Accumulating wealth can feel like an impossible task, with the pressures of daily life and an uncertain economy.
But in a practical sense, when you break it down, there’s no real secret to wealth accumulation: earn more, spend less, and invest wisely.
While “earning more” and “spending less” are straightforward enough, learning where to invest can be more difficult. But don’t worry, there’s a simple and straightforward answer to that part of the equation too – real estate.
Why Real Estate is a Smart Way To Build Wealth
Real estate is a solid investment with a track record of helping savvy investors build wealth. Here’s why.
First, investing in real estate enables you to leverage existing assets to purchase additional real estate investments. For example, if you own $100,000 in real estate, you could leverage your investment to purchase investment property worth a million dollars with 10:1 leverage. So for this reason, leverage is thought to be the most significant benefit of real estate investing.
Secondly, real estate investments are physical, tangible assets that typically appreciate and generate income. In contrast to financial assets like stocks and bonds that are traded on exchanges, real estate is often a more stable investment.
Because of the benefits of real estate investing in today’s economy, many people in the U.S. have come to believe that real estate is the best long-term investment.
Building Wealth with Real Estate
Countless investors have built their wealth with real estate. But how can you realistically use real estate to create wealth? Here are some tips.
#1 Invest in Property that will Generate Income Now
If you are an experienced investor with capital to invest, commercial real estate can be a great investment that yields high returns. But for most investors, residential investment properties are a better investment, especially rentals that generate income in the short and long terms.
Big commercial projects take deep pockets and a great deal of time to begin producing income, but residential rental properties start producing income as soon as they are rehabbed and occupied by a tenant.
#2 Pay Attention to Local Markets
Investing in real estate is all about putting your money in the right places at the right time. Researching local real estate markets, and choosing to invest in places where there’s a long-term outlook for profitable real estate investments is critical.
For this reason, investors often rely on local real estate experts to help them locate, buy, rehab, and manage their real estate investments.
#3 Keep Re-Investing
Wealth is built over time by re-investing a great deal of the profits from your real estate portfolio. Therefore, your real estate holdings will grow over time. And if you are investing in rental properties, the cash flow and passive monthly income will continue to increase.