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Wall Street vs. Main Street?

By
Real Estate Agent with Team Limejuicer/Remax Maryland 22383

 

Often times we kick ourselves for not making decisions; you don't need me to tell you that the Real Estate market has taken a turn for the worse, or the stock exchange numbers have plummeted, or ones 401k is no longer existent etc.....

During the times that we noticed these changes occuring we considered reinvestment choices...didn't we.....Did we reinvest? Most of us stood the course hoping that this was an anomaly and that things were going to change for the better....

I suggest we make our own change, here is an example:

Invest $100,000 in a condominium in Germantown today:

Rent it for $1200 a month for the next 8 years = $115,200

In the next 8 years the likelihood based upon supply and demand that this condo gets to 2005 prices is extremely high.

Sell the Germantown condo in 2017 for $200.000.

Total investment: $100,000 plus carpet, paint, some minor repairs minus tax savings

Total revenue: $115,200

Potential Sale Amount: $200,000

Total profit minus initial investment: $215,200 in 8 years (not including rental appreciation)

What is the percentage of return? 26% on an annualized basis........

Let's say one had one's retirement account all in savings paying one dividends:

$800,000 in retirement savings paying one $40,000 a year in dividends (5%)

Let's buy 4 condos at $100,000 and rent them each for $1,200 = $4,800 a month or $57,600 a year.

Sell those 4 condos in 8 years: $800,000 in real estate and $460,800 in revenue


I would suggest one invest in Main Street - this is where the common need will always be....Wall Street should be left for the greedy and the lazy.