I’ll try to find it during the week.

Can you point me to it?

Thanks!

However, take any 10, 20, or even 30 year period and compare dollars in to dollars out — while factoring in after tax cash flow.

The S & P has for its first 55 years averaged less than 8.5% annual return.

The volatility is already included in any time period you wish to measure. Dollars in vs dollars out. Pick an historical time period. Stocks lose every time. Regardless of the period, as long as it’s at least a decade or so, volatility doesn’t change the results.

Sometimes RE rules, sometimes it’s stocks. Sometimes their both simultaneously up or down.

Nothing changes over the long haul. RE wins.

Leverage is applied to real estate with almost infinitely more safety and prudence than the stock market. Buying stocks on margin isn’t even in the same galaxy as leverage in real estate.

Game — set — match.

Hate to get too technical, but to get to a true apples to apples analytical tradeoff, it seems like that in addition to considering after tax cash flows with equal leverage(including all transaction costs and the tax benefits of rental property write offs), we need to include something like a Sharpe ratio that accounts for the respective historic volatility differences that are discussed above. This is the only way I can think of to account for different expected volatilities.

Has anyone seen an analysis that takes all of the above into account?

That number was hit by doing exchanges along the way, if memory serves. I didn’t just invest and hold for the entire period. Does that help?

Even if you put 25% down, Allen, look what has to happen with your stock investments just to stay EVEN.

Example: If you RE investment appreciates at 4%/yr that means your stocks must appreicate 16%/yr to remain even. Though that happens sometimes, it’s not likely to maintain that level for a decade. It’s merely the benefits of using leverage. Using leverage in the stock market is orders of magnitude riskier than in real estate.

10% can indeed get you a break-even or cash flow. The problem with that is Murphy. (Hence the Sominex Account) Even if the investor is visited by Uncle Murph, the AFTER TAX cash flow will no doubt be positive. Try that with the stock market. Of course the stock guy will cite dividends as positive before AND after cash flow.

That argument is too weak to spend time addressing. Suffice to say if yer happy with the relatively reduced returns of the stock market, and their embarrassingly low and TAXABLE dividends, go for it.

I prefer prudent leverage backed by solid research, and a generous cash reserve.

So, do you know off-hand the numbers (n,i,pv,etc) that resulted in you ending up with $458,000? Just curious…

Also, if you have to put 25% things do not look that much better for real estate (neglecting the benefits of depreciation).

I was wondering…can 10% get you break-even or better on cash flow?

Thanks again and take care!

On your 12C do the following:

10 n -100,000 PV 0 PMT 599,000 FV Hit i

19.6% is what my 12C comes up with three times running.

I’m just learning to use my hp-12c calculator, so please bear with me if I screw up.

Using 10% down, $100K would buy $1M in real estate.

Future Value in 10 years $1,491,000
Less remaining bal. after 10 yrs $772,000
Gross equity $719,000
Less 8% of future value $119,000
Net Equity $599,000

$100K growing to $599K in 10 years is 18.4%

Take Care!

My job was to manage the money, which came from many individual investors much like yourself. Anyone with a few thousand dollars and an Etrade account can get into these funds. Granted the best funds are reserved for the heavy hitters, which start at $1 million to get in the door. There are still plenty of funds out their, with no load fees that are open to the average investor. Like Jeff, I wont go too far, but I definitely feel like any investor can do as good in the stock market.