3 REASONS WHY BUYING A VACATION HOME COULD BE A GREAT INVESTMENT

Couple Standing on Balcony Looking At The Ocean

1 – House Price AppreciationTHREE REASONS WHY BUYING A VACATION HOME COULD BE A GREAT INVESTMENT

The average rate of house price appreciation in the US over the past 20 years has been over 3% per year.  This means that if you bought a vacation home 20 years ago for $100,000, it would likely be worth over $180,000 today.  If you used a 20% down payment, your $20,000 investment would have yielded more than an 8% annual rate of return.

2 – Ability to Rent Out the Property and/or Save Money on Hotels

You may be able to rent the property for part of the year that you’re not using it.  Additionally, you could save some money on hotel bills if you vacation in your own property instead of vacationing in a hotel.  These factors could help you to reduce your cost of ownership.

3 – Step-up in Tax Basis

If you keep the property for your entire lifetime, your heirs will likely receive a “step-up in basis” when they inherit the property.  This means that their tax basis “steps up to” the future value of the property.  In our example above, if the property is worth $180,000 when your heirs inherit it, their tax basis would be $180,000.  This means that they could sell the property and pay absolutely nothing in capital gains taxes.

Contact me for more information or to consider your mortgage options.

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Real Estate is Best Long-Term Investment

Americans Believe Real Estate is Best Long-Term Investment | MyKCM

According to Bankrate’s latest Financial Security Index Poll, Americans who have money to set aside for the next 10 years would rather invest in real estate than any other type of investment.

Bankrate asked Americans to answer the following question:

“Which would be the best way to invest money you did not need for more than 10 years?”

Real Estate came in as the top choice with 25% of all respondents, while cash investments (such as savings accounts and CD’s) came in second with 23%. The chart below shows the full results:

Americans Believe Real Estate is Best Long-Term Investment | MyKCM

Sterling White, co-founder of Holdfolio, gave one reason as to why real estate may have ranked so high.

“Houses are tangible. You can physically see and feel the product. So you know where your money is going.”

July’s poll also found that for the “26th consecutive month, Americans’ sense of financial well-being improved when taking into account debt, savings, net worth, job security, and overall financial situation.”

Bottom Line

There are several reasons, both financial and non-financial, as to why homeownership makes sense. It is nice to see that Americans have returned to a belief in homeownership as the best investment.

Real Estate #1 Long Term Investment

STM-ShareThe Gallup organization recently released a survey in which Americans were asked to rank what they considered to be the “best long term investment.” Real estate ranked number one, with 35% of those surveyed saying it was a better long term investment than stocks & mutual funds, gold, savings accounts or bonds.

Here is the breakdown:

Americans Rank Real Estate #1 Long Term Investment | Simplifying The Market

The survey revealed that real estate was the number one choice among each of the following groups:

  • Men
  • Women
  • People between the ages of 18-29
  • People between the ages of 30-49
  • People between the ages of 50-64
  • People 65 and older
  • People with annual earnings of less than $30,000
  • People with annual earnings between $30,000 and $74,999
  • People with annual earnings of over $75,000
  • People with a college degree
  • People without a college degree

Even stock investors ranked real estate number one. According to the report:

“With housing prices showing a steadier path upward in recent months, even stock investors are about as likely…to choose real estate (37%) as stocks (32%) as the best long-term investment.”

Invesment Homes Sales Up!

Investment-Homes-STM-1046x1662

Some Highlights:

  • 2015 marks the first year-over-year increase in investment home sales since 2011.
  • 62% of all investment homes purchased were single family homes.
  • The South saw the highest percentage of investment home sales (39%) with the West coming in second (28%).