Why Real Estate ?

If you are a new investor or just starting out, most of our clients want to know why they should invest in real estate and how it will help them accomplish their financial goals. So, we put together a few compelling reasons that will help you understand why over 9.5 million people invest in real estate.

>> Reason #1 - Banks Will Loan You Money to Invest

Investing in real estate doesn’t really require that much money. If you invest in stocks bonds or mutual funds, you have to have a lot of real money. If you invest in real estate, banks will loan you up to 90% of the purchase price of your investment. Think about this for a minute: Will banks loan you money to invest in stocks, bonds, or mutual funds? No. So, which do you think is a better and safer investment?

>> Reason #2 – Leverage Creates Accelerated Returns

Let’s say for a minute that you have $10,000 to invest. Would it be better to invest your $10,000 in the stock market and get a 12% return or invest it in real estate and get 3% appreciation? Let’s take a look.

If you invest the $10,000 in the stock market and receive the average annual return of 12%, you will make $1,200 on your $10,000 investment. Now, if you use that same $10,000 to purchase a $100,000 piece of real estate by making a 10% down payment, and the bank loans you money for the remaining 90%, even if the property appreciates by only 3%, that’s 3% of $100,000 or $3,000 per year. That’s a 30% return – much more than the $1,200 return in the average stock market. Of course, this assumes that your rental income just “breaks even” with your mortgage payment. And just so you know, all the investments recommended by Craig Martin have at least a “break even” cash flow with 10% down, so this example would apply to you.

>> Reason #3 – Inflation Works for You

Envision just for a minute the house in which you grew up.  Think about what your parents paid for their first house.  How much do you think they paid for that house? Now, what do you think that house is worth today? Obviously, if they bought it when you were a child and held on to it since then, it would have been paid off by now.  How many of those investments do you want?

That is the power of putting inflation to work for you.  Here’s a simple fact for you. According to the National Association of Realtors (NAR) website, their research shows that the average home price/value doubles every 10 years.  That means that if you invested in an average $200,000 property, according to the NAR, your investment should be worth $400,000 in the next 10 years.  We at Craig Martin are a little more conservative than that and believe that properties can double every 15 years.