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Reply to "Why do people have investment properties over stocks?"
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[quote=Anonymous][quote=Anonymous][b]First, assuming a 10% SPY return is optimistic. Long run it’s more like 7.5%.[/b] But to answer your question…leverage. You can borrow 80% of the purchase price of a rental property, so your equity return is much higher from rent, plus the increase in purchase price. Sure, you could buy stocks on margin…but that’s a risky thing to do and most won’t do it. Also, RE provides a hedge against stock market volatility. If you owned the SPY in 1999, it went down and didn’t come back to even until 2011. In theory, an investment property would have earned a nice return of er that time period (assuming you didn’t lose it in theory financial crisis).[/quote] This, and even 7.5% is optimistic.[/quote]
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