Is buying a home a sensible investment?
This is a difficult question to answer in the present depressed economic scenario. In normal times when the economy is on an even keel, the thumb-rule in real estate is that a homeowner can reasonably expect an appreciation of five percent per year on the value of the property. Of course other factors will determine this appreciation, like the neighborhood, the amenities and facilities surrounding it. Now this does not sound an attractive return when compared with an investment in treasury bonds, the safest investment of all. For that matter, in normal times an investment in stocks can fetch far more attractive returns. But as mentioned before, these are uncertain times when investment in stocks may not be the most intelligent decision.
Take a practical example in a house investment. Suppose a homeowner invests $400,000 in a house with a 20% down payment of $80,000, which is the homeowner’s capital investment and the balance on mortgage. At a conservative annual appreciation of 5% at the end of the first year, the house would have appreciated by $20,000. This amounts to a 25% return on the initial investment of $80,000, a handsome return-on-investment by any standard.
No doubt mortgage repayments and property taxes are involved. But the interest on mortgage and property taxes are both tax deductible. Added to that is the current tax incentive of $8,000 for first time homeowners. Effectively, the government in its largesse is subsidizing your purchase of a home.
Invest in the California bay area
Dale Warfel is an experienced real estate agent who has worked in the Bay area, California for nearly thirteen years now. He is thoroughly conversant with the economics of a house investment in any district of the territory he covers. Dale Warfel knows the rates of appreciation of every neighborhood and can work out a viable proposal. Do visit his website at www.dalewarfel.com which has a questionnaire under ‘Contact Me’. Dale Warfel will be happy to answer any queries you might have. He can be reached on 408.624.6202.
Take a practical example in a house investment. Suppose a homeowner invests $400,000 in a house with a 20% down payment of $80,000, which is the homeowner’s capital investment and the balance on mortgage. At a conservative annual appreciation of 5% at the end of the first year, the house would have appreciated by $20,000. This amounts to a 25% return on the initial investment of $80,000, a handsome return-on-investment by any standard.
No doubt mortgage repayments and property taxes are involved. But the interest on mortgage and property taxes are both tax deductible. Added to that is the current tax incentive of $8,000 for first time homeowners. Effectively, the government in its largesse is subsidizing your purchase of a home.
Invest in the California bay area
Dale Warfel is an experienced real estate agent who has worked in the Bay area, California for nearly thirteen years now. He is thoroughly conversant with the economics of a house investment in any district of the territory he covers. Dale Warfel knows the rates of appreciation of every neighborhood and can work out a viable proposal. Do visit his website at www.dalewarfel.com which has a questionnaire under ‘Contact Me’. Dale Warfel will be happy to answer any queries you might have. He can be reached on 408.624.6202.
Labels: Dale Warfel; real estate; house investment;; real estate agent; Bay area
posted by Sangeetha @ 2:50 PM
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