This question of the never ending battle in many peoples minds. Should I pull my money from the stock market and invest in real estate in Colorado Springs or should I sell my Colorado Springs real estate and invest in the stock market?
Let’s say that someone has $50,000 in the stock market and asking this question.
They can leave it in the stock market. If the market continues to grow they can earn 12% on their money per year. If the money grows at 12% every year for the next 6 years, their money will have doubled to $100,000. That is not a bad investment. That is a good scenario within the stock market.
When any stock broker sits down to sign you up for any IRA or Mutual Fund, they will tell you that a 12% return is great.
REAL ESTATE INVESTMENT
They can buy two $80,000 Townhomes in Colorado Springs with $20,000 down on each. The cash flow will be an approximate 17% return. (based on loan $60k, 30 yrs, 4%, HOA dues, property management fees, Taxes and insurance.) If there is economic growth similar to the stock market, you are looking at another 3% inflation per year not on your $20,000 down payment, but on the value of the home. ($80,000). Finally there is debt reduction every time a tenant gives you rent to make a payment. There is approximately another $2,500 in principal reduction each year. When you add everything up it turns out to be $8,308 per year which is a whopping 41.5% return per year. In this case your money doubles in 1 3/4 years.
So, given those very basic scenarios, who wins Round 1? Real Estate or Stocks?
How can anyone really debate it? Round 1 goes to Real Estate, it is absolutely clear.
“Own Real Estate”
View Round 2