A Case Study
Who watched their net worth erode over the past few years as the economy took a sudden nose dive? Well, that’s most of us. Our retirement savings and financial investments lost between 30 – 40% of their value! Unless of course Madoff was your financial planner, then you got to lose it all!
Some people however did manage to make some money on their investments. I recently sold a two bedroom condo for a client of mine located in West Campus at the University of Texas. The purchase price was $210,000. We purchased this condo just over three years ago for $164,000. After closing costs were paid, my seller cleared approx. $30,000. That is 18.3% more than what was invested. Or approx 6% per year! Not bad during a time when most people’s portfolios lost twice that in a couple of months.
Not only was there a profit of $30,000, my client was able to lease the 2nd bedroom to a friend of his daughter’s at a market rate of $600. Over three years, that’s an additional $21,600! The income produced by the extra bedroom and the appreciation realized over three years was more than enough to cover the cost of the daughter’s education. Nothing like a free ride! There must be something to this college real estate!