Buying in Brooklyn

Why Buy: Leverage

Over the years I’ve come to learn that there are a myriad of reasons to buy/invest in real estate.

The most important thing to understand about the economics of buying, is the effect of leverage. There is no other investment out there that will allow you to control an asset, and all the benefits of it’s growth and income, with as little as 3.5% of the total price invested.

Example-

Purchase a $500,000 property with 5% down payment, $25,000 invested.

Over a 5 year period of time, the investment breaks even, and the market goes up an average of 5% per year. At the end of year 5, the property would be worth $638,000, a 138,000 profit on a $25,000 investment.

At todays interest rates, you would be lucky if your money in the bank would be $26,000 after 5 years.

What would you rather do with your dollars?

I confidently followed this rule over the past 30 years with spectacular results. I encourage you to do the same.

 

 

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One comment

  1. Just liked this post on FB. Thanks for the fantastic read.

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