Are you having a hard time deciding on what investment to do? Do you have small savings that you wanted to earn more out of it? Read more and find out…
Dolf De Ross posted in his book Real Estate Riches the contrasting points in real estate and stocks .He showed that the property is not just as good as other investments, not just a little better but hundred times better than the other investments. Why?
For example you have a 200 thousand pesos and just for the sake of simplicity let’s ignore the brokers fees and commissions. With your money you exactly can buy 200 thousand pesos worth of stocks (where in you become a part owner of a company through buying some of their share). Though that you can also buy stocks in margin (ei below the required investment but getting the same rate of return but with very limited number of stocks and if the of stocks go down in value, investments houses make a “margin call” that means you need to pay add a portion of the plummeted value. The fact here, is that in stock market you need to pay the entire purchase price in CASH. Thus, nearly to say 200 thousand pesos will buy you exactly 200 thousand pesos worth of stock.
Now here’s the gems in real estate, you can actually buy a 800 thousand worth of property from your 200 thousand pesos by taking out 75% mortgage. Also, You can buy a 1 million pesos worth of properties buy taking out the 80 percent mortgage. Right?
At first we’ll think that buying a million worth of property it’s beyond our financial capacity limits, not in our comfort zone others may say. This maybe because of the interest rates from the bank or don’t have enough cash to pay the full purchase price. But here’s a fact beyond buying a million worth property using your 200 thousand pesos, you would have and ASSET worth of a million that would generate a RENTAL income for you and let that income work in paying mortgage at the bank or pag ibig. Right?—so thus you’re creating more of your wealth from your 200 thousand.
Now going back to the with stocks, you basically have to invest the entire purchase price (ei 200 thousand pesos for 200 thousand worth of stocks) but when you buy a property you generally let financing institutions help you that offers to lend you money to a secure investment -real estate, you can actually have more or less a million worth of ASSET from your 200 thousand pesos. Moreover, you are getting a very low risk investment. To simply see the table below:
Now let’s see who are the richest in our country today.Isnt it the real estate owners and developers?
Henry Sy for example from a shoe retailer have moved on to Real Estate. He bought strategically located real properties specially thickly populated build a shopping center: earn rent from tenants and earn profits SM products
The Ayala and Zobel, the Consunji well known names in the field of real estate. I am sure they have not bought all their real estate properties in cash they’ve also used financial instutions.The lesson is clear invest in a secure investment-real estate. Use financial institutions to leverage in real estate. Convert your property to generate income. Isnt it there’s gem in real estate investment?
Ponder on this…and let me know your thoughts about it…
(Toast Master Project Speech #9)
