Is it too late to invest in real estate?
I hear this all the time because of the recent years appreciation. What is important is that the numbers make sense. Let’s look at the numbers.
First we have to remember that along with higher prices and interest rates, we have also had increases in rents and wages. The average $/SF rent is now $1.34
Let me illustrate with an example:
Let’s look at purchasing a house for $448,000 with 10% down. The payment would be about $2426/month. This home would rent for approximately $2195/month. It is $230/month cheaper to rent then buy.
Now let’s say it increases by just the rate of inflation (which is currently 7.9%)
2022 $448,000
2023 $483,392
2024 $521,580
2025 $562,785
2026 $607,245
2027 $655,217
That is a $207,217 increase in 5 years. Plus you get to depreciate the home on your taxes and deduct your interest payments. This more than makes up for the $2,800 a year negative cash flow. In addition, when we go into the next recession, say possibly 2 years, you can refinance and most likely will be in a positive cash flow situation.
Compare that with having your cash sitting in a bank account losing 7.9% / year or in the risky stock market. This is the reason why owning Real Estate is the #1 wealth builder.
So yes, it still does make sense, as long as you buy the right type of house in the right area with the right features.
We have a step-by step process to make sure you buy the right house that will make economic sense for your financial future.
If you have any questions, please call/text 480-226-1925
