Did you know that in a recent survey seventy percent f Americans view home ownership as the smartest and safest investment you could make? Yet only ten percent felt that way about the stock market.
More and more investors are leaving the stock market and going in to the investment property market. Why is this? One reason is that over the past 5 years stocks have risen in value at about a three percent increase per year. Compare that to the 14%-20% increase in the housing market. Now combine that with people buying that investment property and renting it out, and you have a huge profit machine.
For example: Let us say you bought a $200,000 investment property and it was earning a modest 10% per year. Then, you were able to rent that property for $800 a month for that same year. After one year you would have a capital gain on the property of $20,000 + $9600 in rental income for a total of $29,600. Not many people would complain if their 401K was doing that well.
Time is on your side! Most would be investors major concern is what if the housing bubble bursts? True, this can happen, but look at th1 1980 bubble burst with interest rates nearing 25% on a home loan. The people that held on to their properties that they bought in 1977 for $60,000 were able to make huge profits in the mid to late 80’s when the market recovered. In some cases, they sold the home that dropped in value in 1980 to only $45,000 for $150,000 in 1988 just because they didn’t panic and sell. Time is always on your side in real estate.
For more information on investing in real estate please feel free to call or e-mail me anytime.
Todd Clark – broker
Kastings & Associates