pass pass, re:"As a CSCO bull, I am discouraged by your remark because if you buy a piece of real estate, say $500k, in California today, it'll probably be at least $1000k in 10 years. Your initial 20% down payment $100k will make you $500k profit tax free."
your monthly payment on the other $400,000 is almost $3,000 per month @8% 30 year rate. that's more than $350,000 after ten years and you have hardly put a dent in paying off the principal. Suppose the RE market crashes again like it did in 1987 and the property does not appreciate at all. That is a pretty big yoke around your neck for 10+ years.
I am also a csco bull but the only way you win with real estate is to pay cash and put that monthly payment in your pocket every month. You also get the satisfaction of having a roof over your head, something we all need.
If you manage to pay off that 30 year mortgage you will have paid $1,050,000 after 30 years, plus your down payment of $100,000 for a total of $1,150,000. If you sell it for $1 million you have only lost $150,000 and you will pay taxes on the sale. not such a hot deal. |
