In most cases, buying a home is cheaper than renting a home! According to Trulia a real estate website: 74% of the cities show it is actually cheaper to purchase a home than to rent a home. This is great for the home buyer (when they indeed can qualify for a loan). Herein lies the problem for the home owner and the benefit of the real estate investor.
Home prices have been beaten down so far over the past several years that it is actually cheaper to buy a home than to rent one. In some parts of the United States you can actually purchase the home for the total of 7 years’ worth of rent payments. To the investor this means huge opportunity, cash flow and capitol growth. Of course you need to consider other costs such as taxes and insurance and repairs but, in good theory, you can have that house paid for in about 10 years’ time at which time the cash flow will be monumental.
The flip side is, as an investor you are challenged to get a loan for the property, which is why so many people are using their 401K’s and other such investments as a borrowing tool. Inside of ten years or so (depending on what and where you purchase), you can have all your principle returned to its place of origin and your cash flow will outperform any investment you put it up against.
The capitol growth will have you doing cartwheels all the way to the bank. When, and only when, the market is properly positioned for you to liquidate and move your money to the next emerging market, the cash flows will explode. The alternative, of course, would be to liquidate all together and have a very nice capital growth (appreciation). Remember at this point your initial investment is already returned so you will have pure profits at the time of sale.
If you would like to find out more about investment properties we have available that are cheaper than renting, give me a call today! 941-718-7761