However, most homeowners will never see the 20-30% return you’re talking about. Historically, RE increases at the rate of inflation, including increases in square footage or better construction for the typical house.
Not true. You are thinking that I am trying to get 20% or 30% because of appreciation. That is not what real estate investors do. It is very possible to get a return of 20% or 30%. In my projections and calculations, I use only a 4% appreciation rate, which is about inflation. I do not use funny numbers like 10% appreciation. Still, you have to choose the properties that can give you this kind of return, and SFRs/condos are not going to do it for you.
Here is the calculation:
Return on real estate = (cash flow + appreciation + depreciation tax decrease)/downpayment
In my calculations, I strictly avoid using appreciation rates of more than 4%.
As for real estate investing being only for professionals, that is not entirely false, but it is not brain surgery either. All it takes is being able to educate yourself, being patient, and diligent. But yes it is basically a second job. My advice is don’t do the day to day management yourself, just hire property managers.
