Get out of the RENT trap!
You're throwing away money by not owning your own home!
Most people rent (instead of
owning) because they're unsure if they will be living in their area very long.
Or they just moved to the area, and want to get a 'feel' for the market
before they buy. For some, the idea of assuming the responsibility of a mortgage
is a deterrent. Whatever the reason, STOP RENTING! Owning real estate is one of
the most fabulous ways to build wealth!
The
Power Of Leverage Can Give You Incredible Returns!
You magnify your purchase power
with what is called leverage the use of borrowed money to purchase an asset that
is likely to appreciate, magnifying your profit. When you buy a home and take
out a mortgage (as most people do), you are borrowing money from the bank.
Therefore, when your home appreciates, you keep the profit on a home you
haven't even paid for!
This example clearly illustrates
the power of leverage: If you were to pay all cash for a $150,000 home, and you
sold it for $180,000, the $30,000 in profit represents a 20% return on your
original investment. However, suppose you took out a mortgage (like most
buyers), and put a 10% cash down payment on your home. You paid $150,000 for the
home, and later sold it for $180,000, making $30,000 in profit. You made $30,000
on a $15,000 investment (your down payment)! That's a fabulous 200% return
using the power of leverage! Why do you think people buy properties and rent
them out? You pay the mortgage, while they use leverage to profit when the
property appreciates.
Appreciate
the word Appreciation!
The price you sell your home
for, less the price you paid, is appreciation.
Real estate normally appreciates at an average annual rate of 5%,
providing you're not in a depressed market. Compared to the more speculative
stock market, this represents a more reliable return on investment. And when you
add the power of leverage, you can make 5% per year off borrowed money!
Owning
A Home Is The Ultimate Tax Shelter!
Consider the tax benefits that you are currently not enjoying
by renting. As you're probably aware, the IRS does not allow you to write off
your rent. When you make a mortgage payment, a portion of your monthly mortgage
payment is interest expense on the loan, which is fully tax deductible! The good
news is during the early years of repaying your mortgage, a large percent of
your mortgage payment is interest (versus later in the loan, when you are paying
down the home). Your tax deduction from writing off interest on your mortgage
payments can be great! Furthermore, you can write off your annual property taxes
and a portion of your closing costs.
Tax
Bill of 1997
Most importantly, thanks to a provision in the tax bill of
1997, when you sell your home, $250,000 of the profit from the sale of
your home is tax free if you file a single tax return and $500,000 of the
profit is tax free if you file jointly! In other words, you are most likely
going to pocket all of the profit when you sell your home! Add leverage, price
appreciation, and the fact that your profit (up to a certain amount) won't be
taxed, and buying a home is simply one of the best investments you can make!
Let’s
Look Beyond The Finances: The Psychological Benefit Of Owning A Home
The last time you started hammering a nail in the wall to hang
up a picture, you were probably wondering if your landlord would disapprove.
With home ownership, you are in control! You don't have to get
permission to bang in a nail. If you want to make improvements, like fixing up
the bathroom or remodeling the kitchen, this a project that you can control and
enjoy. Most importantly, owing a home is
the American Dream! The pride of ownership dates back to the founding of
this country.
I hope this informational report was informative. As your local
real estate professional, I am constantly aware of good deals on the
market, and can help you determine what type of house and location is
right for you. You can call me at any time for advice, and please remember
that you are under no obligation or pressure of any kind.
