What’s the ROI on Your MN Home?
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Chances are - you aren't earning a return on the equity in your home. For most people, their home-equity is the most underutilized-asset they have... |
It needs to be looked at, no differently than any other asset you own. It could be viewed as a security line of credit.
Many people choose to leverage up to 90% of the equity in their home to invest in Minnesota real estate. The investment-properties support themselves through rental-income. Your lender will most likely recommend you have at least 6 months reserves in assets or secured credit.
All MN investment-properties will eventually grow into having at least 80% financing in place through appreciation. As your port folio appreciates, you can refinance to pull out equity and buy more properties.
Here is an example:
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Single Family Home costing $250,000 |
Appreciation, and a conservative 5% on a $250,000 house, is $12,500 per year. Using this example, cash flow is a -$981.12 per year, or $81.76 per month.
Your annual tax savings is $1744, or 12%. With appreciation at $12,500, which is 77%. Leaving your total annual-benefit at $13,262.
So when we talk about ROI (or Return on Investment) - if down payment and closing costs were $14,500 ($14,602 divided by $13,250 = 91%)!
