Looking for an investment that will turn $10,000 into $80,000 in seven years? Sound too good to be true? What if I told you that you could live in it every day during that seven years? Would that sound even better?
A $300,000 home purchased today on an FHA loan would have a $10,500 down payment. If it appreciated at 2% annually, which is less than the U.S. average, the future value of the home would be $344,606 in seven years. The unpaid balance on the loan would be $256,350 based on normal amortization which would make the equity in the home $88,256.
The annual compound rate of return on the down payment would be 35%. This number sounds so large, that you might start doubting the credibility of this example.
Looking at some…