#11
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Re: Real Estate Basics
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wouldn't it make sense to buy outright and not pay interest? [/ QUOTE ] No. The simple answer is "leverage". Say you have $100,000 to invest, and pay cash for a $100,000 dollar duplex. Assume that in your first year of ownership, your duplex appreciates 4% in value. Well, congrats, you just made $4000, a 4% ROI (Return on Investment) on your large investment. Not exactly a banner year. Now assume that you split your money into 5 $20,000 down payments, which you use to buy 5 duplexes, which all appreciate 4% during the first year you own them. I'll let you do the math. |
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