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By Tomas Morkenson
A very common question and a very good one too, as the face of
the real estate market has changed dramatically since your
parents first bought their place and quite a bit in the last 5
years even. For a while it was an instant gold mine and if you
weren’t able to buy real estate you were missing out on huge
profits. Housing and land has appreciated in value at
incredible rates which trump even the 10% per year average of
the stock markets. The basic number that sticks in people’s
head is the 7% per year and let me tell you for a while it was
3 to 4 times that!
Thinking has also changed with the changes in laws and this
has
made the payment structure and the leverage that you have in
your house as an asset. It used to be that you had arrived
financially when you had your house and your car paid off and
all of the money that you had been putting into these things
was going instead into your retirement fund. That is no longer
the case. Now it makes more sense to use the tax deductions
that you get when you buy real estate on loan.
You see liquidity of your assets is so much more important in
today’s fast paced and fickle market. You never know when the
current housing bubble is going to pop or slow and when your
job is going to be revoked. You are not smart therefore if you
have $150,000 “invested” or more correctly locked into your
house. What if the house will only sell for $100,000 and you
have a huge health care bill for which you desperately need
every penny that you have saved into the house? Well the sad
fact is that you have lost that money and there is no getting
it back, because you didn’t buy real estate in the right way.
On the other hand pretend that you had mortgaged the house and
refinanced whenever you could as the house appreciated. You
then took the profits from these refinancing ventures and put
it into a fund that could earn more money than you were paying
in interest on the loan. Well you now would have a fund of
liquid cash that you could use for whatever emergency that
came
up and you actually had more than if you would have simply
paid
your house of not even thinking about its’ market value. This
is made very possible by the fact that number one any interest
you pay on a house loan is interest that is tax benefited, and
number two there are funds that you can put this money into
that are liquid, earn a better rate of return, are tax free!
This is the real reason why it is a good idea to buy real
estate.
About The Author: Being a market analyst has put Tomas
Morkenson in a great position to buy real estate as an
investment and he loves to advise people in this area. If you
need advise about real estate investing check out
www.buyrealestatehub.info.
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