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Billionaire Advice: Real Estate is Best Investment Possible!

John Paulson billionaire offers real estate advice

Image courtesy of the Wall Street Journal

John Paulson is a billionaire hedge fund leader and investment genius, so when he speaks, people listen. He is the president and portfolio manager of the hugely successful Paulson & Co. Paulson, was interviewed at the 2014 Delivering Alpha Conference and had a lot to say about why real estate and owning a home is still the best investment. Delivering Alpha is a who’s who in the investment community that features candid interviews and lectures from some of the top hedge fund and investors in the world.

A Little About John Paulson

Back in 2005 and 2006, Paulson made a lot of money betting that the subprime mortgage disaster would collapse the real state market. He was right. He knows the housing market better than most anyone, knows when to buy and sell and supports the idea of individual homeownership in today’s current real estate market.

Why John Paulson Thinks Homeownership is the Best Investment

During the interview, Paulson stated that he thinks homeownership is a great investment because the financing costs of today are “extraordinarily low”. Mortgage rates for a 30-year loan are currently under four percent, which is historically low. “If you put down, let’s say, 10 percent and the house is up 5 percent, then you would be up 50 percent on your investment,” according to Paulson. Many economic experts agree. After all, who else is seeing a 50% return on a cash investment in today’s current economic market?

Owning Vs. Renting, According to John Paulson

Paulson is a big proponent of the long-term financial benefits of owning a home versus renting one. In his interview, Paulson said, “…today the cost of owning is somewhat less than the cost of renting. And if you rent, the rent goes up every year. But if you buy a 30-year mortgage, the cost is fixed.” Because of this reason, Paulson thinks, “…from an individual perspective, the best deal investment you can make is to buy a primary residence that you’re the owner-occupier of.” We love this bold statement!

Here are some other reasons buying a home is better than renting:

– Across the United States, mortgage interest rates would have to rise to 10.6% for renting to become less expensive than buying a home. Rates have not been that high since 1989!

– Low mortgage rates have kept homeownership from becoming more expensive than renting, despite home prices increasing in many real estate markets over the past year.

– Some housing markets may see renting next year increase as prices continue to go up faster than rents, due to a strengthening economy.

Bottom Line

Whenever a billionaire gives investment advice, people usually clamor to hear it. This billionaire gave simple advice – if you don’t yet live in your own home, go buy one.

Thinking of buying or selling a home in the La Jolla area? As consistent Top Producers in real estate, Linda Daniels and The Daniels Group are your La Jolla housing specialists. Working with The Daniels Group will give you with the advantage of having local experts to ensure that you have a successful real estate transaction. From buying, selling and investing to financing options and more, we have the expertise and resources to help you achieve your goals. Call us today at (858) 361-5561 or email us anytime by clicking here.