Here’s a fun little comparison of real estate investing versus traditional investing.
Assume you start with a $10,000 investment.
High Yield Bank Savings Account: 1% Annual Return
$10,000 x 1% = $100 return
Certificate of Deposit: 1.25% – 2.25% Annual Return
$10,000 x 1.25% = $125 return
$10,000 x 2.25% = $225 return
Mutual Funds: 7% – 15% Annual Return
$10,000 x 7% = $700 return
$10,000 x 15% = $1,500 return
Real Estate: Unlimited Return
Let’s take a single family home as an example. Multi-family and Commercial properties just up the ante.
Purchase Price: $200,000
$10,000 down payment & $190,000 financed
6% appreciation per year = $12,000 return!
That’s a 120% return per year.
If you could learn to do that, would it be worth an investment in your (and you family’s future)? So, what if you bought 10 homes? Use them as rentals, have tenants pay the mortgage and bills, while you make $120,000 annually in equity on the homes. In addition, you make money monthly on the cash flow from the renters.
Now that is thinking wealthy!