| Real
Estate Investment Trusts (REIT) The BIG news since 2001 is the development of publically-traded REITs. Across the United States and Britain, investors have banded together to develop new student housing complexes for the approximately 50 percent of students that higher education campuses can not provide with on-campus housing. These new complexes tend to offer far greater ammenities than converted single-family houses in student ghettos can offer. They are hugely popular with students, and parents are pleased with the security features and the fact that most of these developments have fire-supressing sprinkler systems (in the United States most student fire-related deaths occur in older off-campus housing).
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PROPERTY DESCRIPTION |
Four bedroom home | Eugene, OR |
|
| Price | $129,900 | ||
| INITIAL INVESTMENT |
Down Payment | $12,990 | |
| Closing Costs | $1,800 | ||
| Prepaid Expense | $927 | ||
| Total | $15,717 | ||
| NET ANNUAL INCOME | |||
| GROSS OPERATING INCOME |
Annual Rent | $15,000 | |
| Vacancy Allowance (10%) | ($1,500) | ||
| Total | $13,500 | ||
| ANNUAL OPERATING EXPENSE |
Loan Payment | $9,930 | |
| Property Taxes | $925 | ||
| Insurance | $200 | ||
| Private Mtg Ins | $912 | ||
| Utilities | $600 | ||
| Maintenance | $500 | ||
| Management | $0 | ||
| Total | $13,067 | ||
| Tax
Savings from Depreciation (35% State & Federal Taxes) |
$1,191 | ||
| NET INCOME AFTER TAXES | $1,624 | ||
| GAIN
ON SALE OF INVESTMENT (7 year holding period) | |||
| INCOME RECEIVED |
Projected
Sale Price (6% annual appreciation) |
$195,322 | |
| Income During Holding Period | $11,367 | ||
| Return of Prepaid Expense | $771 | ||
| Total | $207,460 | ||
| EXPENSES PAID OUT |
Mortgage Balance | $107,556 | |
| Closing Costs | $13,673 | ||
| Capital Gains Tax | $15,486 | ||
| Total | $136,715 | ||
| TOTAL FUTURE WEALTH | $70,745 | AFTER-TAX RATE RATE OF RETURN = 30.1% | |
SiteMeter
