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Building wealth is not as difficult as it once was. Sure, it’s no easy walk in the park, but if you are determined to make it work, chances are good you will eventually succeed.
Call me an optimist, but that’s just truly what I believe.
One of the best ways I’ve found to build wealth is through real estate investing.
It’s easy to get bogged down by all the details that seem overwhelming and complicated, but if you stick with it and learn from reliable, trustworthy resources, the opportunity is a pretty secure bet to make.
But what if it doesn’t work out?
You’ve surely heard the horror stories about people losing all their savings to bad real estate investments, and you probably roll your eyes at the swarm of “Become a Millionaire Overnight with Real Estate” e-books that populate the web.
And while it’s true that real estate investments are not a get rich quick plan, they are a very viable long-term income plan.
If you’re willing to do your research, work hard, and be patient, then you can build a very secure source of wealth from the real estate market.
Table of Contents
Build Wealth Through Real Estate Investing
Benefits Of Real Estate Investing
If the real estate business is so much work, why do people choose to go into it? I mean, aren’t we still feeling the aftereffects of the last time the real estate bubble popped?
Why willingly jump into an industry that has so many unique challenges?
Well, the answer is quite simple in the investor mindset, and it’s this. With unique challenges come unique benefits. This is especially true with real estate investments.
Each investment and/or property has its own unique challenges that makes the returns on it sweeter than ever.
But, if you’re just getting started, you may not know about that yet. And that’s okay. You will get there soon. In the meantime, here are a few more benefits of investing in property.
#1. “Self-Employment Tax”
One of the biggest turn offs to self employment is the extra tax burden.
When you are your own boss, you are responsible for not only your income taxes, but the employer side of taxes as well.
That means paying double the taxes of a normal W-2 worker.
Real estate is a little different, though. Most of the time, money you earn by renting out properties you own doesn’t count as self-employed income.
If you hop into the real estate game, you may end up paying less in taxes than you might imagine, making your profit all that much sweeter.
Why is rental income subject to different rules?
It’s because the U.S. government wants to encourages private housing rentals, which in turn lower the housing burden that the government is responsible for.
#2. Inflation
Most people view inflation with a sense of trepidation.
But people invested in the real estate market look at this inevitable phenomenon as a net gain.
Because no matter what you paid for a property yesterday, odds are its base value is only going to go up.
Unlike investments in stocks or bonds, which have a very real risk of plummeting in value, real estate usually has nowhere to go but up, making it a safe way to hedge your bets when it comes to inflation.
#3. Equity
Not all wealth is cash in the bank. Equity is a great thing to have, period.
But there are some extra perks to home equity when you invest in real estate. It’s simple, really.
Those who invest in real estate have more properties through which to gain equity. That means more equity, period.
Should the need ever arise to borrow against that equity, such as with debt consolidation, real estate investors have a distinct advantage.
How To Invest In Real Estate Wisely
So how do you go about dipping your toes in the vast real estate lake?
How do you avoid becoming one of those cautionary tales about foolish investors?
Well, generating decent income from real estate investments is made much simpler by taking a few things into consideration.
#1. Choose Your Investment Track
The investment world is pretty big. There are a lot of options beyond “buy house, sell house.”
You can rent, for example. There are also a lot of options regarding what kind of properties you invest in.
It’s a smart idea when you’re first diving into investing in real estate to pick a niche. Perhaps you want to rent duplexes or flip vacation homes.
Whatever your interests, try to stick to one thing, at least at first.
There’s a high learning curve on real estate investing already, so it’s in your best interest to get as specific as possible so you’re not overwhelmed.
#2. Never Settle
One thing to remember about buying property is the price is never set. Haggling is going to be your friend in real estate.
The cheaper you can get a property, the more money you’re going to make. It’s that simple.
#3. Create Appreciation
Waiting for properties to appreciate is part of the real estate game, but a savvy investor can force their own appreciation.
Fixer upper properties are a great investment if you pick the right ones.
Properties in need of repairs can often be bought on the cheap and then, providing you budget your repairs and additions wisely, their value will skyrocket in a matter of months.
#4. Have realistic expectations
Real estate is not likely to make you rich overnight. There is a lot of work and preparation that goes into it.
In all likelihood, you will not be able to do it alone and will have to hire or contract with various other professionals to keep your properties managed.
Don’t expect to make a million dollars the first year you start investing, and don’t try to land huge deals right out of the gate.
Start small and work your way up. Before you know it, you will have a steady stream of mostly passive income augmenting your bank accounts.
Wrapping Up
At the end of the day, real estate investing is an excellent option to build your wealth.
While there is a learning curve to it, if you take things slow, you can greatly reduce your risk and in turn, increase the likelihood of success.
And over time, you will see your wealth grow and many opportunities come your way because you decided to start investing in real estate.
Author’s Bio: Christine Yaged is a co-founding partner and Chief Product Officer of FinanceBuzz. Christine launches and scales brands. She is passionate about technology, digital marketing, and people.
