You pay the million dollars, rent it at $3.5k/mo, get a 3.5% return from rent, and then let the market drive up the value of the place 6-7% a year.
You now have an investment returning a fairly steady ~10% annually, which matches the returns on some pretty bad junk bonds, however on paper your risk is much less. Or you could live in it and just get the 6-7% annual return, with even lower risk.
You now have an investment returning a fairly steady ~10% annually, which matches the returns on some pretty bad junk bonds, however on paper your risk is much less. Or you could live in it and just get the 6-7% annual return, with even lower risk.
That's why the apartment costs $1M.