What are you earning while you sleep?
The true definition of wealth is the ability to not work and still live the lifestyle you want. There are many ways to build wealth but real estate is the only investment that offers all the following advantages:
Passive income: No lie, I opened the mail today and there was a check for $2,500.00 from one of the many rental properties. This is passive income because once purchased, the property will spin-off cash flow with little interaction on my end. This is not a job. If I sleep in, I still bank the loot.
Independence: There is something magical about receiving your first rental check and it feels 10000X better than a raise or promotion at work. Knowing you created the opportunity and NOBODY can tell you what to do with it is awesome. Each time rental revenue is added to your portfolio, independent wealth is created.
Taxes: Ok, These stink no matter who you are. Even IRS workers probably hate paying taxes (at least I hope so). Your primary home offers nothing in the form of tax advantages but real estate investments come with massive tax advantages. The income is treated much differently from W2 income which is a plus right off the bat. This asset also allows for depreciation, entertaining, supplies, utility expenses, and management fees to be deducted from your gross income. Oh yeah, and once you sell your apartment building, you can buy a new one and defer the capital gains tax.
Leverage: Taking out a home equity loan to buy a boat is plain stupid. Buying a new pair of shoes and paying 20% interest is also leverage gone down the toilet. However, using equity and debt to create more cash flow and wealth is a powerful tool. Last month I purchased 3 properties and 7 units by using the equity in previous investments. I also received a check at closing for all the needed repairs. My out-of-pocket was $0. Done correctly, the leverage in real estate creates one of the best ways to grow personal net worth.
Purpose: Do I know anyone who sits on the board of directors for Starbucks? Nope. Giving the coffee giant my money in exchange for stock is not a bad thing but there is little purpose outside of the money. However, buying and improving an apartment building that needs resurrecting creates a sense of accomplishment, knowing people have a safe, well-maintained place to live.
While there are no shortcuts to success in real estate, there are proven methods and processes that if implemented with discipline can be your ticket to financial independence and wealth.
