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checkrates.com Mortgages Article, What is My Home Really Worth?

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An old adage about real estate is: Rents don't lie. What it means is rents dictate the value of real estate.

Rents Don't lie. This a timeless old adage of real estate and it always holds true, even today. When I look at the value of my home and what it could rent for, I have to ask if the price it is selling for warrants me selling it.

If I look at Zillow, they value my home at $648,000 and give a me a rent estimate at $3,200 per month.

If someone came along and hypothetically paid cash for my home and then rented it out for $3,200 per month, what would their return be?

$3,200 x 12 is $38,400 per year gross rent

Less $4,000 per year in taxes and insurance and another $2,000 for maintenance and vacancy, there would be a net income of $32,400 and that is exactly a 5% return.

Not a bad investment, especially considering there is a tax benefit for depreciation and a good chance for appreciation.  

 

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