Real Estate Ninety percent of all millionaires become so through owning real estate. ~Andrew Carnegie

Real Estate

Original Article Posted On: February 23rd, 2014
Article Last Updated On: May 1st, 2017

The first time I bought a house (as a rental property) I’m pretty sure I went through the five stages of grief.  Its just like buying a stock, but that stock is leveraged 4:1 and you then have to let complete strangers hold that stock for you and you have to hope they don’t decide to burn the stock down.

All that being said a rental property is an excellent way to buy a physical asset which provides you a higher rate of return for increased risk.  If you are looking for a lower risk way to get into the market then I highly recommend you look into REITs.  It’s basically the stock version of real estate without the ownership and the calls in the middle of the night.

You may ask why then I decided to temporarily leave my sanity behind and buy this property?  Rental properties are able to provide you the following:

  • Rents are a different market than stocks. Typically the markets will not fluctuate together (the great recession we’ve been heading through is the rare instance where all three markets were hit).
  • Rental properties allow writeoff’s that become increasingly difficult to obtain the more you earn.
  • Due to the increased risk, there is also a greater chance for increased reward.  It is not unheard of to earn 20-25% ROI for properties (it’s not unheard of to earn much less too).  Due to my age I decided the increased risk (and learning experience) was worth the effort.

Since I think it’s important to mention this I currently have 2 rentals. I am by no means a big fish and I am constantly learning.  That’s not to say I wouldn’t mind some company as I learn through my mistakes (and hopefully prevent you from making some of your own).

 What to know for buying a house

  • Am I ready to purchase a home?