Yes, buying real estate is a big commitment but many times not buying real estate is a bigger mistake. Let’s compare the costs of renting a property in today’s market versus buying the same property today.
First to establish an example. My figures will work with any example, but let’s use a home that would rent for $2,000 a month or would sell for $400,000 at 3% down.
What would your cost per year be to buy when compared to the $24,000 you would pay in rent?
Let’s use very oversimplified figures:
Interest: 5% on $388,000 = $19,400
Property Taxes = $ 4,000
Insurance = $ 1,000
$24,400
There are other factors to consider. For example, IRS tax relief for the deductible items above. Let’s use a 25% IRS tax rate and an 8% California tax rate. Interest and property tax payments are deductible so 33% of the $23,400 would result in a tax savings of $7,722. That brings the outlay each year to $16,678. That is less than renting.
Yes, there are other variables such as the interest deduction in later years will drop plus property taxes and insurance will increase, but rents will also rise. There will be expenses such as repairs to be paid by the owner but this could be offset by appreciation as real estate markets return to normal.
The major point of this posting is that the tax benefits of ownership are important when budgeting for yearly housing costs, as are future appreciation plus your pride of ownership so consider buying now not later. Any questions? Call your friendly and capable real estate agent at County Properties.
If you would like to get loan information from recommended banks, or get started and view all homes, condos, investment properties, pre-foreclosures, bank owned foreclosures (REO's) or thinking of selling your property, please visit our website at: County Properties San Diego or County Properties Riverside
By the way…if you know of someone who would appreciate the level of service I provide, please call me with their name and business number and I’ll be happy to follow up and take great care of them.