Hi Team,
I am a Christian. Recently I purchased a new house by the grace of God and Christ. I purchased using home loan. I need to pay EMI. When I try to rent the house, some of my Christian friends were telling me that I need to rent the house only to Christians. They tell as that God gave this land and building and if you rent it for unbelievers they will do their worship here. This will make you as "you did wrong before God".
I am in India. The percentage of Christians is 2% and the probability of getting Christian tenants is low.
What can I decide. Can anyone tell using Bible verses / passages.
Thanks,
As most of us don't live in your area we have no idea what "EMI" means. Please explain. Perhaps it's a mortgage of some sort?
Trying to get Christian tenants when only 2% of the population is Christian is not practical. But you can set a good example to the unbelievers that rent from you as a Christian. So it can be very positive. Just be patient and honest. That's just good business. And never, ever misrepresent what you are doing or what you are renting. Even though this is very common in Indian culture in business (I see it all the time here when interacting with Indian immigrants) don't do it yourself. Be true and transparent. People will admire you for it and you will shine bright in that group.
Now on to money management, something we're taught over and over in the Bible. You've made an investment. Now maximize it.
In western countries we get way more renting a house to individuals in each room. You may be able to rent to multiple people per room. Many Indian people do that in the US and Canada but only rent to Indians so it probably will work there. Here, say the room normally rents for $500/month. If it's two people it would typically rent for about $400 each so the owner is getting about 60% more. Three people would be say $350 each. Four people would be say $250 each. Now the owner has doubled their rent for that room. Yes there is more conflict and noise. That's the down side. But if that house, say it was 2 bedrooms, was renting as one place to one family, the rent would only be about $1200-1500/month. The trick is to convert the living and dining rooms and the basement if you have one, to individual rooms. Now that two bedroom house becomes 4 bedrooms without a basement and easily 8 with a basement. Now the revenue is $4000 minus one room for the owner. Now it gets REALLY lucrative. It's all about figuring out what is the best room size per square meter. You see, that $500 room above if doubled in size would not rent for $1000! Probably $650-$750. So find out the best room size for revenue in your area by looking at what others are getting for different sizes of rooms.
When people do this in North America they typically live in the house, and they are typically single. This way they don't need much space themselves (a family would typically take up an entire floor hugely lengthening the time it would take to pay off the mortgage) and if there are problems they can deal with them quickly. Also families make a lot of noise sometimes which disturbs the tenants. You need quiet tenants if there are a lot of people living close together. Otherwise it can't work. Calm and quiet is the key.
The term for this is house hacking but really it should be called rent maximization. It can totally change your finances, because it's leveraged at hopefully a fairly low interest rate. The key is to pay off the loan as fast as you possibly can so your overall interest paid to the bank is minimal. Many people, with a 20-30 year mortgage, pay more in interest than the price they paid for the home. That is insanity.
Many people are paying off their mortgage this way in just 4-6 years. Even with a 5% down payment.
Let's run some numbers to show how incredible this is and how it obliterates virtually all commonly used investment vehicles. I'm going to use round numbers for ease in calculation.
$100,000 house with 5% down payment of $5000 so a $95,000 mortgage which will be completely covered by the rental income. That's important. And it all depends on the layout or if you can change the layout to so each room is close to that optimum size. Even a smaller house of about 1500 square feet in North America can easily have 7 small rooms. If there's a basement 10 is possible. $5000/month pays off a $100,000 mortgage VERY fast. For most in about 4 years. If you do short term (nightly or AirBnB) you can easily double your income but you need to be in the right area and it is a lot more work.
So you pay off your mortgage say in 5 years because you're living there and using one room. (Remember you control the outdoor space! Some owners choose to build a small shed/house on the property to live in.)
You invested $5000 and now you're getting $5000 a month plus the house has appreciated in value in those 5 years (probably at least 3% a year) so it's now at $115,000 if you were crazy enough to sell. It would be insane to sell something that is bringing in $60,000/year for $115,000. But here's what's strange about this: When most buyers look at your house they just see a $115,000 house because they can't imagine doing what you're doing. You could sell to an investor but they would look at it and just think "I can do this!". So you do not sell. You refinance and this works just fine. Here they give you about 80% of the value so you'd get $115,000 x 80% = $92000. How many houses can you buy at 5% down doing what you just did? Well, at least 10! In 5 years they could all be paid off. Now think of your rental income. About $70,000 a month? Remember rent goes up with inflation!
Now my numbers may be optimistic but its very doable. The principles are sound. It may take most people a little longer, say 7 years instead of 4 or 5 but also remember you're living there for free all this time. AND you have control over the outdoor space. This is something most people that do this almost never take advantage of. If young people do this it would transform their financial future. By their mid 20's they could retire just on the rental income from their first house. In 5 years they could have 10 times more.
Welcome to leveraged investing. And if you don't sell, market conditions don't matter to you. All you care about is rent and rent almost never goes down because when the economy sinks more people are foreclosed from their homes and have to rent causing rental demand to spike that causes rents to increase because of a lack of supply. The downside to rental income is the tax. But in North America there are many things that can help with that. In India it may be similar.
