Finance Explained - Overview
Why has Real Estate always formed the foundation of
wealth building? Can I do it too? What do I need to know
about the financing?
The fundamentals of Real Estate are simple. Buy a
home. Enjoy it. Make your payments. Sell it and invest
in another one or cash out. It's hard to lose, but people find ways.
You need to establish a relationship with people you can trust. We
believe you'll choose us, because we empower you to make informed
decisions that you will be happy with for years to come.
So let's talk finances. You need a basic
understanding of what we call TALC (Taxes, Appreciation, Leverage & the
Calendar).
Taxes-The government wants you to own your
shelter, your home. The pride-of-ownership contribute to
everyone's quality-of-life. To encourage ownership, the
government created tax benefit that you only get if you own your home.
Appreciation-Since 1968, when the National
Association of Realtor's started tracking home values, the average
price of a US home has never gone down. Appreciation, the
percentage increase your home achieves each year, varies but area like
Chicago's suburbs have average between 5.7% to 10.7% per year, over
the last 5 years.
Leverage-If you thought 10.7% sounds good,
keep in mind that if you put 20% down on your new home, your return is
not 10.7% but 5 times 10.7% because you have only paid 1/5th of the
total price for the home. The appreciation rate of 10.7% was on
the total price, not just you down payment. Put down less, say
10% down, and your return would be 10 times 10.7% or 107% return for
the year. You can see why Real Estate represents such a vital
share of the portfolio of the most affluent people in the world.
Calendar-Your investment and savings
continue day after day and never sleep. Assuming a $200,000 home
and the average owner tax profile, their home would increase in value
by $950/month (5.7%) to $1783/month (10.7%) and they would have tax
savings of $352/month. All that and they would be paying
approximately $1049/month. So their net cost is $1049 minus
$1783 minus $352, that's right, it's like someone showing up with a
check made out to you $1086 and you get to live in your investment,
rent free.
All this and the government, banks, relatives... are all
conspiring to help you. You can do it too! We can show you
how.
This is perhaps one of the few excepting to the rule
that if it sounds too good ... We know time, leverage, and,
unfortunately, taxes are a given. Appreciation does and will very.
It's vital that you work with a knowledgeable agent one
who has the research and knowledge of local trends. Paying too
much or moving into a troubled priced neighborhood could take years to
recover from. The right agent will vastly increase your ability to
make sound decisions.
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