Investing in real estate now pays for itself in the future. Whether it is for your future retirement, nest egg or to pay for your child’s college tuition; considering an investment home is a great option. With college tuition increasing and the interest rates as low as they are right now, it is worth your time sitting down and running numbers on this opportunity. Real estate historically increases in value and rental rates increase as well.
Some may choose to set aside so much money per month. I know this can be tight for some families. Let’s say you do $300 a month, that is $3,600 per year. Assuming your child is a newborn, 18 years of savings comes out to $64,800. Why not let money work for you?
To invest in real estate, you need at least 20% down. On a $150,000 home, this is $30,000. Your monthly payment would be around $900-1,000 with interest, hazards insurance and taxes. If you can rent it out for $1,300, you are making $400 a month, $4,800 a year and $86,400 in 18 years. Let’s say the home value increases to $185,000 and you have paid the home loan down, you can now hold on to the home or sell and make an additional $35,000 in equity plus get back your $150,000. This example shows that a $30,000 investment can bring you $121,400 in 18 years. Of course you have to factor in repairs, rental vacancy etc but we can all agree this route is not a bad option to have in case you need to cash out later.
If you’re looking for an investment property, please give The Peters Company a call! We have several buyer specialists who have worked with several investors!
Written by Amy Wade, NE Georgia Specialist, The Peters Company