As you probably heard, over 90 percent of all millionaires made their wealth in whole or in part through real estate investing. The common denominator is that real estate is in their investment portfolio. Real estate has for years been known as the best performing vehicle to create wealth.
There are many strategies to investing in real estate and they are not all created equal. Many investments are more speculative in nature such as flipping property. This is a great tool for creating a chuck of cash. When done properly people have made good chunks of cash.
However if you simply keep buying and selling and living off of the profits ( as many flippers do) you have created a nice job, business or career for yourself.
True real estate investing is purposefully evaluating property for stable and long term stability with an intention to hold the property long term for passive income and sustained appreciation. This type of investing is an ideal investment.
IDEAL is the acronym for the 5 wealth building principles
I (INCOME) positive cash flow
D (DEDUCTIONS) interest, depreciation, repairs, all expense are tax deductible
E (EQUITY) as tenants pay down the mortgage the principle builds up is equity for you
A (APPRECIATION) annual property value growth
L (LEVERAGE) O.P.M. you gain all the above from borrowed money
There is no other investment available that can fulfill all 5 of these wealth building principles.
Most investments will return 1 or 2 of these wealth building principles and only real estate has the ability to return all 5. The typical investment is expected to return (Income) a positive return. When you can produce the 4 additional wealth building principles from the same investment you have put your investments on hyper growth.
Larry Arth is the founder and CEO of Equity Builders Group, a Florida based real estate investment group.