Real estate is one of the steadiest and most reliable ways to build wealth in the United States. It’s an industry that people shy away from in a lot of cases, though.
There’s an idea that it’s particularly difficult or stressful to invest in real estate, while that isn’t always true. We’re going to discuss how to get rich from real estate today, breaking down some of the myths and false impressions you might have.
Let’s get started.
How To Get Rich From Real Estate
The idea that you need to be wealthy to invest in real estate is entirely false. Many people conjure up images of Warren Buffet or Donald Trump when they think of real estate investing.
That said, anyone who owns a home is technically investing in real estate. Real estate investments are just pieces of property that you own and profit from.
The beautiful thing is that there are numerous financing options to get started as well. Many states allow first-time homebuyers to get financing without putting more than five or 10 percent down. The standard down payment is 20 percent of the total cost of the property.
The down payment is essentially the startup cost for your real estate investment career. Beyond that, you allow the power of interest to do the work and provide you with more opportunities.
From Now To Retirement
Let’s say that you’ve got $5,000 sitting in the bank.
You’ve got a good credit score and you find a house worth $75,000. The bank allows you to put your $5,000 forward as a down payment because you’re a first-time buyer. You close the deal, fix the house up, and get it up to code.
Now, you rent the house to a qualified tenant. The house is now a rental property.
This person pays you to rent that more than offsets your mortgage payment. If you continue on with your life as it was before you bought the property (old apartment, same job, same expenses), the new house would provide you with marginal monthly revenue.
The rent payment would give you some extra spending cash after you paid the mortgage. The benefits, however, come from the increased equity on the house.
Property tends to grow by around seven to 12 percent per year. After a few years, you might have a house worth a whole lot more than you paid for it.
Doubling Down And Building Wealth
There are different ways to get that equity out of the house and use it toward other investing. A common method is to simply refinance the home, get the additional cash, and try to get a better mortgage rate in the process.
Let’s say that you have $40,000 in equity after four years. If you were to put that cash forward as a downpayment on another property or two, you’d multiply the revenue by the number of properties you buy.
There are variables, but the general principles lead you toward more and more wealth.
Want To Learn More About Rental Home Investments?
If you’re still wondering how to get rich from real estate, there’s more to learn. The process described above is just one of the many ways to make money through rental home investments.
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