Return On Cash In

The other day I posted a blog about a CD that one of the local mortgage brokers put in our box at the office. It is by Steve Harney, I listened to it, and was really impressed. He focused on getting the buyers off the fence and into a closing. I mentioned that the market has risen much more than it has fallen if you look at 5 years instead of just the last 18 months.

Another interesting statistic that he quoted was a study that Private Mortgage Insurance (PMI) did on the cash in vs return of cash in. They studied over 5000 loans. The average amount of cash into a purchase of a home was a little less than 20%. In five years the average return of that "investment" or cash in of a down payment was 135%. After 10 years the return on the cash in or investment was 301%. After 15 years that return was a whopping 490%.

He said to focus on what their investment amount rather than the depreciation that we have seen in the past 18 months. Granted his focus on this study was to be used to entice the investor back into the market. I was blown away by these statistics. Who wouldn't want nearly a 500% return on investment after 15 years!

As I mentioned I really liked his approach to try and get those people off the fence and into a house, whether they are investors or whatever. I also loved this thought about Wealthy people: they fall into 3 groups a)they own real estate b) they own real estate that has oil flowing out of it c) they are computer "geeks" that have created software or a company like Google or Microsoft!