There are many options for investing your money. Here are some examples:
- Bank Certificates
- Mutual Funds
- Other Over the Counter Investments
Department store tycoon Marshall Field once said “Real Estate is not only the best and quickest way to make you wealthy, for the average person it is truly the only way.“
What makes real estate such a great investment for the average person? Why have so many wealthy people used real estate to amass their fortunes? The answer is—
Only with real estate do you get “The Royal Flush”. What does a royal flush have to do with real estate? Here is what I mean. Every kind of investment has some advantages and the more advantages the better the investment. For example with IRA’s there are tax advantages and with stocks you may have leverage through a margin account.
Real estate on the other hand has five advantages and all five cannot be found in any other investment. I call these “The Royal Flush” because having all of them makes it hard to lose.
Only with Real Estate do you have the advantages of…
- Revenue Production
- Tax Advantages
- The Power of Compound Interest
Let’s look at each of these separately…
Leverage – The Greek Inventor and Mathematician Archimedes once said “Give me a lever long enough and a fulcrum on which to place it and I shall move the world”. Leverage will allow you to control a $100,000.00 property for a little as $10,000.00 possibly even less. When you mix this leverage with just a 3% Inflation your $10,000.00 investment just grew by 30% and that kind of return is very difficult to find with any other investment.
Inflation – Median Housing Costs in the U.S. in the 1940’s was $2,000.00. By the 1970’s it had jumped to $23,000.00 and by 2007 it was over $150,000.00. Don’t be misled by news reports that insist that the real estate bubble is going to burst. People will always need a place to live and real estate will always hold value. History clearly shows that real estate always has been and always will be a good investment.
Revenue Production – Wouldn’t it be nice if you could borrow $10,000.00 – put it into the stock market and then take that stock and rent it out so that that rent would more than cover your loan payments. That may sound ridiculous–but it’s done every day with real estate.
Tax Advantages – Democratic Governments love real estate investors and give them tax advantages to prove it. Even though home prices may go up in a given year in most cases the owners are allowed to take a tax deduction for the depreciation of that same home. There are also deductions for repairs, taxes paid, interest, and the list goes on and on.
The Power of Compound Interest – Albert Einstein called Compound Interest “The 8th Wonder of the World.” Has anyone ever asked you if you would rather have a thousand dollars a day for a month or a penny a day doubled for a month. The thousand a day would net you $31,000 in January but the penny a day doubled each day would net you $5,368,708.80. That’s just one example of the power of compound interest. By reinvesting the profits from your investments you will receive similar results in just a few short years.
Using your Royal Flush it will only take one home per year to create wealth.
“Over the years”
- Rents will go up
- Principal pay down will increase
- Property value should appreciate
- Tax advantages will add up
- Mortgages will eventually payoff
And you will become wealthy.
I hope this article will help you in your quest to build wealth through real estate investing. For more articles on real estate investor training, visit my website at www.dennisjhenson.com. Also on that site, you may sign up for free reports, articles, and e-books and find free forms, documents, MP3 downloads and much more.