Real estate represents the single best investment for the average person. My father was not a sophisicated investor and put any saving in Canada Savings Bonds. However, he bought a modest home in north Toronto in 1945 for $4000 that has a market value appraisal of $410,000 in 2004. The ROI per year was 8%, much better than CSB returns while being safe and an investment he could enjoy while holding it.
His cottage was built for $1000 in the same timeframe and sold in 2000 for $200,000, representing an ROI of over 10% a year for 55 years.
My best exeriences were homes number two and three. Number two was purchased for $32,000 with a $20,000 mortgage which we sold 2.5 years later for $46,500, and after realtors fees, netted a return of 34% per year.
Home number three was even more dramatic: $67,000 with $40,000 mortgage which appreciated to $140,000 in just 14 months, representing 207% per year.
Finally there was the joint venture of building and selling a MURB in which $125,000 appreciated to $300,000 in just 18 months for an ROI of 79% per year. Of course, real estate is not without risks and market timing means a lot as these examples illustrate. They are an easy and relatively safe form of leveraged investing.
For more on the subject, here are Justin Ford's recommended real-estate books:
(Note: Justin Ford is the editor of Main Street Millionaire)
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