Pay Off Mortgage Or Invest: Minimizing Risk of Investing Series 4 of 5

How to Minimize The Risk of Investing

You will want to minimize any risk associated with not paying off your rental property mortgage and using your money to invest in another property instead. Investment property owners have several options open to them that can lower financial risk or be prepared in the event of job loss or a similar emergency. Here are a few ways to minimize the risk of investing:

• Make A Backup Plan: Among real estate investors, there are several different opinions on how much money you should have saved in case of an emergency. A common estimate financial advisors recommend is to have 3 – 8 months’ worth of expenses set aside. This will give you enough time to assess your situation in the case of job loss and decide your next move. Your reserves should be enough to cover both personal and rental property expenses.
• Cover Yourself With Insurance: Different forms of insurance will help you and your loved ones in case of an emergency. Income protection will help if you are unable to work. Medical and life insurance is also essential for protecting yourself and your family. It is highly advisable to be covered by many forms of insurance to be prepared for any major life events.
• Prioritize Paying Off Your Mortgage: Once you start seeing returns on your investment, you may use it to pay off your personal mortgage until you decide to invest at a later time. It is important to note that any part of your income that is not being used to pay down your mortgage is being charged with interest. In this case, paying off your mortgage should be at the top of your priority list.

Summary

Realizing you have extra cash each month is a great feeling, and deciding what to do with it should not take away from that. Whether or not you decide to pay off a mortgage or invest in rental property is entirely up to you, and there are numerous benefits to both. There is not a pay off mortgage or investment calculator to tell you exactly what to do; instead, I recommend anyone deciding between the two to do their research. You may be surprised which option is better for you. Whatever you decide to do, you should be proud of the fact that you can make this decision at all.

Are you a recent homeowner deciding whether or not to pay off mortgage or invest? Share your journey in the comments below, I’d love to hear from you.

We can help you find your investment property

Pay Off Mortgage Or Invest Series 4 of 5

Original article here