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Paul Hansen
786-586-4778 |
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Carole Hansen
Para Informacion
en Espanol
786-586-4780 |
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Real Estate Reports |
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The Best Investment
As a fairly general rule, homes and condos appreciate at a national average of about five percent a year depending on the neighborhood and region. Five percent may not seem like that much at first. Stocks (at times) appreciate more, and you could easily earn over the same return with a very safe investment in treasury bills or bonds.
But take another look.
If you bought a $500,000 house or condo with 20% down and took a mortgage for the rest, you would have an investment of $100,000. At an appreciation rate of 5% annually, a $500,000 home would increase in value $25,000 during the first year. That means you earned $25,000 with an investment of $100,000. Your annual return on investment would be a whopping twenty-five percent. Remember in the Miami Real Estate market, the rate of appreciation is higher than the national average. At an appreciation rate of 10% the money earned would double to $50,000. That translates into a 50% return on investment. If you take into consideration that certain areas of Miami Real Estate have appreciated a much higher rates than 10%, the numbers can get pretty staggering.
Of course, you are making mortgage payments and paying property taxes, along with other costs of ownership. However, since the interest on your mortgage and your property taxes are both tax deductible, the government is essentially subsidizing your home purchase. Your rate of return when buying a home is higher and safer than most any other investment you could make.
If you take that same property at $500,000 and lived in it for two years at a 10% appreciation, it would be worth approximately $605,000. Under current capital gains laws if you lived there as a primary residence for two years or more and sold that home or condo, you could keep the entire $105,000 in profit with no tax liability and buy a new property with more money to put down. At this point you would have roughly $200,000 to work with. This would conceivably give you enough money to make a down payment of 20% on a $1,000,000 property, or put more money down on a less expensive property. Capital gains laws state that a single person is entitled to a $250,000 deduction while married couples have a $500,000 deduction. This is a great strategy to eventually pay off your primary residence somewhere down the road.
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HansenHomesAventura.com
2875 NE 191 Street Suite # 601, Aventura, FL 33180
Phone: 786-586-4778 | Fax: 786-428-0636 |
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