​Investment Paying Off? What to do with Your Newly Boosted Income

First off, congratulations! Getting a boost in your income due to a wise real estate investment is a pretty big deal. Not everyone is cut out for real investment, and it’s a testament to your sound judgment and decision-making that you have this extra cash in your pocket. Now onto the real question at hand - what should you do with this bump in your income? You’ve got a few options, so let’s examine them.

Buy More Property

One strategy is to use your extra cash to help fund the purchase of additional properties. This is a popular choice for investors who want to make the most of their “passive” income by creating a sort of snowball effect, with the proceeds from one property providing necessary funds for the acquisition of more real estate. The reasoning is simple: the more properties you own, the greater the potential rewards. While there’s an increase in your risk level as well, the potential for profit by having multiple properties far exceeds these risks - so long as you continue to make wise investments.

Make Other Investments

Real estate isn’t the only avenue for investment. There are lots of other ways to invest your money, and it’s a great idea to take advantage them. Diversifying your portfolio with a variety of assets - real estate, stocks, bonds, mutual funds - can maximize your investment, reduce your risk, and give you more security.

Reduce Your Debt

Using your boosted income to pay down debts is another great option. Who doesn’t want to live debt-free, after all? If you go this route, the real question lies in which debt you should tackle first. An obvious answer is to use the funds to reduce the principal on your rental’s mortgage, which will increase your equity in the property and put you that much closer to true ownership. However, if you’ve got other nagging debts, like credit cards or other personal loans that carry higher interest rates, it may not be a bad idea to focus your efforts there.

Hang Onto It

Depending on how much extra cash you’re pulling in each month, it is wise to set a little aside. With real estate, you never know what might pop up in the coming months or years that will end up costing you. What happens if the furnace goes out at your rental property? You’re responsible for replacing it ASAP, and that will set you back a few thousand bucks, easy. Plus, there’s always going to be regular maintenance that will need to be done. Of course, you should already have much of this budgeted in, but it never hurts to have a little cushion where maintenance and repairs are concerned.

These are just a few of the ways you can handle an increased income. If you want more ideas on what to do with your additional funds, give us a call. We’ll be happy to discuss your options and help you find a plan that will work best for you.