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Owning Property “Free and Clear”

For some investors, the goal is to own properties “free and clear,” that is, with no mortgage debt.  While this is a worthy goal, it does not necessarily make financial sense.

For example, consider a $100,000 property that brings in $9,600 per year in net income (net means gross rents collected, less expenses, such as property taxes, insurance, maintenance, and property management).  The $100,000 in equity thus yields a 9.6 percent annual return on investment ($9,600, the annual net cash flow, divided by $100,000, the cash invested).


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