Incentives
Why Golden Eagle Offers More Value
Golden Eagle’s HOA dues are only $65 per month and are scheduled to reduce to $40 per month. By comparison, many other gated subdivisions charge significantly higher monthly dues and probably additional Mello-Ross property taxes. In comparison the HOA dues in Spanos Park in a gated complex with smaller lots are currently $450 per month. The $410 extra HOA payment is equivalent to a payment on a $140,000 loan. In other words my lots effectively cost $140,000 less then my competition that have high HOA dues. I also do not have Mello-Roos taxes.. This is explained more fully below.
To put this into perspective:
Every additional $200 per month in non-tax deductible HOA dues or Mello Roos taxes is equivalent to the monthly payment on about a $70,000 mortgage 15 year mortgage but this is for as long as you own your property. Furthermore, poorly managed HOA dues can increase yearly by over 5% per year. That means buying in Golden Eagle is effectively like getting your lot for $140,000 less than in comparable communities with $400 higher monthly dues.
Tax Advantages
Mortgage interest is tax-deductible.
Points paid at closing may also be deductible.
For buyers in a combined federal and state tax bracket of 40%, the effective after-tax mortgage interest rates drop substantially:
30-year loan at 6.5% → 3.9% net
15-year loan at 5.7% → 3.42% net
Example: At 3.42%, the after tax deduction interest only payment on $70,000 is just $199.50 per month.
Buying Power vs. Renting
Let’s compare a $1,000,000 home purchase:
With 20% down, the mortgage is $800,000.
After tax deductions, the effective monthly interest portion is:
About $2,600/month (30-year loan at 6.5%)
About $2,280/month (15-year loan at 5.7%)
Ask yourself: what can you rent for $2,280 to $2600/month that guarantees your rent will not increase, and that stops completely after 15 years?
Building Wealth Like a Retirement Account
On your first payment of a 15-year loan, a large portion of $2,821 is applied directly to principal.
Each month, the amount going toward principal increases. This is similar to automatically funding a retirement account.
Unlike rent, these payments build long-term equity.
Real Estate as a Safer, Enjoyable Investment
Renting a $400,000 home typically costs over $2,000/month, while renting an $850,000+ home in a gated community can exceed $6,000/month.
With today’s relatively low interest rates, owning upscale real estate is not only financially smart, it’s also safer than volatile stock market investments that can be influenced by hedge funds.
The inflation in a home’s value more than offsets other cost of home ownership such as insurance and property taxes.
And unlike stocks, your investment provides immediate lifestyle enjoyment.
Final Thought
Have your CPA confirm the numbers, but in my 50+ years of experience, investing in upper-end real estate, while also living in and enjoying it, has been the single best financial decision I’ve made. Golden Eagle offers an opportunity to do the same.