Financial tip of the day.com - FREEDOM THROUGH FINANCE
Social Sites
  • Financial Tip Of The Day
  • Books
  • Websites
  • Contact Us
  • Disclosure

The IDEAL investment

5/11/2014

0 Comments

 
Editor: Crass Cash
Picture
I read recently that real estate is the I.D.E.A.L. investment.  As in...

Income: Make sure you have a positive cash flow real estate investment that produces Income for you. 

Depreciation: For tax purposes you get to depreciate the value of the building.  This helps you pay less in taxes now.  You'll eventually have to pay them, but you can put that off until you sell the property.  Or indefinitely if you keep doing 1031 exchanges.  

Equity: By making your monthly mortgage payment you're building equity in your loan.  It's like owning more and more of your home each month.  

Appreciation: Depending upon where you live this can be significant, but generally speaking home prices go up with inflation and economic growth, so about 5% after inflation.  This is a huge part of your eventual return!

Leverage: By using other people's money you can leverage your above appreciation to spectacular gains.  Although as we saw with the housing downturn you could be wiped out as well.  If you leverage 5:1 like a normal mortgage you can get a 15-25% return every year if your home appreciates in value along with the long term fundamentals of 3-5% appreciation growth.  
0 Comments



Leave a Reply.

    Author

    This website was created due to the atrociously misguided financial advice that I've heard over the decades.  Financial freedom is not intellectually strenuous, but it takes discipline. 

    RSS Feed

    Categories

    All
    BHAG UPDATE
    College Savings
    College Savings
    Credit
    Economics
    Estate Planning
    Estate Planning
    Financial Planning
    Financial Planning
    Insurance
    Investing
    INVESTMENT JOURNAL
    Mistakes
    Net Worth Update
    Retirement
    Tax
    Thrift

    Archives

    October 2017
    August 2017
    May 2017
    April 2017
    February 2017
    October 2016
    September 2016
    August 2016
    July 2016
    June 2016
    May 2016
    October 2015
    September 2015
    August 2015
    July 2015
    June 2015
    May 2015
    April 2015
    March 2015
    February 2015
    January 2015
    December 2014
    November 2014
    October 2014
    September 2014
    August 2014
    July 2014
    June 2014
    May 2014
    April 2014
    March 2014
    February 2014
    January 2014
    December 2013
    November 2013
    October 2013
    September 2013
    August 2013
    July 2013
    January 2011

Powered by Create your own unique website with customizable templates.