How Owning Real Estate Makes You Wealthy
Did you know that 90% of millionaires became so through owning real estate?
Let’s talk about the benefits of purchasing and owning real estate.
- Owning real estate will make you wealthy.
- Over the course of history, the value of Real Estate has steadily risen. Home prices rise year over year all while you are also making payments to pay down your mortgage, so as your property gains value (also known as equity), your net worth increases. In a few years, you have equity in your home which allows you freedom to start a business, purchase rental properties, send your kids to college, or pay off other debt by leveraging that equity through lines of credit or refinancing. With each payment you pay back some principle and you become closer to owning the property free and clear.
- Rental properties generate passive income year-round.
- Tenants pay rent. After expenses, you have monthly, recurring mostly positive cash flow. Let me give an example of a rental property that I purchased in 2020. The property was purchased for $97,000. Including taxes and insurance, the monthly mortgage payment was $510 and it rented for $800/month. In 2023, This two bedroom home currently rents for $1,100 a month. So, this property generates $590/month with a yearly cash flow of $7,080 (gross cash flow before repairs, etc.). Plus, I get to depreciate the property which helps me save a few thousand dollars every year in taxes. There is only so much time in the day, so owning rental property is a way to have multiple streams of passive income that isn’t connected to your time. The house is now worth $158,000 and I’ve added over $60,000 to my net worth, while my tenant has paid my expenses for owning the property. The rent I can charge will continue to increase as will the value of the house.
Side note: Here’s something that differentiates real estate from investing in the stock market. Cash flow doesn’t happen for most stockholders. You usually only make money when you sell the stock after the value of the stock has gone up.
- Renting will take your money, buying will make you money.
- Why continue renting for $1500 a month when you can purchase a home for $150,000 with your payment being a little over $1000 a month? Buying a home can be scary, and many first-home buyers have questions surrounding interest rates, down payments etc. That is where qualified lenders and real estate agents come in. With over 30 years of experience, the Carlin Team can help answer those questions and give you recommendations for qualified lenders.
- Real estate doesn’t tie up a lot of cash.
- There are lots of options when it comes to purchasing real estate. If you find a house that needs to be renovated before you can rent it, you can borrow additional mortgage funds, which allows you to update the house and not use additional funds out of your pocket. You can also have the seller of the home pay your closing costs, which can be written into a contract. There are several loan programs that allow you to purchase with a $0 down payment. You could purchase a home with less money than it costs to pay the first month’s rent and deposit.
- Everyone needs a place to live.
- New homes, duplexes, and apartment complexes are being built each year. This is a testament to the growing real estate market. The population continues to increase, which means we need more housing, and the increased demand for rentals will only growth wealth for real estate investors.
Call the Carlin Team today so we help you grow your wealth.