Investing in Duplex and Other Multi-Family Real Estate Beats the Stock Market!

January 1st, 2009 Jacquie Cliff - Real Estate Agent and Loan Officer

For those of you that are still on the fence as to whether real estate is a good investment or not, I have a fantastic article for you written by Scott Snyder, a real estate agent in North Carolina.    Scott sat down and did the math on if he had invested $33,000 in a duplex property 10 years ago, and compared it to if he had invested that same money in the Dow Jones for the same period.  His results were AMAZING!

What I learned was shocking to say the least. To arrive at the value for the duplex investment I made a few VERY conservative assumptions. First, 20% down payment, 7% interest rate, 3% long term appreciation(Raleigh has seen more). Additionally, I assumed only a 3% cash return from the duplex.

The original $33K if placed in the DJIA would be worth $32.9K today, yes, LESS than the original investment. But the same $33K investment in a duplex with the above assumptions would be worth $119.2K+ or $86.3K MORE than the same $33K invested in the stock market. I realize the real estate market in some areas has seen a tremendous drop over the last couple years, so I am not suggesting that the duplex option is like a money market account. However, even in the areas that have experienced a tremendous drop keep in mind that they also saw insane and unsustainable gains that place their average return at well over 3% appreciation.
Read Scott’s Full Article on Comparing Buying a Duplex to the Stock Market

 

What does this teach us about investing for today?  I think the answer is simple:

 Buy and hold Duplex, Triplex and other Multi-Family investment property!

In ten years from now are you going to look back on things and wish you had put money into real estate investments that have positive cash flows, or be looking at your retirement with confidence because you have a portfolio of partially paid off, cash flowing investments that will continue to provide for you for as long as you need them?  The choice is yours!

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