Real Estate Investing — Beats Stocks Every Time
By David Whisnant, JD
http://www.4-real-estate-investing.com
I have a friend who is an attorney who recently settled a big case, and he asked me if I had a stock broker that I could recommend. He wanted to park part of his income from that case for long term retirement savings.
I replied that real estate really is a better rate of return, and that I keep almost all of my investment money in real estate for that reason. I like to teach methods to find properties at large discounts and immediately turn them for a cash profit but for those with less time to look for properties who want to outgain the stock market, here is a great way to do it with minimal effort.
When you look for real estate the way that most people do not, you can routinely find deals that will allow you to buy for 65-90% of value. Let’s take the worst case scenario 90% number, which means that you would buy a $100,000 home for $90,000. To acquire this home, let’s assume that you took out a 10% down payment investor loan, with your seller paying closing costs.
That means that you put $10,000 down into the property. If you rent this property out for a couple of years, it should easily be able to be sold for $110,000 net sales price after commissions to you with some fresh paint and cheap landscaping repair. (Note that if you are buying a home this close to retail value, it will be in good enough shape to rent. If extensive repairs are required, you will purchase this real estate for considerably less).
Thus, your initial investment of $10,000 turned into a $20,000 profit in a couple of years. That is a 36% annualized rate of return. This was not a complicated deal, or even a great deal on the buying end, but it still returned a 36% annualized rate of return on your initial investment. This was for a clean property that was purchased close to retail. Plenty of examples of properties are available everywhere like this. Of course, if you buy the way that I teach, and buy at a higher discount than this, you can see what that would do for your rate of return. This is a secure investment that is easily understood, requires some (but minimal effort), and will almost always outgain stocks. This is why that I would urge everyone to have at least some real estate in their investment portfolio.