Thursday, March 6, 2008

100 % ROI VS. 10% ROI

One of the first lessons that I learned from a very smart and successful entrepreneur that I know , Adiel Gorel, was that Real Estate beats the stock market 10 times out of 10. Even in a down market right now, real estate is still the best long term investment. The stock market has historically performed at about a 12-14% ROI (return on investment) per year, and real estate from 10-12%. The fact is that the Stock Market is dollar for dollar, meaning you invest $10,000 and get 10% ROI, then you walk with $11,000 excluding taxes. In real estate, the best kept secret is the financing; you can invest $10,000 and get a loan for the other $90,000 on a 30 year mortgage! This means that if you home goes up by $10,000 , you actually have a home now worth $110,000 , and you made $10,000 on your $10,000 investment! Please read this sentence again if it was not clear. In you were starting a business today, you may be able to get a loan for 5 years, or maybe even 10 years, but if you asked for the loan to be repayed over 30 years, they would laugh in your face. This is the power of real estate , in that over 30 years, with inflation alone, you will make money even if the market went down. What does this mean? It means that if you pay $1,000 per month for your mortgage, you will still be paying $1,000 per month 30 years from now! If you rented a home for $1,000 today, do you think that same home will rent out for $1,000, 30 years from now? Hmmmm. Something to think about....
Real estate is what helped me get started and made me the most money to date. ( more to come on the details)

For more on Adiel, go see .

1 comment:

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