It's common knowledge that many people get wealthy through real estate.

The real question to ask is why?

There is one simple reason.

Let's say that you have $100,000 to invest. You have two choices: invest it in the stock market or put it into a rental property.

Assume 10% annual return in the stock market. That might be generous considering wars, pandemics, inflation reports, etc. that have been dragging the market down but let's be optimistic in this scenario.

After ten years your investment will be worth $259,374.

Now let's consider a rental property. You would put $100,000 down and purchase a property worth $400,000. You do your homework and figure that rent will cover your mortgage payment, property taxes, insurance and other expenses. Assume 7.5% annual appreciation.

After ten years your investment will be worth $824,412! $565,038 more than if you had gone with the stock market!

Why is your net worth so much higher? Because you are gaining the appreciation on $400,000 worth of assets vs $100,000.

I'm still invested in stocks (especially high dividend ETF's) and 5% interest checking accounts because they are much lower maintenance than real estate and I find that they're often more consistent in terms of cash flow; however, if your goal is to increase your net worth, there's really no comparison to real estate.