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I have a question on the rate of return vs the MARKET value of a rental.
If a paid for rental home (single family) is worth 80K and is rented for 6.5K/year, the rate of return on the EQUITY is about 8%.
I think the equity will return more if invested in stock and or bonds if income is the goal.
The argument comes when we look at what has been invested in the rental (only 25K). This changes the return on INVESTMENT to 26%.
Should we borrow the equity and invest it?
Any input?
H.
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