Is a house really a good investment? Illustrate the rate of return. |
Many people feel there house is a good investment and a good place to park their money. Let us plug in your numbers and look at how your house is holding up as an investment. Perhaps you do have a great deal of growth in your house but you may be forced to sell it to gain access the the money. The point here is that if your house value does NOT keep pace with the interest return you could receive from your other investment opportunities then prepaying your mortgage may not be prudent. On this screen we are assuming that you paid cash for your house the day you bought it - which may not be the case. We can also subtract the real-estate commissions and closing costs from the amount you could sell your house for to get an even truer picture of its current return potential. What are you thinking as you view the results? Is your house a good place to park your money? |
This screen calculates the return on investment of a house using the following simplifying assumptions: 1.We assume the house was paid for with cash. That is, there is no leverage due to a mortgage. 2.We assume the capital improvements occur at the time of purchase. The result is achieved using a time value of money calculation and solving for Rate. PV: Original Purchase Price + Improvement and Expenses FV: Current Market Value Period: Years owned. |