Quote:
Originally posted by Alex from Montreal
No it doesn't.
For example, just because you put $40,000 down on a $200,000 house and then resell it a few years later at $280,000, doesn't mean you made a net profit of $80,000 due to leverage.
There's all these "hidden costs" that people never seems to take into consideration comparing real estate with stocks...
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Stocks do 10% per year. This is a very long average. Real Estate does 3% per year. Pretty easy to get 4-1 leverage so that you make 12%. Then if cash flow is positive you add that in too.
Your example above is 200% return in "a few years". Even if costs ate 40k so that you only doubled, it would take a balanced stock portfolio 7.2 years to do that.