In 2018, Warren Buffet said if you had invested $10K in an index fund in 1942 - it would be worth $51M today which is about a 12% annualized return. I can tell you in San Francisco - had you paid $80K all cash in the late 1940’s on a beautiful view home on one of San Francisco’s best blocks in what has always been our most expensive neighborhood - if you had maintained the home, but not renovated it - it would be worth $12.250M in 2022 - which is about a 7% annualized return over 75 years.
But they also say that real estate is the greatest wealth creator. Which is it? And does renting ever make sense over homebuying? Hint: Leverage is key!
The most important thing to remember is that like baking a cake where you must have the right ingredients and the right measurements, combined properly to get a good cake - here you have to have the right numbers to input, in order to create the scenario properly. Just like with baking ingredients - once you are agile with the process, you can start to play with, add in and subtract variables.
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