"JimH" wrote in message
...
wrote in message
oups.com...
NOYB wrote:
Housing prices have averaged an increase of 17-26% in Naples over the
last 6
years. Name a single investment that offered equal or greater return,
with
the same level of risk, *and* a tax deduction.
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You've almost got it, Doc. The price of housing, expressed in dollars,
has increased 17-26% for the last 6 years. The owner of a single family
home in Nipples is no better off, however, unless he also owns
additional property that he doesn't need to *consume* in its entirety
every month.
First of all, the quality of your argument is diminished with your
childess
munipulation of the name of the city of Naples. It is Naples, not
Nipples.
Grow up Chuck.
Secondly, you have to look at the end result of the real estate process.
Let us compare owning vs. renting.
Static liebral thinking wishes to ignore the fact that you have to live
somewhere.
Let's take a 100,000 house. You can purchase it for 0% down. The cost of
the mortage, taxes etc will be about 800.00 month. The first several years
will show very little prinicpal payment, so for arguements sake, will assume
there is none. Someone in the 33% tax bracket will have a net cost of around
540.00 a month. Assuming a 20% increase in value after 5 years, the house
is worth 120,000. So for a 0% investment, you are 20,000 ahead, while only
spending 540 a month in "rent".......the 20k is also tax free, Looks like a
damn good investment to me.
You could NOT rent an equivalent residence for the same 540.
Example (real life) I have $30,000:
EXAMPLE 1:
If purchasing a house: I buy a 4 bedroom house for $150,000, putting
$30,000 down. I owe the bank $120,000 and I put nothing into the house
over
the years I own it other than the mortgage payment.
I then sell that house for $250,000, yielding $75,000 net after
commision,
payments to the bank and expenses. My initial investment was $30,000.
I
now have $75,000.
I then buy a house for $350,000, putting the entire $75,000 down. I owe
the
bank $275,000 and I put nothing into the house over the years I own it
other
than the mortgage payment.
I then sell that house for $450,000, yielding $133,000 net after
commision,
payments to the bank and expenses. My intial investment was $30,000. I
now
have $133,000
I downsize and look back at that $150,000 starter home I once owned. It
is
now selling for $300,000. I buy it, put down my $133,000 in down payment
and
thus owe the bank $167,000.
I eventually sell the house and move into a retirement community (paid
for
by my insurance). The house sells for $325,000. After expenses and
commisions I net $155,000. My initial investment was $30,000.
I yielded a net profit of $125,000 on a $30,000 investment, *and* I had
ZERO
living expenses over all those years.
EXAMPLE 2:
If renting a house/apartment: A $30,000 investment over 30 years at at
5%
rate of return would yield a return of $130,000.
With an average cost of rental housing over 30 years for a 4 bedroom
apartment @ $000/month (a very low average) of $180,000, I yield a a net
loss of -$50,000.
Compare to that the ownership scenario and realize almost a $1000,000
return.
RESULTS:
A net profit of $100,000 to own.
A net loss of $50,000 to rent.
The difference....$150,000 over 30 years on a $30,000 ownership
investmet.
My scenarios were very conservative.
Real estate is not an investment? Bull****. You know absolutely
nothing
about real estate Chuck.
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