Why Real Estate Is a Superior Investment:
- Real Estate vs. Other Investments
Purchasing a home isn’t like buying a car; it’s an investment. Real estate historically outperforms a 401(k), stock market returns, or interest earned from a savings account. - Steady Growth and Equity Building
Unlike other investments, real estate grows steadily. Monthly mortgage payments effectively deposit money into your “real estate investment account.” The more payments allocated toward the principal, the more equity you build. Additionally, older loans (4-5 years) often have higher principal payments, accelerating equity growth. - Tax-Free Gains
Real estate offers unique tax advantages. Up to $500,000 in capital gains on a primary residence is tax-free. No other investment vehicle, such as a 401(k) or IRA, provides this benefit. - Comparative Costs of Waiting
With today’s rising interest rates, a new loan will have a monthly payment roughly $2,000 higher compared to an older loan on a $50,000 down payment with a 6.5% rate. Plus, initial principal payments on new loans are significantly lower (current principal payment is $988). Look at the amount of interest payment vs principal in my screenshot below.
- Tangible Value
Think of a home purchase as transferring money into an investment account that you live in. Unlike stocks, which can become worthless, a home retains inherent value—you can live in it or rent it out.
Real Estate: The Long-Term Advantage
- Proven Appreciation
Homes double in price approximately every 12-14 years. If your clients are looking for strong returns, real estate is one of the best options. Even real estate investment trusts (REITs) perform well over time. - Stability
Real estate is a safer investment than stocks, with far less volatility and greater long-term reliability. - Rental Potential
If your client wanted to purchase a rental property, interest rates would be 1%-2% higher (7.5%-8%), and a down payment would be required. Even then, rental properties remain a worthwhile investment due to their cash flow potential. - Net Positive Cash Flow
Renting out a property could generate thousands in monthly net income, offering consistent returns without requiring asset liquidation.
Personal Experience: Lessons Learned
From one of my clients personal experience he can attest to the value of real estate as an investment. Early in life, he neglected traditional retirement accounts like a 401(k) or IRA. Instead of getting a rental investment with downpayment requirements ( a higher interest rate and bigger downpayment), he purchased a home and kept the other home he purchased in 1999 for $150,000 (4 bedrooms, 2.5 baths, 2,200 sq. ft.) as a rental. For the last 12 years, renters have covered the mortgage. The property, now worth about $540,000, will be fully paid off in a year he told me.
Instead of selling it for a half-million-dollar windfall and pay taxes, he’ll continue renting it out and use the income to accelerate the payoff of his current home. In 10 years, he will own two homes outright, the value then would be $1.5–$2 million combined, providing significant financial security. This strategy allowed him to recover from his youthful financial missteps.
In the investment world, this approach is considered highly conservative. A more aggressive strategy would involve leveraging the equity to acquire additional properties, maximizing returns through portfolio growth. However, this approach aligns with his personal goals and preferences—everyone’s financial needs and desires are different, and it’s important to choose a strategy that works best for your individual circumstances.
The Worst-Case Scenario
Even in the “worst-case” scenario, purchasing a home means:
- Lower monthly payments compared to future rates.
- Faster equity growth through higher principal payments.
- Tax-exempt gains when selling.
Carlos Cardo Associate Broker
It’s hard to beat real estate as an investment—where even the least favorable outcome can still result in significant financial growth.
Carlos Cardo is a highly skilled and dedicated Realtor with an unwavering passion for the real estate industry. With extensive knowledge of the Virginia housing market, Carlos has earned a reputation as a trusted and reliable professional in the field. He currently serves as a Realtor at RE/MAX ULTRA, one of the leading real estate agencies in Virginia. Carlos brings a wealth of experience to his role, having worked in the real estate industry for about two decades. His expertise encompasses a wide range of real estate transactions, including residential properties, investment properties and property management. Carlos understands the unique needs and goals of each client, and he goes above and beyond to provide personalized service and guidance throughout the buying or selling process.
With a strong commitment to customer satisfaction, Carlos strives to exceed his clients’ expectations by delivering exceptional results. He believes in building long-lasting relationships based on trust, integrity, and open communication. Carlos takes the time to listen to his clients’ needs, carefully guiding them through every step of the real estate journey and ensuring they make informed decisions. As a REALTOR at RE/MAX ULTRA, Carlos has access to an extensive network of resources and cutting-edge marketing tools, enabling him to showcase his clients’ properties effectively and attract a wide range of potential buyers. He stays up to date with the latest market trends and utilizes his negotiation skills to secure the best possible outcomes for his clients.
Beyond his professional accomplishments, Carlos is known for his friendly and approachable demeanor. He genuinely cares about his clients’ well-being and works tirelessly to help them achieve their real estate goals. Carlos believes that everyone deserves to find their dream home or make successful real estate investments, and he is committed to making those aspirations a reality.
If you are looking to buy or sell a property in Virginia, Carlos Cardo is the REALTOR you can trust. Contact him today to experience his exceptional service, unwavering dedication, and expertise in the Virginia real estate market.
Both Education and Experience are an important part of being a REALTOR. Carlos Cardo has earned the following designations:
ABR- Accredited Buyer’s Representative
CNHS – Certified New Home Specialist
CRS – Certified Residential Specialist
CSP – Certified New Homes Sales Professional
GRI – Graduate REALTOR® Institute
MRP – Military Relocation Professional
RCC – Residential Construction Certified
SFR – Short Sale & Foreclosure Resource
CDPE – Certified Distressed Property Expert
These designations are valuable and has helped him provide the best service possible to his clients, family and friends. Over the past 20 years he has helped hundreds in buying, selling and investing. In doing so Carlos Cardo has achieved the following recognition:
Circle of Excellence – Hampton Roads REALTORS ASSOCIATION Award
Circle of Excellence Longevity Award – Hampton Roads REALTORS ASSOCIATION Award
RE/MAX 100% Club Award
RE/MAX Hall of Fame Award
Carlos Cardo’s mission is not to simply smile, it is to ask questions and provide both analysis and advice when buying, selling or investing in real estate. Lastly, he must be professional, courteous, keep all matters confidential and support even after the sale.
He often tells people, “Our first few conversations is not a commitment; rather it is to answer your questions, to see what your needs, desires and concerns are. After that we can decide to cross that real estate bridge together with a mutual respect and an understanding that as my client I work for you!”
