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Reply to "Why are people so obsessed with rental properties yielding positive cash flow?"
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[quote=Anonymous][quote=Anonymous]Is there a firecalc type app that compares the ROI between a RE investment compared to S&P? Assume a 20% down payment and a 1% gross rental return vs. a one-time S&P investment of the same 20%? How would one fare if they did this in 1900 vs 2000 vs 2015, etc. over time? [/quote] Of course real estate would give you more due to leverage on initial investment. Because with stocks you only get income on those 20% that YOU invested. In real estate, you get return on the whole 100% (your down+ remaining 80% financed by the bank). Of course if real estate prices call you are at a loss more than you would be in stocks. But in reality they don’t fall that drastically at lease in urban areas, and when it works well as a rental covering your mortgage and carry costs you can continue holding it . There is no point in selling real estate unless you want to do 1031 exchange or reinvest [/quote]
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