Still Paying Rent? How Would You Like $600,000.00?
By Bill Forrest, Realtor
Still Paying Rent? If you are reading this chances are that you just don’t get why home/condo ownership is such a big deal. No worries there, we will show you. You are young right? Living in the moment, not thinking about long term and thinking this apartment is good enough for now. Right?
Chances are if you are living in Midtown, Buckhead or another trendy area you are paying $1500 a month in rent for a 1 or 2 bedroom apartment or condo….with absolutely no return on your money
The Biggest Reason to Own is Building True Wealth
No, this is not a pyramid scheme or network marketing. This is what the other 65% of Americans already know. Home/Condo ownership is about building true wealth effortlessly for them, effectively for free.
For $1500.00 a month you are currently paying you could own a great condo that has better amenities, space, finishes and appliances than your apartment in the same neighborhood. With interest rates at a all time low it is truly cheaper to have something better by owning. And you could have $600,000.00 or more in real wealth over time essentially for free as well.
But Why? The $600,000.00 Question
Rent is just that: rent. You get nothing in return for your hard earned money. With ownership there are two major things in play. As you pay a mortgage, you are paying off the loan. That is not rocket science. But what makes this even more powerful is that the property is appreciating or increasing in value at the same time. Yes it is not a constant, there are peaks, valleys and market corrections. But history has always shown that home values consistently appreciate over time long term. Even with the recent market correction, over the last 30 years, there has been a average annual appreciation of 3.4%. That doesn’t sound like a lot of money but its surprising so lets play it forward:
(This could be much more if the appreciation rate is higher than 3.4% or if you make major improvements to the property. Nothing in life is guaranteed but this believed to be solid and conservative.)
So with today’s interest rates, For $1500.00 a month you can get a great $210,000.00 condo. ( That monthly mortgage payment includes principal, interest, taxes, insurance, and HOA.) So if you pay rent over the next 30 years you have nothing. But history shows us that for the SAME payment if you own instead, you will have built true wealth of over $543,000. Why? Because that 210K condo you bought 30 years should be worth $543,000.00 or more and you then owe NOTHING on it…
Where is the other $60,000.00 you ask?
TAX REFUNDS… Yes! the mortgage interest that you pay each month and your property taxes are tax-deductible on your income taxes. If you have a great job and are in the highest tax bracket, that refund for you first year could be as much as $3933.47. Even better is the $81,324.57 in possible tax refunds over the life of the loan.
Yeah that’s thirty years from now.. What about short-term?
Based on the above example of market appreciation of 3.4% even the first year you will see gains (some condos and homes in Atlanta are appreciating at 18% currently). Year One: $7,140.00 equity increase and tax return of 3933.47 possible. In year five that jumps to over $50,000 in appreciation/equity and a 5 year total of over $19,000.00 in tax returns are possible. With renting: ZERO Wealth.
Why Buy Now?
Because of the market correction and interest rates. There is a old rule in real estate that still holds true today: if you buy low, it doesn’t matter when you sell; you will make money. Most properties are still undervalued in the Atlanta marketplace and are currently appreciating as much 18% annually right now. This of course will flatten out, but now is the time to buy. By most all accounts, interest rates are at a all-time low and are only going to go higher as the economy expands.
How Do I Get Started?
Call me and I will help you find the right lender for you to reach your real estate goals. Once we have your loan secured; then I will help you find your ‘Ideal Home.’ Best of all my services as a Buyers Agent are free. A Buyers Agent works for you: their loyalty, confidentiality, and fiduciary responsibility is to you but paid for by the homeseller. They agreed to pay a buyer’s agent commission when they listed the home for sale thus free to you. Give me a call at 404-353-9233 or E-mail and I will be happy to send you my guide to home/condo ownership that explains how the process works, how I make it fun & painless for you and why NOT having a Buyers Agent can cost you thousands.
© 2018 Forrest & Company