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Old 01-12-2008, 10:25 PM   #53
Mike Oxlong
Got Oliver Klozoff
 
Join Date: Feb 2003
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Quote:
Originally Posted by MacDougalbry View Post
Not to nitpick, but the 40% return you cite is created by the use of leverage, not by the underlying investment itself. You could buy bonds or other securities using leverage and achieve the same result. Also, leverage works in both directions, i.e. a 4% price decline turns into a 40% loss.
Totally agree. That is my exact argument. Real Estate allows you to use leverage.

That is the advantage of it. You are using the banks money.

As I have said numerous times. There will be peaks and valleys but historically Real Estate always goes up. It is a good LONG term investment.

How can you use leverage to buy bonds or other securites? (Serious question. I have never heard of a bank loaning you $90,000 to buy $100,000 worth of stocks or bonds)
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