"...$1.4 million; it’s a good time to sell, considering he bought the place for $627,000 in 2002."
Wow! Sounds huge right? Well, 12 years to double? That means it's a ~6% yearly increase. That's LOWER than medial bills, college education, & almost exactly what you'd get from any stock index (S&P 500) for that time period.
You need to calculate the return based on the equity invested. Assuming they paid 20% down that's $125K. The house appreciated $773K over the initial purchase price. That's a 6x return on equity, not a 2x.
But thanks for the lecture about how other people don't understand inflation / math.
My point was more about how journalists too often spout "PRICES DOUBLED!" to get attention like blood in the water, including here. And, in too many cases, it's over a time period that's 10+ years, so it's not really doubling, but 6%/year.
And, yes, leverage can profit, but it can bite hard too. Plenty of people bought at $500k with $100k down, then saw the value drop to $300k, meaning they lost 200+100 = $300k if they had to sell.
All fun math, with, yes, GROSS simplifications here.
But, more fun math:
Stocks don't have maintenance costs like houses/rental units. The property tax alone per year on a ~$500k place is ~$8k. (You'd need to get $700/month in rent JUST to cover property tax.) (The next buyer, at 1.4M valuation, would need to charge ~$2k/month JUST to cover the prop tax, nothing else!)
Add in ~$2k/year in regular maintenance, + ~$30k of maintenance every ~5-10 years (roofs, flooring, bathroom fixtures, appliances all die someday), and renting not so profitable. Reliable capital appreciation is the bigger, pure profit here.