Happy Thanksgiving! We should all be thankful for the 30 year home loan - the most amazing wealth-building tool ever created. Here's what it does, automatically:

That means, if you buy a $1mil duplex and put 20% down, rent it out and forget about it until your kids are in college…the loan will be paid down to $500K and the market value will be $2mil.

 

Wow. You'll have turned a $200,000 down payment into $1,500,000 in equity, in 20 years. These are all approximate numbers, but that “return on investment," expressed as a percentage, is 10% per year (in addition to the rent you've been collecting over the past two decades, which remember, has gone up each year).

 

Warren Buffett is considered the greatest investor of the century - his lifetime annual return is 9.34%.

 

Congratulations investing superstar. Hint: this works more than once, so try to lather, rinse, repeat.

 

Wait, but what about rates? Newsflash - they don't matter. Whether your rate is 15% or 5%, your loan is still half paid off in 20 years. And the property still appreciates. All that changes is the monthly payment (which is fixed anyway until 2052).

 

You don't need to find the “next big thing”. The 30yr loan is it.

 

My top articles, books, and favorite homes of the week linked below.

 

Until next Friday,