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Have Extra Money? Consider Investing In This...

Can a $60,000 investment really return $412,000 in 20 years by buying a piece of real estate? Read to find out if this is possible in Ankeny.

There are a lot of people today who have money available and do not know where to put it. The stock market scares them so they are just stuffing it under their mattress.

For those type of people and anyone interested in real estate investment, here is a very real scenario, possible in Ankeny right now. Follow along as I run through, in my opinion, the best way to make a lot of money, while having to do very little yourself.

I know of a rental property for sale in Ankeny. It can be yours for around $315,000. This property is fully rented and brings in $2800 per month in rents. The property taxes are about $6400 per year and insurance and lawn care adds about another $1,000.

Ok, on a property like this a bank is going to want about 20% as a down payment. For simple math, we will call it $60,000.

So you go to the bank and take out a loan for 80% of the price of the house, giving the bank your $60,000 as a down payment. Think of that $60,000 as your investment. Compare it to putting it in the stock market.

Lets say the bank gives you a 20 year mortgage at 5%. That means your payment will be roughly $1715 per month. We have to add taxes and other expenses to that as well, which takes our total monthly expense up to $2,331.

Now remember, you already have signed leases that are bringing in $2800 per month. That means that each month you MAKE $469 and somebody else is paying for all your housing bills! How cool is that?

Ok, so now you are making $469 every month. Let's take that times 20 years, which gives us $112,000 in "rental profit" over the course of the loan. But that is not all. Now that your mortgage is completely paid off, it might be a great time to sell and cash out. Over 20 years it is really safe to assume the property has appreciate or gone up in value, but to keep things simple, let's pretend it did not and you are again selling it for $320,000.

So you sell it, and maybe hire an agent and pay some taxes so let's call it an even $300,000 you walk away with.

Don't forget to add in the $112,000 you earned over the course of those 20 years. So simply put, you put in your initial $60,000 investment and somebody else paid the bills. At the end of the 20 years, your $60,000 investment has paid you $412,000!!! That is a return of 586%

The stock market is a joke compared to that return.

Also, don't forget that while you own the properties you also get some tax advantages like being able to write off the property tax amount.

Now to be fair, along the way, you may face stretches where you don't have a tenant, or you will have to do some repairs to the home, so it will not go as perfect as this scenario, but the return far outweighs the risks.

If you ever wonder why some property owners seem rich, this is a great example of that.

So, if you, or somebody you know is wanting to get into this type of investment, it is real and it is out there. Feel free to contact me for help or more details.

As always, you can reach me at 515-864-6444 or by email at Mark@MarkCharter.com.

You can check me out online at www.MarkCharter.com.

 

Mark Charter

Remax Real Estate Center

Licensed to sell real estate in Iowa #s56865

This post is contributed by a community member. The views expressed in this blog are those of the author and do not necessarily reflect those of Patch Media Corporation. Everyone is welcome to submit a post to Patch. If you'd like to post a blog, go here to get started.

Kurt B. March 03, 2012 at 12:45 AM
A great summary on the pluses of a rental property. Not all work out so rosy however. So much depends on your tenants.

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