How Real Estate Will Make You 100% Return
- April 6, 2020
- Posted by: Jim Pellerin
- Categories: Buy, Rent and Hold, Fix and Flip
I hear people compare real estate and investing with other types of investments like stocks and bonds. And you know, they say, well, I have this investment or I have a stock that made me 10% or 20%.
You know, real estate is crazy. You can make upwards of 100% on your investment. And the way you do that is through the different types of return that you’re going to get on your investment.
Sure. You might think that cash on cash is one of the only returns, which is how you measure stocks and bonds, right? There are some that also provide dividends and some that provide a capital return on investment, meaning you get money back when you sell it through increased value.
But with a real estate investment, the way you get 100% return is through a combination of the three different ways to make money in real estate investing.
Number one, through the appreciation or through the increased value of the property. So if you buy a property, you put 20% down it only has to go up in 20% to get 100% return.
So for example, you buy a property, let’s say it’s worth $100,000, and the value of it increases to $110,000 or $120,000. And if you had put $20,000 down, you just made a 100% return. Now, that doesn’t normally happen in the short term. So that would happen over whatever the appreciation or the average appreciation of properties are in that timeframe.
The other thing that happens during that time is you’re also making a return through the rents. Meaning the amount of money you charge for rent should be greater than the amount of expenses you have. That difference, that gap is the difference, is your profit. That amount of money coming in is also a return on your investment.
Mortgage Pay Down
And the other thing that happens is that you’re paying down your mortgage every month. So you’re paying down the principal. Over time that mortgage is getting paid off.
So the three ways in which you’re contributing to that 100% return in real estate is through appreciation, through a monthly profit, and through your principal paydown.
And that’s how you can make 100% return on your investment. … or more.
If you would like to learn more about real estate investing and how you can scale your business and build a large portfolio fast … then click this link jimpellerin.com/invest