in the short term
• Why banks lend you money to buy properties
• How your tenants can help to pay for your investments