I had a friend ask me the other day, "If you had a pile of money to invest and you weren’t going to invest into real estate, what would you invest in?"
I pondered ever so briefly then with a little research replied, "Let’s see, in 1973 the Dow Jones Industrial Average climbed to a high of 1051.7, the value of gold was $112.50 per ounce and the average home in Pierce County sold for $24,788. Today the Dow is at 8073.82 (668% change), Gold is over $900 per ounce (700% change) and the average price of a home in Pierce County is $258,775 (944% change)… And you don’t want to consider Real Estate? Clearly during this time period real estate has been the hands down winner; and real estate certainly has not been as volatile as the Dow Jones, which has lost over 25% of its value 6 times in this time period! Additionally, these numbers don’t account for the fact that you can live in "it", rent "it", and mortgage "it"! The next time you buy a stock or gold, try living in "it"; or, ask someone to rent "it" to help you pay for "it"; or, try getting a mortgage for the gold you buy… I don’t think so!
This mortgaging of real estate which we all take for granted is actually an investment strategy called leveraging, which is available to homeowners and investors alike. Over time, leveraging will typically enhance your return by 5, 6 even 10 times over a typical cash purchase as shown above. And that doesn’t even include the benefits of living in your investment, renting it, or best of all, having Uncle Sam help you pay for it with tax write-offs and incentives. The returns available to the average citizen clearly demonstrate: real estate is your best investment!
Indeed, I think it is easy to show that over time, real estate has added more personal wealth to more individuals than has any other commodity.
Tags: Real Estate