Savings Accounts vs. Real Estate Investments

real estate investments

Investing in Real Estate is a great opportunity to earn a return on your money of up to 10% annually.  Just think of it this way, why would you have your money tied up in a savings account with a 1% or maybe if you’re lucky a 2% APY when you can invest in an income producing property and earn a higher return?

With today’s interest rates being so low, it’s not uncommon for the monthly rent you collect to not only cover your mortgage payment, but to also give you a little extra change on top.  The extra cash flow (over and above the mortgage payment) affords you the ability to make improvements to the property, which in turn adds to the resale value, or to start saving for your next investment.

Unfortunately, the decline in our economy over the past few years has forced many potential homeowners to put aside their dreams of buying a home, while they focus on other priorities. Whether they are families afraid of taking an unnecessary risk, students who have to worry about their tuition, or recent immigrants who simply don’t have the means to own, one thing remains the same:  they all need housing.  So if they are not in a position to own, then the only option is to rent.  This increased demand for rental housing, caused by the economy, is a direct benefit when it comes to purchasing investment properties as it gives you pricing power.

Yes, many of us believe that saving in a bank account and collecting interest is beneficial to our future, But the key word is FUTURE.  If you don’t invest wisely, someone else will. If you’re ok with a 1% return on your investment and have no aspirations of growing your wealth, then by all means, leave that money in a bank account and let the bank use your money to multiply theirs.

About Alice Ananyan

Alice Ananyan is a Real Estate Agent at JohnHart Real Estate, and one of our valued Transaction Coordinators. As such she is responsible for maintaining relationships with outside agents, coordinating with escrow, and monitoring transactions from beginning to end.