If you’re thinking of buying a home in Las Vegas — congratulations! You just might make a bundle when the time comes to sell it.
That’s because the average annual internal rate of return for a homeowner in Sin City is 13.29%, according to a recent analysis by Betterment.
The so-called IRR is an investment’s return based on its related cash flows over time. In the context of owning a home, that cash flow includes the cost you pay each year to live there and maintain the dwelling.
In its calculations, Betterment assumed the owner remained in their home for at least nine years.
“Some of the cities with the highest real estate appreciation have the lowest internal rates of return from the homeownership perspective,” said Nick Holeman, a certified financial planner at Betterment.
Charlotte, North Carolina, and Denver round out the top three metro areas with the highest annual internal rate of return, the firm found.
Property appreciation is only one criteria in determining how much you’ll earn on your investment once you sell, Holeman said.
“The biggest factor is how expensive those homes are relative to what you can rent,” he said. “It’s how expensive the home is versus the cost of renting.”
Source: CNBC
