3 Top Real Estate Investing Methods for Maximum Wealth (by Steve
Majors - The Lazy Investor)
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Real Estate investing can be used to gain wealth in three major
ways –
1. Long-term Real Estate investing is most often utilized using
appreciation as a planning tool.
Historically, Real Estate has doubled in value every 11 years
(6% per year on average over the period).
Of course, not all areas have seen that much appreciation, while
others (like sections of California and Nevada) have seen double
or triple that rate, but overall, a 7-11 year cycle of doubling
value has been the ‘rule’.
So, a house worth $100,000 today will be worth $200,000 after 11
years (on average).
The best part about this plan (when it comes true) is that the
debt on the house after 11 years will be less than the original
$100,000 (because payments were made for all that time), while
the property is worth $200,000.
The difference makes a great retirement ‘nest egg’.
2. Instant cash is available in many types of Real Estate
investing transactions where money is made within days or weeks
(sometimes hours, and even minutes!) of the purchase.
These transactions are often referred to generically as ‘flips’
(a more detailed description of these transactions is given
below).
When the money made from these transactions is used to reinvest
in other ventures, the return rate highly exceeds any other
method of Real Estate investing. The reason for this is that, on
a property valued at $100,000, the purchase price is often
10-50% less.
With an example of 15%, the purchase price will be $85,000.
Selling the property at a discount to another buyer for $95,000
will net well over $5,000 (after closing costs and all
expenses).
The $5,000 used as investment money for another transaction will
yield an additional discount on that property, and when you
continue to ‘roll’ the money made from such real estate
investing activities, you eventually lead to ‘full cash’
purchases, which is usually what is needed to acquire most 30%
or more discounts from sellers.
This method of Real Estate investing (buying low, selling high
and re-investing) yields extreme wealth – plus, the first
property could have been done as a ‘no money down’ transaction!
Extreme wealth from nothing – where else can you find this
except in Real Estate investing?
3. Cash flow properties are often used in cooperation with
appreciation (one of the biggest benefits of Real Estate
investing), however, is listed here as a separate system because
many investors do not count appreciation into their calculations
when purchasing a property.
Cash flow properties are those with some monthly income – that
is, the difference between what is paid in and what is paid out.
Traditionally, these are ‘rental’ properties, and bring in a
constant flow of cash for the investor.
Sadly, many investors use this cash for their living expenses
and never grow the wealth they could by simply reinvesting this
money into another property.
Although slower than other techniques, this method of Real
Estate investing can yield a very high rate of return for the
careful investor.
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