Compared with every other investment product out there, real estate has no equal. This point is compounded after considering that interest rates are still hovering at all-time lows, and purchasing real estate allows the investor to use the power of leveraging borrowed funds.
Leveraging is one of the chief advantages to investing in real estate. By obtaining a mortgage to acquire a rental property, an investor has the ability to leverage the borrowed funds to not only generate monthly cash flow but to also realize a gain on the underlying value of the property.
As an example, if an individual who spent $10,000 investing in the stock market achieved a 10 percent return on his investment, he might be excited enough about that $1,000 to tell his friends about it. If the same individual had spent his $10,000 investing in a rental property valued at $200,000, and the property had appreciated by 10 percent, his gain would have been $20,000.
Now that is something to get excited about!
This is not even taking into account the fact that the monthly cash flow generated by a real estate investment is typically much more significant than the cash flow that can be achieved by purchasing stocks, bonds or other types of securities. The monthly cash flow on a single investment property might not be life-changing, but seasoned investors can speak from experience about the positive returns associated with owning multiple properties.
There are a number of additional benefits that can be achieved by purchasing a rental property, such as:
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