| Normally homes appreciate about three to eight | | | | swimming pool or put in a skylight so you don't get |
| percent a year. This figure will vary from state to | | | | depressed after seeing all the rent money go to |
| state, and town to town. Even with stocks sometimes | | | | someone else? When you rent, you are normally |
| gaining more than ten percent in some years they also | | | | limited on what you can do to improve your domicile. |
| are in my opinion more risky and often do not average | | | | You have to get permission to make any |
| a steady three to eight percent appreciation with all of | | | | improvements. Who pays for the improvements? |
| the tax benefits and forced savings the home | | | | Most landlords I know, won't just fork out the dollars |
| purchase affords us. Traditionally, this makes home | | | | for improvements that cost them money. They |
| buying one of the absolute best investments a person | | | | already have a profit margin they are trying to make |
| or family can make. | | | | off of you. It does not make a lot of sense to spend a |
| Real estate has made more millionaires than anything | | | | lot of dollars painting, putting in new carpet for the |
| else. Most wealthy individuals have a real estate | | | | benefit of the landlord. If the landlord spends money |
| portfolio. There is a reason people buy homes and | | | | your rent will probably go up soon. The landlord wants |
| count this as one piece of the American dream. It is | | | | to keep his expenses down as we all do. |
| not only a good living arrangement but a good | | | | You can do whatever you want and spend what you |
| investment over time. When you retire you do not | | | | want if you own the home. You also get all of the |
| have to pay rent if the house is paid off and often the | | | | benefits of any improvements you make, plus you get |
| money you have made can be cashed out and tax | | | | to live in an environment you have created. |
| free up to a certain amount. | | | | For our example, let us say you are currently in an |
| For purposes of discussion and simplicity of example, if | | | | apartment. With your own home you will probably |
| you buy a $100,000 first house and you did not pay | | | | have more space, both indoors and outdoors. |
| cash for the home but got a mortgage. Suppose you | | | | Apartment complexes are more interested in creating |
| put as much as twenty percent down - that would be | | | | the maximum number of income-producing units than |
| an investment of $20,000. We will forgo the closing | | | | they are interested in creating personal space and |
| cost just for this example to make it simple. | | | | custom, living arrangements for each of the tenants. |
| At an appreciation rate of 5% annually, a $100,000 | | | | You usually do not have to cut the grass in an |
| home would on average increase in value | | | | apartment but then how much grass is there in the |
| approximately $5,000 during the year. That means you | | | | yard anyway? |
| earned $5,000 with an investment of $20,000. Your | | | | The fourth of five little know ways to get a home is |
| annual "return on investment" or cash on cash spent | | | | called a lease with an option to purchase a home. Find |
| would be a whopping twenty-five percent. | | | | an investor in your town (or I can do it in mine), that |
| Of course, you are making mortgage payments and | | | | has a home with a good fixed monthly payment and |
| paying property taxes, along with a couple of other | | | | tell him or her you want to Lease their home then buy |
| costs. However, since the interest on your mortgage | | | | the home in a couple of years. Most investors want to |
| and your property taxes are both tax deductible, the | | | | sell houses not rent houses. |
| government is essentially subsidizing your home | | | | Tell the investor you have some money for a down |
| purchase. | | | | payment (or if he prefers an option) to buy the home |
| Your rate of return when buying a home is normally | | | | at a price you agreed to buy the home for at some |
| higher than other investments you might make and | | | | time in the future (maybe 12 to 24 months). The |
| better than a savings account and in my opinion less | | | | investor has purchased the home for less than the |
| risky than the stock market or lottery tickets. You | | | | average person could get the house and will be willing |
| have to live somewhere it might as well be your own | | | | in today's market to sell it for less than you can get if |
| home. | | | | for if you go through a Realtor because he doesn't |
| Because of income tax deductions, the government is | | | | have the realtor fees or the marketing expense to add |
| basically subsidizing your purchase of a home. All of | | | | to the price. He understands the market and can find |
| the interest and property taxes you pay in a given | | | | you a home in just about any price range if he knows |
| year can also be deducted from your gross income to | | | | he has a buyer and does not have to sit on an empty |
| reduce your taxable income. | | | | house making payments. |
| For example, assume your initial loan balance is | | | | Another advantage of this method to acquire a home |
| $80,000 with an interest rate of eight percent. During | | | | is you can usually go ahead and make the |
| the first year you would pay approximately $6800 in | | | | improvements you want because you and he both |
| interest. If your first payment is at the end of January, | | | | know you are going to buy the home. The investor |
| and you pay your note each of the next twelve | | | | may even finance the home for you. Another |
| months, your taxable income would be reduced due to | | | | advantage is you do not have to worry about the |
| the interest deduction by the same amount or $6800 if | | | | price going up or the payment changing for a set |
| you itemize at the end of the year when you pay your | | | | period of time that you both agree to accept. |
| taxes. You can also have a deduction for the $1000 to | | | | You also usually get most or all of the appreciation |
| $2000 property tax you pay for the home. You may | | | | that the home has gained (the three to eight percent |
| get back more money than you think at tax time. You | | | | or more per year) when you eventually buy the home. |
| can usually also get a homestead exemption. | | | | This means when you get your credit cleaned up or |
| Another giant advantage is your payments on a thirty | | | | maybe more money saved up, have the kids in school, |
| year fixed rate mortgage stay the same for the | | | | are settled and are ready to get financing, you will |
| mortgage. When you rent, you expect your rent to | | | | have to come up with less out of pocket real dollars to |
| increase each year. How high will your rent be in thirty | | | | purchase the home. You will have equity in the home |
| years if you stay in the same place? Start to see why | | | | or forced savings that are applied to your purchase |
| owning is beneficial? | | | | ratio. You do not have to move again and pack up all |
| Many young people have a hard time saving money, | | | | your stuff. You do not have the major event of |
| and a house is like a savings account. You accumulate | | | | moving. You know where you are going to live and |
| savings in a number of ways. Every month, a portion | | | | what you are going to pay to live there. You know the |
| of your payment goes to pay of the house and | | | | home and the neighbors and you have the American |
| reduce the amount owed. | | | | dream. |
| Over time the home you purchase usually appreciates. | | | | Hope this helps. |
| Average appreciation on a home historically is about | | | | Mark Neighbor |
| five percent. Historically in Georgia owning a home has | | | | This is a Brief description of how it works. We are not |
| been a very good investment. | | | | supplying legal advice or any recommendations. For |
| What happens if you want to paint your rental unit or | | | | legal advice consult an Attorney. |
| get a waterbed or add a trampoline or get a | | | | |