By Sarah Hordusky
“Ninety percent of all millionaires become so through owning real estate. More money has been made in real estate than in all industrial investments combined. The wise young man or wage earner of today invests his money in real estate.” This famous quote by Andrew Carnegie, one of the wealthiest entrepreneurs of all time, is still just as relevant today as it was well over a century ago.
Real estate investment is one of the fastest and safest ways to build wealth and grow your net worth. There are several reasons why millionaires invest in real estate and I am going to share why you should too!
Whether you are a homeowner or an investor, owning real estate can help you build wealth in two ways: buying a primary residence and seeing the value of the home appreciate over time, or buying investment properties for both appreciation and cash flow.
Over time, real estate tends to appreciate in value. This happens more often when you purchase property in an up-and-coming area or make improvements to the property that increases its value. Here are 5 Proven Ways to Increase Home Value. When you buy real estate, you can build equity that will increase in value over time.
It is estimated that 90% of all millionaires invest in some form of real estate. One of the biggest reasons why millionaires invest in real estate is because of the passive income it provides. Creating a diverse portfolio of properties and investments can easily create a stream of passive income! There are only so many hours in a day, so if you’re only earning money by trading your time, you’re limiting yourself. What builds wealth is developing multiple passive streams of income that are not related to your limited time.
Positive cash flow is a major reason to invest in real estate. When you analyze investment properties, you want to calculate the estimated cash flow the property will provide. Cash flow is the money you have left over after paying your expenses, including your mortgage, property taxes, insurance, and other fixed and variable costs. When you have a property that provides positive cash flow, you can use that money to reinvest in other properties
When you invest in real estate, you can deduct several expenses from your taxes including mortgage rate interest, property taxes, property insurance, property management fees, building maintenance and repairs, and qualified business expenses. Because of the many tax benefits, real estate investors often end up paying less in taxes even as they are bringing in more income.
Depreciation is the loss of a property’s value over time due to wear, tear, and degradation. A real estate investor who receives income from a rental property can deduct depreciation expenses from their taxes, lowering their tax liability and taxable income.
Consult with a qualified tax professional about which expenses may be tax deductible!
Home equity is a great asset many individuals have! It's important to know what home equity is and understand how to use that equity to build your wealth. Home equity is the portion of your home that you own. In other words, equity is the difference between your home’s value and the balance you owe on your mortgage. Here are 8 tips for building equity in a home! Building equity increases the amount of money you have in your home that you may be able to use now or in the future.
Many people have a large percentage of their net worth through equity in their home. The greater your assets and the lower your liabilities, the higher your net worth is. As you pay off your mortgage and build equity, your assets grow and your liabilities shrink, therefore increasing your net worth.
Investing in real estate is a great way to accumulate wealth. Wealth grows through investing which means putting money into something with the expectation of receiving more money back later on. This is why many people have become millionaires due to real estate. Not only does it make you money, but with the numerous tax advantages and home appreciation, it allows you to keep a lot more of the money you make!
Even if you aren’t looking to buy or sell, adding a real estate agent to your personal finance team can be extremely beneficial in helping you understand the market and learn about opportunities to build wealth in real estate. Are you ready to learn how to have financial and TIME freedom through real estate investing?
If you're interested in learning more about me and how I help buyers and sellers, reach out today by visiting my contact page
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