People dream about being rich all the time. There are a few ways to do that. You can inherit wealth from your family (like the Walton’s or the Hilton’s), you can build a successful business that brings you wealth through ownership (such as Bill Gates or Steve Jobs) or through investing (Warren Buffet or Donald Trump).
Then there is real estate. I believe that this is the best vehicle for the average person. When you want to build a nest egg that can be worth millions of dollars you can use this as the vehicle. Here are a few reasons why:
1) Appreciation – Contrary to what has happened in our economy these last years appreciation is still one of the top reasons to own real estate. Property has a habit of increasing in value over time and you can see your investment go up in price.
2) Tax Advantages – You can use investments to lower your tax liability and create write offs for yourself. You can increase your income simply but deducting allowable rent expenses.
3) Rental Income – I like this benefit of owning property. Each month you can receive income from your investment properties that help to improve your cash flow. You can get to a point where you can live off of your rents. Some landlords do and kiss their jobs goodbye.
4) Multiple uses of equity – When you own property you can use the equity to purchase other properties or to make purchases on things you want. I remember going to buy my dream car and having the gentleman look at my income and the car I wanted. Based on my job at that moment I could not afford the car with my current payments. But when I told the salesman I also owned property and got rental income each month I walked out with my car.
5) Leverage – As you look to expand your real estate portfolio you can use one building to purchase another. I was buying a six unit building and was short on cash. I spoke with a lender and they ultimately used that equity to close on the building I wanted. Real Estate is one of the vehicles to use leverage on because people are not expected to pay cash for a property.
6) Profits from fix and flip – You can buy, fix and flip homes. If you are profitable and can save a portion of your profits, you may end up rich.
Go for it. RE Investing is a great life.