Why Invest In Real Estate?
The first question is probably “Why do we invest our money at all? Why not hid it under the mattress?” The answer is that we invest in order to have enough money to live on when we are no longer capable of or want to work. These funds must be sufficient to overcome the effects of taxes and inflation that eat into our savings each and every year.
Assume you put all of your savings in a bank savings account or any other type of “fixed” investment. (They are fixed investments because you are paid a “fixed” return on your investment, regardless of how much the institution is able to earn on your money). If you receive 5% interest and inflation runs 5% per year, all of your profit is used up. Not only that, you are paying income tax on that 5% interest you earned. You are losing money each year. At the same time, each year it will cost you more to do the same thing you did the year before because inflation is now working against you.
Stocks and real estate are the two primary ways of beating the odds. Assuming the market goes up, stocks give you two ways of earning money…the dividends you are paid plus a chance for appreciation. In recent months, many stock investors have been flocking into real estate investments.
Even in a bad economic market, real estate will usually fare better than stocks. God quit making land many years ago. What we have now is all we are going to get. Every year more and more people need a place to live, work, shop and play. They all want a piece of the fixed amount that is available. It’s the law of supply and demand. It’s easy to see why land…real estate will continue to appreciate in spite of some slow-downs in the economy.
Real Estate offers you four ways of making a profit and staying ahead of taxes and inflation:
1. The cash flow from the property (The profit after operating expenses and mortgage payments are paid). In other words, the money left over from receiving rental income after all expenses have been paid.
2. Mortgage principal reduction. Each month your tenants pay down a portion of your mortgage for you through their rent. This essentially equates to money in the bank.
3. Appreciation. The same factor that erodes your savings, inflation, helps your real estate investment. Real estate prices in today’s very hot market continue to increase, in spite of occasional economic market slowdowns.
4. Leverage. No other form of investing, of comparable risk, allows you to make as much use of leverage (other people’s money) to make money yourself. If, for example, you purchase a $100,000 investment property and only invest $25,000 of your own money and finance the remaining $75,000 you are earning appreciation on $100,000 worth of real estate with only $25,000 of your own money invested. If your property appreciates only 4% next year, you will have made a paper profit of $4,000 ($100,000 X .04) Since you only invested $25,000, your return is 16% on $25,000 ($4,000 / $25,000)…and that’s just the “appreciation” part of your profit.
Real Estate has proven to be the finest way to create wealth…and you don’t have to be a genius to learn how. That is the purpose of our web site…to show you how easy and profitable it is to become a real estate investor.
We have shown close to a quarter of a million people how to create wealth through real estate investing. Many report back with amazing results. Will you be next?