I thought I would share this weeks update from the Mortgage Broker I work with on a regular basis…

“I met with clients this week to discuss with them the benefits of investing in Real Estate. They were specifically looking at an income property…but the same conversation applies to anyone contemplating a real estate purchase.

The first thing I like to do with people who are existing home owners, is determine the rate of return their own home has given them.

In this particular case, my client’s have owned a home for 7 years…they purchased for $291,000….and put 5% down…so their cash investment was $14,550.

That home 7 years later is now worth (according to their Realtor) about $430,000…so they have gained $139,000 in equity in the 7 years.

$139,000 return on $14,550 invested…they have earned $19,857 a year on their investment…or 136%…they have 9.5 times their original investment.

Now imagine if this was a rental property…and someone else was making the mortgage payments…then we would also add on the amount of principle pay down over the 7 years…and the tax deductibility of the interest portion of the mortgage…”

If you have any questions, please feel free to give me a call 905-914-5302.

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