Knowledgeable investors have been legally acquiring real estate, using their Individual Retirement Account, for years. This makes a lot of sense... even in an inflated market.
For this example, we'll use $25,000 from an IRA to purchase a c
ondominium for $100,000. Assuming rents are sufficient to cover the mortgage, expenses and generate $50 in net monthly cash flow or $600 per year.
Using a conservative appreciation of 5% we would see a a $5,000 increase in value and lets say that after the first, year the loan balance has been reduced by $1,000.
In the above scenario, the first year you've gained $600 in rent, $5,000 in appreciation, $1,000 in amortization for a total of $6,600.
Considering the initial investment of $25,000, we've received a 26% return on investment (ROI) which is more then double of what we would get from a stock index fund.
By locating distressed owners, willing to sell for 20% to 25% below market value, we could see a 10% to 15% appreciation even if the market is declining.
Because mortgage costs would be lower, we would enjoy a higher net income from the rent.
Let consider another plausible scenario... We receive 10% appreciation ($10,000) plus $1,200 a year in rents, plus $1,000 in amortization, then our total return is $12,200. That's a 48% return on the 25,000 investment!
If we use a Roth IRA to acquire the investment all capital gains are 100% tax-free, regardless of the profit you make when you sell.
For Safe, Secure and Smart Real Estate Investing ideas contact us or visit PinehurstHomeTeam.com
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Thank you for your interest and the privilege of serving you!
With our highest regard,
Wayne and Lynda Gomillion
"The Pinehurst Home Team"
"The friendship and referrals of those we serve is the foundation of our success."
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Wayne and Lynda Gomillion
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