Investing in property builds wealth. It is as simple as that. No investment has been more time-tested and successful than real estate. Generational wealth is almost always the result of a prudent property investment strategy.
How should you start real estate investing? What are the best practices to attain optimal results in the shortest time possible? What risks are involved with property investment? These are the most common questions that interested novice investors have when it comes to buying real estate.
This post details some basic and incredibly effective strategies for buying real estate in order to build wealth.
Investing in Real Property Builds Wealth
Real estate tends to appreciate in value year over year. Sure, markets slump on occasion, but over time, the price of property goes up almost without exception in the historical record. This makes property a safe investment when compared to many other options.
Real estate is an actual tangible thing that you own. This is also a great benefit to investors. If you can not rent or sell real estate during a particular time period, you can always put the land to use for business, agriculture or other application. The amount of real estate on our planet is finite, while the population is growing exponentially. This alone makes every parcel of useable land valuable.
You need to live somewhere, right? Why not at least start small and purchase a property that you can live in. This way, you can learn more about buying property while not getting in over your head. Every month that passes will increase your equity in the property if you have a traditional mortgage. Equity is an important concept to understand, since it is critical for growing wealth when it comes to property investing.
Real Estate Investing Wealth Building Strategies
If you want to start investing in real estate as a business venture, you are definitely following a path towards success. Just be sure to use good judgment and self-control when making investment choices. If you get too greedy, you may bite off more than you can chew, which is what costs some investors to lose big, as opposed to making gains year over year…
I recommend buying a multi-unit dwelling as a great place to begin. You can live in one unit and rent out the others to cover your costs. There are many advantages here to buying a duplex, or better still, a triplex, quad or small building:
Your rent roll may be able to provide a free place for you to live. At the very least, the rent will help you to pay the property expenses every month, allowing you to gain equity on someone else’s dime.
If you are ready to move on, you do not need to sell the property. You can improve elsewhere and just rent out your old unit also. This will increase the income fore the property and help you to generate even more equity faster than when you lived there!
Owning Property Builds Wealth Over Time
One of the major tenets of property investing is DO NOT SELL. If you sell, sure you may recoup considerable gains due to appreciation. However, if you hold the property and continue to rent it out, then the appreciation is still there and can be used to secure a line of credit for more real estate purchases. However, you continue to generate sustainable income by holding the property, as well. In most cases, if the property has appreciated considerably, it will continue to do so far into the future.
Using equity or your own funds to buy additional properties to rent out will build a huge net worth over time. However, I strongly recommend doing this slowly and smartly, instead of leveraging yourself to death with additional loans and buying several properties each year. If the economy takes a downturn, you DO NOT want to be stuck with many properties that you CAN NOT afford to keep if renters can not pay or you have any other fiscal issues. It is best to continue investing at a slower rate with a safety net of cash reserve to keep you up and running through lean times.
If you can pass property down through generations, just imagine the portfolio of real estate your family could possess. In 2 generations, you could go from poor to incredibly wealthy, even without having a traditional job or formal education! This provides freedom far into the future for your children and grandchildren. This is a gift that truly keeps on giving!