About Real Estates

In general, the value of homes appreciates about four to five percent per year. While this varies from neighborhood to neighborhood and region to region, this is the rule of thumb. While five percent might not be that much, and other investments like stocks, bonds and such might seem more lucrative, real estate is still a wise choice.

For example, you buy a home, and you did not pay cash for it. Say, you went for bank financing, and you have a mortgage. Suppose you have a $200,000 home and put up 20% down payment, that’s $40,000 cash.

An appreciation of 5% annually, a $200k home will increse in value by $10,000 in the first year. So that translates to an earning of $10,000 for an investment of $40,000, or an annual return on investment of 25%.

While you’re making property taxes and mortage payments, these are most likely tax deductible. Essentially, the government is subsidizing some part of your home purchase.

With these in mind, buying a home–or other real estate property for that matter–is not a bad idea after all!