Today, I’m going to explain how to become wealthy by investing in real estate. Investing in real estate is one of the most common ways of building wealth. Many people who purchased homes 30-40 years ago, are now sitting on a net worth of $500,000 plus. Recent articles are showing that milennials prefer renting over purchasing their homes.
I’m going to tell you why purchasing your home, and other investment properties will propel your wealth. Even families with an average income can build their net worth to the seven figure range if they practice a little patience.
Why purchasing a home is better than renting
Deciding whether to purchase or to rent can be a tricky decision. You might not want to be tied down with a mortgage, property tax, and a burden of taking care of repairs. Renting seems like a convenient option, but you don’t want to give up money month after to month to someone who won’t let you paint the walls.
While purchasing a home may seem like a more expensive hassle. It’s possibly the best decision you’ll make.
When you invest in real estate, you are most likely going to have to get a mortgage. This may seem like a big commitment, and it is. It is also your key to building wealth. See, as you pay your mortgage you are building equity (the value of the house minus the loan amount).
Paying your mortgage is simply taking money from one pocket and putting it into the other. You will see this money again. Whether you decide to sell your house or refinance, the money isn’t gone. To make matters even better, your house is increasing in value. Purchasing a home is an amazing investment.
Purchasing Investment Properties
Now that you see the benefits of owning the home you live in, we are going to talk about investment properties. This is where true wealth is made. Just like with your own home, you have a mortgage. The difference is that now, someone else is paying your mortgage. Yes. Instead of taking money from one of your pockets and putting it into the other, you are taking money from someone else’s.
Sometimes it’s hard to grasp how people make fortunes in real estate if they aren’t seeing profit each and every month. Even if you spend all of the rent you receive paying the mortgage, you are still profiting. The best part of this is that it’s passive income. Occasional repairs are the only work required once you have a tenant.
Growing your Real Estate Portfolio
You are probably wondering how you can continue to purchase property if all of the rent money is going towards the mortgages. The key here is to constantly reinvest the equity that you’ve already built. To do this, you need to refinance your other properties, and use that money as down payments on new ones.
You want to have other sources of income while you do this. Unless you put down roughly 50% as a down payment, you are probably going to have to subsidize your mortgage, property tax, and other expenses with another source of income.
Invest your money wisely
Picking high quality properties in good areas is important during this process. Location is more important than the actual structure of the property. Try to read economic journals that list the average real estate increase in your city and surrounding areas.
Real estate in California is going to increase in value quicker than real estate in the mid west. Also try to time the market. If it’s been a while since the last recession, usually 7-9 years, then it’s a good idea to wait before purchasing more property.
Thank you for reading my article! If you have any questions, comments, or anything you’d like to add, please comment below or email me at firstname.lastname@example.org!