By Bill Lyons | Updated on February 5, 2024
TABLE OF CONTENTS

    Stock Market Example

    • Invest $160,000
    • 10% annual growth
    • $504,287 at end of 12 years
    • $342,974 at the end of 8 years
    • $2,808,354 at end of 30 years

    Griffin Funding offers DSCR (debt service coverage ratio) loans at a ratio as low as .75 to allow you to qualify on the cash flow of the property only, and we even have no-ratio DSCR loans where the DSCR isn’t taken into account for vacant properties that have yet to be rented out. Since the majority of real estate investors typically flip homes quickly or use rental income to repay the mortgages of their investment properties, these loans exclude investors from the rules of repayment that are typically required. 

    No tax returns or your personal income is required. We look at:  Credit score, rental income, appraisal (to ensure you have at least 20% equity), and verification it’s to be used as a rental property and not primary residence.

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    Real Estate Example

    • Invest $160,000 in 2 single-family residences (use rental income to qualify)
    • $400,000 for each SFR
    • 20% down payment of $80,000 on each property
    • 5% estimated annual growth/appreciation (US average 7.72%)
    • $718,343 in estimated value in each at the end of 12 years for a total of $1,436,685
    • $398,343 in estimated equity in each property ($318,343 growth plus $80,000 down pmt) $796,686 in total equity after 12 years.
    • $1,728,777 in estimated value in each at the end of 30 years for a total of $3,457,554
    • Both properties mortgages are paid off and are free and clear.
    • Tax benefits: depreciation and expenses.

    What is a better investment so far? Stock market or real estate?

    Real Estate Example with Leverage

    Do the same as above: Invest $160,000 in 2 single-family residences (use rental income to qualify)

    What if every 4 years you borrow the appreciation and buy more property with a cash-out refinance? By taking the equity in your property and turning it into cash, you can use that money to purchase another property.  You can also accelerate this by using your tax benefits of owning real estate investment property.  

    • 4 years 4 properties
    • 8 years 8 properties
    • 10 years 10 properties
    • 12 years 18 properties
    • Estimated value at the end of 8 years $1,772,405
    • Estimated equity at the end of 8 years $474,077
    • Estimated value at the end of 12 years $7,974,080
    • Estimated equity at the end of 12 years $1,577,395
    • Estimated value at the end of 42 years $31,805,959 (since you refinanced or purchased each property on year 12)
    • Estimated equity at the end of 42 years $31,805,959 (all 18 mortgages are paid off and the houses are free and clear)
    • Tax Benefits: Depreciation and expenses to write off

    What is a better investment? Stocks or Real Estate?

    NO ADVISE
    This content is only for the purpose of providing general information on Debt-Service-Coverage-Ratio mortgages for investment properties and
    other real estate-related subject matter. Griffin Funding is a licensed mortgage company and is not a real estate brokerage/agency, real estate
    investment advisory service, or a real estate investment advisor. We do not tell or suggest to people, what home or asset they should buy or
    sell. Griffin Funding recommends that anyone investing in real estate should do so with caution. While we strive to present accurate and useful
    information, Griffin Funding makes no guarantee of accuracy or completeness. Do not assume that any real estate indicators, insights, charts,
    graphs, data, or information are accurate or will ensure a profitable acquisition or investment. Therefore, you should not rely on Griffin
    Funding, and the information and resources contained in this content as a replacement or substitute for any professional, financial, legal, or other
    advice or counsel including but not limited to a licensed real estate agent/broker, licensed financial advisor/representative, Certified Public
    Accountant/Tax Professional or Attorney/Legal Advisor to determine the suitability of any purchase or investment. Griffin Funding makes no
    representations and warranties, and expressly disclaims any and all liability, concerning actions taken by following the information or using the
    resources offered or provided. In no way will Griffin Funding be responsible for any actions taken or not taken based on the information or
    resources provided, use this information at your own risk. If you have a situation that requires professional advice, you should consult a
    qualified specialist. Do not disregard, avoid or delay obtaining professional advice from a qualified specialist because of information or
    resources that are provided, however, provided. All customers are encouraged to fully investigate and do their own due diligence before
    purchasing any property.

    METHODOLOGY
    Appreciation Rate
    The appreciation rate is the estimated rate at which the property will gain value. However, appreciation is volatile, unpredictable, and not
    guaranteed. Appreciation can vary depending on what area of the country the investment property is located and real estate can lose value.
    The example used in this illustration is set at 5% annually. According to the Federal Housing Finance Agency and Core Logic the Average Cumulative
    Appreciation since 1991 = 231.62% or 7.72% annually.
    Stock Market
    The rate of return used to compare investing in the stock market to investing in real estate was 10% annually over the course of 12 years.
    The average stock market return for the last 30 years is 9.87%.

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    Bill Lyons

    Bill Lyons is the Founder, CEO & President of Griffin Funding. Founded in 2013, Griffin Funding is a national boutique mortgage lender focusing on delivering 5-star service to its clients. Mr. Lyons has 22 years of experience in the mortgage business. Lyons is seen as an industry leader and expert in real estate finance. Lyons has been featured in Forbes, Inc., Wall Street Journal, HousingWire, and more. As a member of the Mortgage Bankers Association, Lyons is able to keep up with important changes in the industry to deliver the most value to Griffin's clients. Under Lyons' leadership, Griffin Funding has made the Inc. 5000 fastest-growing companies list five times in its 10 years in business.