There's a better place to put your money to maximize returns
, a self-made millionaire who retired at 37, says buying a home 11 years earlier was"probably the worst financial decision" he ever made. It took Reining three years to save up a $40,000 down payment to buy a $200,000 house near Madison, Wisconsin.
."That's called the opportunity cost — when you choose to use your money one way, rather than another."in a post for Business Insider"Okay, so from 1890 to 2012 the inflation-adjusted return on a house was 0.17%. That means if you bought a house for $5,000 in 1890 it'd be worth $6,150 in 2012. And over the same time period the inflation-adjusted return of the stock market was 6.27%. That means if you invested the $5,000 you'd have $8 million.
That said, some of the most successful investors have portfolios which include real estate — but there's an important distinction. Buying a home as a rental property gives you, the investor,For instance, say you purchase a duplex with a $1,500 mortgage. If you have two renters who you charge $1,250 each, that's a total of $2,500 in rental income a month. That gives you a monthly excess of $1,000 to cover insurance, taxes, and maintenance costs, and pocket what's left over.
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