7 Reasons Why 90% of Millionaires in the US Invest in Real Estate
Yes you read that right- 90% of the world's millionaires became millionaires through real estate. Real estate investment is one of the fastest and safest ways to build wealth and grow your net worth in this country, and it's time for you to get in the game too!
Just to be clear, when I talk about real estate investing, I’m not talking about buying a home to live in. That sort of investment takes money out of your pocket every month. When I talk about real estate investing, I am talking about buying cash-flowing rental property that puts more money into your pocket every month.
There are 7 reasons why millionaires in the US invest in Real Estate.
Passive Cash Flow
Your tenants pay rent. After expenses what you have is monthly recurring, mostly passive, cash flow. This passive income that can supplement or replace your working income is what leads to financial freedom!
Appreciation
Over time, almost all real estate properties will rise and appreciate. If you buy a house for 100K, and over a few years it goes up to 120K, your net worth increased in your sleep. You can also “force appreciation” by doing targeted rehab and increasing the value of the property.
Federal Tax Benefits
This is huge! The government encourages real estate ownership. Buying real estate often lowers your taxes. With depreciation, it can appear as though you’re running at a loss. Even though you’re making income, you have lower taxes and no self-employment tax on rental cash flow.
Leverage
Let’s say you have a 100K property, but you only had to pay 10K for it. You are leveraging money from the bank to get your investment. That’s a way of leveraging OPM (other people’s money). You can also leverage OPT (other people’s time) and OPE (other people’s experience.)
Principle Pay Down
As tenants pay rent they are paying down your mortgage. You get closer to owning it free and clear which allows you to build equity and wealth!
Re-Finance
Doing a cash-out refinance is your ability to pull money out of the asset, even though you still own it. AND it’s a non-taxable event! You can pull out this money tax-free! And then we recommend you put that money into a new investment. That’s essentially a way of “recycling” your money to build your real estate portfolio.
Real Estate is a "Feel Good Business"
At REI Goddesses our mission is to only invest in properties where we can leave the property and the community better than we found it. We are not about being slum lords and taking every dollar out of a deal. When you invest in this way, even as you make more money passively and have more financial freedom, you’re also benefiting the community and everyone involved. It’s a win for everyone!
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