Derrick Cacioppo: enable's verify out this logically. i'm a development developer. I certainly have a call; i will build a 20-unit place of residing development and hire out the residences, or i will build a 20-unit condo development and sell the condominiums to suckers, who think of that paying for the condos and renting them out is going to show a earnings.
Jestine Osumi: I own and rent condos and there is a profit if you keep them occupied. Part of the profit is in the tax depreciation allowed which will have to be paid when you sell but that could be many years in the future. My rentals are set to produce about a 5% net profit per year on the total dollar investment which is a decent return. Here is the formula for that:Let's say I paid $100,000 for the unit. If I make $5000 a year profit, I have a 5% return on my investment. Right now, it is a little lower. In this recession, I had to drop the rental fee by $50 a month but the units are rented. My fees are h! igh but the property taxes are low so I have a decent gross profit. Out of that comes repairs and fees so it isn't ads high as it looks.However, as time passes, the rentals will rise but my cost remains the $100,000 forever. Once you own it, you own it.The tax depreciation earns me much more than the rental fee. Last year, the depreciation allowance on 3 units saved me well over $20,000 in federal income taxes. That is deferred to the sale of the property which is one reason many people hold on to property or when they exhaust its potential, just abandon it instead of selling.I am also having fun with the project. I am retired and yet can say I'm still earning a living!...Show more
Rosella Figliola: if you do your homework, investing in any RE is a good idea.
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