This is a point I am trying to stress. It will play itself out in the near future. There is a price level here where everyone is attracted. The same variables that drew people to buy here still exist. I don't want to get into that today. I want to cover the ability to purchase property and have it produce a yield better than a CD or money market. I believe the rate of return matched with tremendous appreciation potential make 2008 a great time to buy.
Naples has quite a few condo conversion communities. These were once owned by a company that leased them out. In the years when the market soared the owners sold them off (or converted them) as individual condominiums. They were heavily bought up by investors. As things tumbled the investors chose to stop paying their mortgage. This caused a snowball effect directly leading to the problem we have now...the unusual amount of bank owned properties. These are the most aggressive of sellers.
Here is an example. This home sold for $220,000 3 years ago, June 2005. It is now listed at $101,000.
Property Details - Click Here
This is not a bad area. In fact, I live about 2 miles away.
Okay, let's do some math.
A condo like this rents for about $850/mo. Let's say you purchase this for $90,000 cash. I want to calculate what yield the rental income will produce against the $90,000 I laid out. I need to subtract the additional expenses.
Taxes - ~$150/mo. This amount should come down when the county accounts for a lower assessment.
HOA Fees - $263/mo.
So, you are left with $437/mo or $5244/year. 5244/90000= .058 or a 5.8% yield for your $90,000 investment. Combine that with tax deductions and potential for appreciation! How does this measure up against your expectations for the DOW this year?
There is also a way to use your IRA money to purchase the property. To find out how to do this read the article I have attached. I can put you in touch with an attorney to handle this matter.
