When you buy an investment home or a second home in Michigan it is not Homesteaded. When you live in a house you are able to file for a "homestead exemption". What that does for you is reduces the amount of taxes by approximately 35%. Quite a savings! But if you buy a home for $200,000 to live in, and buy a home to rent to somebody for $200,000. The rental house's taxes is going to be much more expensive. The interest rate is going to be more expensive.

This is one of the many factors that you have to consider when buying an investment property. You have to know the mileage rate for the town or city that you are buying in and figure out what the taxes are going to be. You know what the payment is, what the insurance is, so you need to know what the taxes will be. I am always surprised at some of the new investors that never take this into account.

I have had calls after a year telling me that they are losing money on the house. The amount of rent is not covering the taxes, insurance, and principal payment. The owner has no way of raising the rent because then nobody would rent the place. The owner can't afford to fix the place because he is losing money. It is a loss all the way around.

Before you become an investor with rental properties talk to other landlords. Talk to them about the problems they have, who they target to rent to, where they buy their properties at, whether they would get into the business again.

If you need more information on mileage rates go to my website at www.russravary.com