Looking at the tiny, non-existent interest rate on my savings account this morning inspired this blog. Interest rates these days at the banks pay basically nothing. Looking at CapitalOne.com this morning interest rates on $10,000 or more was a measly 0.65%! And a 5-year CD only returns 1.75%. That’s crazy! Your money, sitting in a bank, makes you nothing. Now you could take a chance and invest that money into the stock market, but these days, who knows if you’ll see any of it.
I’m always on the prowl for a good real estate investment. Growing up in a family of investors, it’s ingrained in me. So consider this scenario:
You could buy a $250,000 condo along the Orange Line.
If you paid cash:
Taxes: ~$2,500 (~$210/mo)
Monthly Condo Fee: $225
Annual Insurance: $220 (or $20/mo)
Your Total Monthly Cost: $455
Potential Monthly Rent: $1,600
Monthly Income: $1,145
Potential Monthly Interest on $250,000 in a Bank: $250
If you were to take out a loan to buy this condo, interest rates are around 4% these days. So with a 25% downpayment, and a loan amount around $900/mo, you’d still be making more each month than you would with that 25% sitting in the bank.
p.s. I’m not a CPA, so I can’t give you tax advice, but also consider the deductions you’d get from this investment property!
If you have some cash that you’re thinking of investing, why not consider real estate? Let me know how I can help!