Congratulations, you’ve saved for a rainy day or retirement – but how do you determine the best option for investing your savings? It is estimated that over 25% of Americans have their long-term savings in cash instead of investments like stocks, bonds or real estate.
Memories of the financial crisis of 2008 are recent enough to understand why some people may want to avoid the stock market and real estate. Even though Wall Street and housing have rebounded considerably, uncertain investors are sitting on their cash and hesitant to invest their savings. However, trying to avoid a bad decision can have serious costs too.
If your money is not earning at least at the current inflation rate, you’re losing the purchasing power of your dollars. Bankrate.com estimates the average money-market deposit yields 0.11% and the average five-year certificate of deposit currently yields 0.78%.
Rents are continuing to rise and there is a shortage of good, affordable housing. Single family homes have a significant advantage over many other types of investments. They have high loan-to-value mortgages available at fixed interest rates for long terms on appreciating assets with distinct tax advantages.
The cash flows are considered to be one of the most attractive features of rental properties. Some investors think of it as a growth stock that pays substantial dividends. In the example shown below, a $125,000 rental with an 80% loan-to-value mortgage at 5% that rents for $1,250 per month, has a positive cash flow before taxes of $3,000 a year.
The rate of return on rental property can be substantially higher than other investments while allowing the investor control that isn’t available in alternatives. To search for properties for sale in the Denver Metro area, CLICK HERE
For more information about homes in the Denver, Colorado Real Estate Market or homes for sale along the Front Range, call Marilyn Van Steenberg, Lifestyle Consultant, Certified Residential Specialist and Eco-Broker.
You can reach me at Buyer’s Best Choice at Keller Williams Realty DTC, 303-947-6252.