Mutual funds and rental properties are two great ways to make money, but which is more beneficial in the long run? If you are a parent, you have probably already starting stressing over finding the money to send your child to college. In today’s economic climate getting a good job without a college degree is nearly impossible, not to mention how competitive the job market is these days. Now more than ever it is imperative that you start planning now for your kids future. Fortunately, you might be able to find the extra money you might need in someone else’s pocket through rental real estate benefits. Also, if you are looking for a horse property for sale in Colorado, contact Colorado Horse Property today and speak with one of our horse-person realtors.
Mutual Funds
Owning a rental can definitely be more profitable than a mutual fund and here’s how: Consider that you have $25,000 to invest. Putting that money into a mutual fund paying 5% would earn $1,250 in the first year. But see what happens when you invest that same amount into a rental property. The $25,000 as a 20% down payment to purchase a $125,000 rental home appreciating 3% a year would have gone up by $3,750 or three times that of the mutual fund in the first year. The potential is so much bigger when you invest in rentals.
A mutual fund is not as good because its growth depends solely on the money that you invested in the first place, but rental real estate results in a bigger benefit with the control of a 20% down payment; this is where that “someone else’s pocket” money comes into play. Leverage allows the investor to profit not only from the amount of cash invested but from the value of the investment. And leverage is not the only benefit. You may be saving for your children’s higher education or your own retirement. Using single-family homes as investments are the best investment you can make when compared to mutual funds because homeowners have a better understanding than many other investments. If you decide to invest in a rental property, here is a home buyer list of things to keep in mind.
One thought on “Mutual Funds v. Rental Properties”