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Build Income

and W ealth with

Residential Proper ties
by
Gary W. Eldred, PhD

ou’ve undoubtedly heard—and may actually believe—the cautionary
Y advice, “The higher the potential rewards, the greater the risks.” Now,
here’s the good news. To achieve their outsized returns, property investors
need not take on outsized risks.
Currently, 30-year U.S. Treasury bonds yield less than 5.0 percent per
year. To the capital markets, U.S. bonds present no risk of default. Now
compare those Treasury bond yields to the yields on bonds backed by
30-year residential mortgages—about 5.75 percent to 6.0 percent. In other
words, the capital markets say that mortgage bonds secured by the houses
owned by you, me, and our neighbors, carry a risk just slightly above that
of the U.S. government.

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