Real Estate Investment Return

Returns on Real Estate Investments

What does real estate investment pay? Well, obviously the three types of home investing or real estate investing have different pay structures, and even within them, how much you invest will always dictate how much you can make. Renting a single room townhouse and renting a 1,000 unit condominium complex are obviously going to have different costs and levels of upkeep associated with them. Therefore, real estate investment return on each real estate investment is different.

In general though, all things being equal, Real Estate Investing averages around a 20% return per unit, period. That's right. Buy a house cheap, fix it up nominally, and you can make 20% profit selling it after all is said and done. Buy a condo complex, charge a nominally high rate and fill 90% of the units, and after paying all the bills, you can make on average 20% annually. Equally, Invest into a limited partnership, and if the group fulfills its' responsibilities well, you stand to make 20% on your real estate investment as well.

Sure, with all averages that number rises and falls per unit, over time, and with luck. But I'd have to say, as far as real estate investments go, it's pretty steady, and even fairly common to see someone make that percentage investing in Real Estate investment.

The really cool part? It's much steadier than the stock market. With stocks, you have no control over how the company performs, so you can only judge their performance and invest accordingly. But with Real Estate investing, especially the first two types, you have hands on control over many aspects. More importantly, the real estate investment 's growth is based on a national inflation rate, generally adding 3% per year to the value of the property, regardless of all other factors. Unless the nation's population starts to die off, growth will obviously continue.

The trade-off? Well, I've seen plenty of stock portfolios that averaged over 120% annually, which is something I don't think I will ever see in Real Estate investment return. That kind of real estate investment return has happened before, but mainly only in commercial real estate, and then they are extremely few and far between. Also, while there are some tax write-offs in Real Estate investing, there is no alternative to the Tax deferred or tax free funds that the government offers with stock and bond funds.

Perhaps I'm getting ahead of myself. There are many reasons for and against all types of real estate investment. Let's try it this way, how about a nice list of the Pros and Cons for each?