Many people are looking for new ways to invest their money, hoping that their investments can bring in steady income or accumulate and become more valuable. And this is why a lot of them are turning to real estate as the best solution.
Do you know that 90% of millionaires from all over the world got their wealth from investing in real estate? Real estate provides many ways to invest your money and a steady flow of income for many years to come.
In this article, we’re going to learn more about real estate investment and why it is more consistent than most other investments.
Steady cash flow
Any kind of investment that can provide you with a steady cash flow is very valuable. Cash flow is the money you earn each week or month from your investment. In real estate, cash flow can come from renting your properties.
If you’re planning to rent your properties, make sure your income is more than expenses such as mortgage, insurance, maintenance, property taxes, and property management fees. When your properties pull in more rent each month than the expenses you have to pay, you can enjoy a stable cash flow.
Not many types of investments offer the same opportunity. When you’re investing in stocks, bitcoin, jewelry, etc. you’re hoping that the value will appreciate over time, then sell it for profit. There’s no stable cash flow, and there’s a chance that the value will depreciate instead.
Some people also choose to invest in businesses, especially poorly run businesses, because they’re cheaper. Then they will make those businesses run for as long and as well as they can and start generating a cash flow. But it’s so much work and generally undesirable.
As mentioned above, people invest in things that they think will appreciate over time. You might have heard this story many times about people who made it big by selling their properties. While your investments can go up, they can certainly go down too. Not to mention that the prices can fluctuate and be very unpredictable.
This is why real estate shines over other types of investments. In the long run, real estate values have always gone up, contingent on the increase in demand and decrease in supply. The same story happens all over the world where land is a luxury.
Experts would tell you that leverage is their second favorite part of real estate investments. Real estate is one of the easiest assets to leverage and to some, it is the easiest by far. In real estate, the interest rates are below 5%, loans are amortized over 30-year periods, and down payments can be 20% or even less.
If you did everything correctly, you could invest in real estate using the money you borrow from the bank and make a profit. Remember the BRRRR strategy (Buy, Rehab, Rent, Refinance, Repeat). Leverage is a crucial part of real estate, and everyone should learn how to do it properly.
Make sure that you don’t over-leverage your property or you will have to spend more money to pay back what you owe.
Owning a property is already making you richer
I know that I am making it sounds easier than done, but it’s not uncommon for people to make money just by owning properties. In fact, some people earn like 100 times over the initial investment they paid for the property.
Anyone who owns a property and can maintain it properly can expect to make money when they sell it. And then you can keep investing in real estate with the money you earned, sell it again, repeat. This is how some people got into the world of real estate, they start from owning a small property then keep moving to bigger ones.
The world of real estate is built upon stability and steadiness. Being a landlord, house flipper, or real estate giant is a dream for many people. If you are planning to invest in real estate, please do your homework properly. Account all your expenses and expected ROI, and don’t forget to take advantage of leverage.