April 15, 2015

Real Estate vs Mutual Funds

WHY INVESTMENT REAL ESTATE? Why invest in real estate? The first reason is fairly obvious. Most financial planners recommend that investors accumulate a diversified investment portfolio that consists of some stocks, bonds, and assets such as real estate. Another reason for holding real property for investment is that sometimes real estate can outperform the stock market. A TEN-YEAR COMPARISON According to the National Association of Realtors, the median home resale price in 1991 was $97,100. With a 20% down payment of $19,420 and a $77,680 mortgage, an investor could have purchased the median resale home for $97,100. At the end of 2001, that median price of that home was $147,500. Through only price appreciation, an investor would have gained $69,820.  [Note: This increase in equity does not include the equity growth through the pay-down of the mortgage over the same period. Assuming a 30-year loan at 8%, if this was included, they would have an additional $8,917 in equity growth.] Assume an investor put $19,420 into the Vanguard 500 Index fund over the same time period. Over the same ten-year time period, it would have grown to $60,593, after paying taxes on the capital gains and dividends. Since the Vanguard 500 Index Fund generally did better than most other managed mutual funds over the past ten years, it’s fair to assume that property owners holding real estate for investment outperformed investors holding stocks and bonds in the same time period.

REAL ESTATE VS. A MUTUAL FUND     

Real Estate Index Fund 1991 Equity      $19, 420                 $19, 420

2001 Equity                                        $69, 820                 $60, 593

10 Year Annual Return                          13.7%                     12.1%

5 Year Annual Return                            18.8%                     10.1%

3 Year Annual Return                            20.5%                     (1.5%) 

THE POWER OF TAX DEFERRAL  The comparison above only looks at the appreciation of real estate held for ten years compared to an Index Mutual Fund held for the same time. The benefits of owning investment real estate become even more dramatic after calculating the costs of sale. If the index fund is sold, the investor must recognize capital gain taxes; however, the investor who exchanges their investment property will have all their equity available for purchasing more real estate. This increase in purchasing power is another tremendous advantage in owning real estate held for investment as an important asset in a diversified investment portfolio. 

  © 2006 Asset Preservation, Inc. 

Posted in Real Estate News
Feb. 5, 2015

5 Selling Tips

Staging your home for sale - There are many things you can do to stage your home that don’t are completely FREE.  There are five things you can do to get your home ready for sale.

Make sure to Clean, Clean and Clean Some More

When home buyers walk into a home they are looking for a home that is well cared for.  If you home is super clean it has passed the first buyers test and they feel more at home.  

Clean everything from dusting ceiling fans, door frames, blinds, light fixtures, the stove, microwave, all windows inside and out, Don’t leave a single spot in your home untouched.  Potential buyers look everywhere, so make sure the entire home is spotless. 

Depersonalize the house

Make sure to pack all personal photos and family keepsakes.  You can leave one family photo  because it plants a seed of happiness in the buyer’s mind, making them think how happy their own family could be living in the home.  

Potential home buyers have a hard time seeing their family in a house that has your family pictures, portraits and keepsakes so make sure they are packed away out of view. 

Remember you are not selling the family, you’re selling the house.  So always let that be the center of attention. 

Pack Everything You Don’t Need

You can live without many things you own for a short period of time, especially if you have lived in your home for more than 3 years.  People have a tendency to collect things rather they use them or not.  When selling your house the most important thing is showcasing the space your home has to offer potential buyers.  Remember you can’t showcase rooms in your house that are full of your stuff, especially too much furniture.

It’s best to pack as much as you can live without and store it away from the house.  Remember buyers look in the garage also and picture their car there but they can’t when it’s full of your stuff.

Spruce up the Front Yard and Door

The front of your house is the buyer’s first apian of their home.  If you can spruce it up with flowers and make sure grass is cut and bushes trimmed.  Also make sure the front door area is clean and inviting.  This will give the buyers a positive attitude going into the house.  

When Showing Make Sure Home is Light and Smells Great

Make sure your home is bright with lights on and blinds open.  Turn on every light in the house even the light over the stove and inside the oven, (remember the appliances are pristine and need to be shown off).

Buyers are looking for “light and bright,” not “dark and dreary,” so make sure to give them lots of light.  

It takes a lot of work to get your home ready to sell.  Even without a staging budget, you can still take the time to make I few changes that will have a positive impact on your home sale.