Investing in real estate can often deliver higher rates of return than other traditional investments. For example, let's examine a possible scenario in Denver's University Park neighborhood adjacent to the University of Denver. University students provide a contstant and renewable flow of possible tenants. An investor purchases a typical three to four-bedroom house for $250,000 with a $50,000 equity investment. This would result in an average monthly payment of $1,200 over 30 years assuming a 6% interest rate. After expenses each month, the landlord could expect to recieve roughly $800 per month in net profit. Therefore, the investment would yield a yearly return on investment of 19.2%! Compare this to the 4.5% ROI with U.S. Treasury bonds or battling with the ups and downs of stock markets.
At Madison & Co., we have the knowledge, expertise, and resources to help you get the most out of any investment size. We can help you take advantage of the numerous tax and regulatory laws to reduce costs, risks, and maximize your return. Using the aforementioned example, let's take a look at one of the tax laws that you can take advantage of: the 1031 exchange. After renting your property out for three years, the landlord decides to move into the home and comlete renovations for two years. After these two years, Madison & Co. and our partners can help you "exchange" the property for another real estate purchase. The 1031 exchange drastically reduces the tax liability held upon the investor.
For all of your investment questions and needs, contact our office today!
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