I don’t recall anyone calling long term RE a horrible investment. Most here are against speculative bubble RE investment, and would encourage long term property ownership. Two completely different things.
But to answer your question anyway-
– You would also have to factor in what the renting couple earned on interest on the $80,000 they didn’t spend on a down payment, at whatever rate they can get. Easily mid 5%, higher with more risk. Even at 15% the dollar amount is lower, but…
– The 15% return on the purchase is equity, and only liquid if the house is sold. Selling the house will eat up a lot of that $12,000.
– As it applies to homes in today’s markets, most are depreciating so you lose on your “investment”. 4% may be a historical average, but the bubble saw double digit gains, and I expect the correction to see double digit losses.
That’s what started this bubble: people think of real estate as a short term investment. As a result the market is anything but normal. Assuming 4% is typical over 30 years, you could do better with a money market account.
