Should you buy a boat or invest in a duplex? Here’s how you can do both and still have enough money to finance your lifestyle.
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We all know that the Sun Coast area is a great boating community, but before you go out and buy a boat, I’d like to ask you one question: have you considered investing in a duplex instead?
This may sound like a strange comparison, especially when you see all of the pictures of your friends and family on Facebook showing off their updated boats and boat accessories, but let’s break the cost of a boat down.
Believe it or not, the average cost of a nice boat is probably close to $50,000. If you have $50,000 cash to buy a boat, that’s great! You can slap that $50,000 down and sail away with no payments or taxes, right? Wrong. This is the worst thing you can possibly do in my estimation.
What if you took that same $50,000 and put it toward a $150,000 duplex? There are duplexes in our area available for this exact price. If you were to do this, you would have a $100,000 mortgage. At 4.5% or 5% interest, plus taxes and homeowners insurance, your monthly payment would be about $800 on that duplex.
Why does it make more sense to pay $800 a month for a duplex than it does to buy a boat straight up? Rental rates right now are about $800 to $850 anywhere in town. If you were to rent out both units of that duplex, that property would be bringing in $1,700 every month with only an $800 payment on your end. That’s $900 of income in your pocket each month!
Owning a duplex can net you an extra $900 each month!
Let’s revisit the boat scenario. If, instead of buying the boat in cash, you were to finance the boat at the going interest rate of about 4.5% with a 20-year payment plan, your boat payment would be about $350 per month. If you financed the boat at the same time you rented out the duplex, you could potentially use that extra $900 per month to make your $350 boat payment and still have $550 left over each month. Now you own a boat and a duplex!
Think about other things that your duplex income would allow you to afford: college, a new car, land, or maybe a second home? Which other investments can you think of that would generate you this kind of income while allowing you a tax write-off at the end of the year?
Investment properties can not only pay for your new toys, but will set you up to be in good financial standing in the future.
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