Final answer:
George benefits from holding a mortgage by receiving a stable income stream with property as collateral while building equity and potentially enjoying tax deductions. Real estate investment offers both financial and nonfinancial returns, making it unique compared to other investment types.
Step-by-step explanation:
George, by holding the mortgage on a sold property, benefits in several ways compared to ordinary rental properties. With a mortgage, he's able to receive a consistent stream of income, similar to rental payments, with the added security of the property itself as collateral. This means that if the borrower defaults, George can potentially reclaim the property. The mortgage also potentially provides him with certain tax deductions, such as the ability to deduct mortgage interest. Holding the mortgage may offer George a more stable investment compared to market fluctuations that rental properties can experience. Additionally, it builds equity over time as the borrower makes payments.
The clear advantage of this kind of investment in a house is the dual nature of returns it offers - both financial returns in the form of capital gains and equity building, as well as potential nonfinancial returns if George chooses to live in one of the properties himself.
Mortgages and real estate investments are distinct from other forms of investments like stocks and bonds due to their tangibility, and the range of returns they can provide, making them an important part of a diversified investment portfolio.