Rent vs. invest

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Information about Rent vs. invest

Published on March 1, 2014

Author: BillButler

Source: slideshare.net

Do you have clients with children going to school in Boston? Provide Added Value to Your Clients by recommending a Real Estate Investment vs. Renting Receive 25% referral fee Rental Cost 4 Years Investment Return 4 Years ($52,800)* $121,215** Effective 4-Year Return on Investment: $174,015*** Bill Butler OICP, CDPE RE/MAX Leading Edge Boston Area @BillButlerBos bbutler57@gmail.com 617-771-9376 www.BillBRE.com Investing isn’t for everyone. Call me to discuss your client’s needs. *Avg. 1BR rental $1100/mo. near university campuses **Based upon cash purchase of an “average” 2-Family Property near university campuses ***Does not include any additional tax benefits

Assumptions Made on Market Averages, Subject to Change RENT 1BR apartment $1100/mo. x 48 months = $52,800 LOSS: $52,800 Assuming NO increase in rent PURCHASE 1BR condominium Purchase Price: $225,000 Taxes: $2500/yr x 4 years = $10,000 Condo fee: $200/mo. x 48 months = $9600 Repairs: $25/mo. x 48 months = $1,200 Appreciation: 3% x 4 years = $253,228 GAIN: $28,228 - $20,800 operating costs = $7428 NET GAIN of $60,228 vs. Renting PURCHASE 2-Family House/Duplex 2 units - 1BR/1BTH, 3BR/1BTH Purchase Price: $475,000 Occupy 1BR unit Taxes: $5000/yr x 4 years = $20,000 Repairs: $500/mo. x 48 mos = $24,000 RENTAL INCOME 3BR unit for $2200/mo. x 48 = $105,600 NET OPERATING INCOME (4 years) = $61,600 Appreciation: 3% x 4 years = $534,615 GAIN: $59,615 - $44,000 operating costs = $15,615 NET Equity GAIN of $15,615 + $105,600 Rental Income = $121,215 NET GAIN of $174,015 vs. Renting

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