Americans are faced with a lot of options when it comes to investing their money. These options include savings accounts, mutual funds, stocks, bonds, precious metals and more. With all these options, a study by BankRate.com shows that real estate outpaces each of these as America’s favorite investment. The survey asked what the best way is to invest money that’s not needed for 10 years. The respondents replied real estate (31%), beating cash investments (19%), the stock market (20%) and gold/other precious metals (11%).
Beyond these numbers, there are two reasons that makes real estate even more attractive than other investments:
- Paying a mortgage means that you can build up equity instead of paying a landlord.
- The real estate you live in provides a home for your family. Certainly, stocks or bonds cannot provide the intrinsic value of a home.
But what if you already own a home and still have money to invest? Is real estate the way to go even if you are not going to live in the home and replace the rent you would have paid? The answer is yes for many Americans. Close to 20% of all home sales in the United States are for the primary purpose of investment. What is the attraction?
– Going back to the landlord analogy, if you own a rental property, now you are on the other side of the equation. You are the landlord and your renter is making your mortgage payment for you. This increases the amount of equity you gain each month as part of that mortgage payment goes to pay down the principal of the loan. If you read the iconic book, Rich Dad, Poor Dad,” by Robert Kiyosaki and Sharon Lechter, as an example, the authors advise you to purchase three $200,000 homes, one of which you would live in. This would be as opposed to one $600,000 home to live in. That way others are paying two-thirds of your mortgage payment.
– You are also leveraging your money…
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