You may have heard that more millionaires have been created by investing in real estate than in any other way. My wife and I believe this to be true. But this doesn’t necessarily mean relying on the increasing value of your own home. Money tied up in your personal residence won’t create value for you unless you tap its potential. But how do you do that?
You could pay off your mortgage and eventually downsize to a smaller dwelling when the kids are grown and gone. You could sell your home – pay off any remaining debt, invest the difference, live off that income and rent. Both strategies have merit but delay the creation of income and wealth until some point down the road.
The problem with that is the uncertainty that comes with delay. Who knows what your home will be worth in the future? Will the market be strong or will it be in decline? What investment options will be available to you at some point down the road when you are ready to act? Perhaps that’s too much uncertainty.
What is the flip-side of that coin?
Take action, today.
By investing in rental properties, someone will pay down your mortgage; the residual - after all costs are paid represents income that you can use today or reinvest to compound your returns. There is no secret here. You either enjoy the additional cash flow, pay down your investment property mortgage to increase equity or diversify into other assets.
But how do you get started?
First – you might have cash or liquid investments that you can sell in order to create the required down payment. You might be able to free up an investment capital account, using the equity in your home by establishing a Home Equity Line of Credit. Or you might borrow the down payment from a more established family member.
There are other ways to raise cash via joint partnerships but they are more complex and beyond the simple agenda we are addressing here. Your own catchupinvesting strategy should take some work but not be overly complicated and scare you from taking action.
Here is the bottom line. By investing in a rental income property – you control an asset that generates cash every month your property is occupied with a tenant, or “client” that helps you pay the bills. In time – depending on the number of units or properties controlled – you have effectively constructed your own personal pension plan and you’ve done this principally with someone else’s money.
There is more to it, of course. That’s the “gist” of it.
For more on how you can make investing in rental income producing real estate – please ask using the “Request for Information” formatted email.