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A Safe Way to Turn $60,000 Into $300,000By
Thursday, November 15, 2012
It's time to do something you've probably never considered...
I have a fantastic opportunity to share with you today. But it comes with a warning...
This investment isn't for everyone. It requires real work. But if you're ready to make it happen, you could earn an extra 7% "dividend" every year. That's a huge return in a near-zero-percent world.
Importantly, this income stream will grow with inflation. Big capital gains are also possible. In 17 years, you could safely increase the value of your investment five-fold.
I'm not talking about buying a stock or a bond. This investment doesn't need a "perfect" environment to do well. In fact, it's up 11% over the past year.
It's time to become a landlord. Let me explain...
In April, I told DailyWealth readers how to get the best deal possible on housing. In short, the most unbelievable deals are in the foreclosure market.
I've witnessed several foreclosures in my area fall 10%-plus in just a few months. One property fell from $223,900 to $199,900 in two months. It finally sold for $196,000.
This illustrates what's going on in the foreclosure market...
Banks are selling properties at any price. Mortgage rates are at record-lows. And rents are earning much higher income for property owners than what money earns in the bank.
You need to consider becoming a landlord today. Here's how lucrative this opportunity can be...
Let's assume you buy a house for an even $200,000. A 20% down payment means you owe $40,000 out of pocket. And because most foreclosures aren't in great shape, we'll assume another $20,000 in "fix-up" costs.
So we put in $60,000. Now let's see what we get out...
Thanks to record-low mortgage rates – currently below 3.5% – our mortgage would cost around $700 a month. After adding in property taxes and insurance, our monthly cost is around $1,050.
In my area – a small beach town less than a mile from the ocean – this home would easily rent for $1,500 a month. That means we'll earn $450 a month, or $5,400 a year. To be safe, we'll also assume 25% of our profits go to repairs, vacancies, and other unknown costs. That brings our annual income to $4,050.
We're earning a 7% annual "dividend" on our original $60,000 investment. That's a huge return in our near-zero-percent world. But it gets better...
By reinvesting these dividends, we can improve our returns. In this case, that simply means paying our profits against our mortgage. Instead of paying the minimum $700 a month, we'll pay $1,038 a month ($700 mortgage plus $338 in monthly profit).
By doing this, we will own this rental property outright in 17 years. Once the mortgage is paid off, our annual income will grow to $12,450 after expenses... a 21% return on our original $60,000 investment.
Importantly, the rent you charge will rise with inflation. In 15 years, you could be charging $2,000 or even $2,500 a month.
The value of your rental property will also increase as the housing market rebounds. Our example property could easily be worth $300,000 in a few years.
When you add it all up, becoming a landlord today could safely increase your investment five-fold over the next 17 years...
Now, as I explained earlier, this opportunity isn't for everyone. It requires real work...
You need to get to know your local foreclosure market. You need to find the right property at the right price (they are everywhere today). And to maximize profits, you need to manage the property yourself.
It's a lot tougher than clicking "buy" on your online brokerage account. But it will be worth the effort. And it's unlikely you'll find a safe way to turn $60,000 into $300,000 in stocks or bonds.
I know you've probably never considered being a landlord. But now is the time.
Get out there and do the work. Find your property and jump on it. A 7% annual "dividend" and a $100,000 capital gain could be waiting.
Good investing,
Brett Eversole
Further Reading:
Learn more ways to generate a huge return on your investment through housing here...
"Add it all up, and it comes to an additional $5,000 to $7,000 extra every year in savings and/or extra income," Mark Ford writes. "And it's all guaranteed and supported by the federal government."
"Add it all up and the conclusion is simple... housing is the ultimate no-brainer investment to make today."
Market NotesANOTHER SIGN THE HOUSING MARKET IS RECOVERING We're getting another bullish signal on the housing market from a select group of stocks... paint companies.
When it comes to the housing market, no one has pounded the table as hard as Steve Sjuggerud has. Over the past two years, Steve has virtually dragged DailyWealth readers to their local real-estate offices. As we mentioned last month, True Wealth readers scored big gains in the iShares Dow Jones U.S. Home Construction Fund (ITB).
The latest confirmation of the current recovery comes from some of the simplest companies in the world – paint companies. These companies are on the front lines when it comes to gauging activity in the housing market. Whether someone is building a new house, moving, or simply renovating his existing home, chances are he'll buy at least a couple gallons of paint.
As you can see in the chart below, "paint stocks" like Sherwin Williams (the black line), Valspar (the green line), and PPG Industries (the blue line) have been on a tear over the past year. Together, these companies sell tens of billions of dollars in paint and coatings for the construction market. And they're all within a few percent of fresh all-time highs. The housing uptrend continues.
– Larsen Kusick
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