Best Ways to Make Money and Build Wealth
Neil Shekhter - Why Real Estate is One of the Best Ways to Make Money and Build Wealth
More people are trying to amass wealth to become finacially independent. This is a noble goal because it removes the shackles a regular job puts on a person, and one way to do this is through real estate. Try to keep an open mind, and let me show you why I think real estate is the path towards financial independence.
Versatility is Great
There are many ways to make money; for example, you can take a dive into the stock market. This can be a great idea, but the problem is that the only way to make some extra cash is if the stock appreciates, which is not a certainty. When the stock appreciates, you have to sell quickly before the price drops. Real estate is not like that. You can make money in this industry in more than one way. I can tell you that there are countless ways real estate can bring in money besides appreciating in value.
One thing you can do is rent the property out to people in need. This creates a great source of income that could be constant if you rent to responsible renters. Renting your property does depend on the market but not that much, so it could be a stable option for you if you do not want to just sell your property when it appreciates.
You can also increase your property's equity with a little trick that I've used myself. All you have to do is take out a mortgage to finance your rental so that you increase your equity every time you pay your mortgage. Okay, so what I did was put down around 25 percent for my previous rental and am currently at 33 percent equity. The rents ended up paying the eight percent difference between those numbers, which has helped me increase my worth.
You know that leverage increases returns. All you have to do is what I did, which was put down 20 percent on a property that you are interested in. Best of all, you still get rental income, which you have to workout to ensure a profit. Say that your property is $100,000 and your mortgage is around $500 a month. Then, all you need to do is raise the rent by a few hundred dollar to pay your mortgage and still make a profit.
Another fun way to make money off of your property is by simply compartmentalizing your property. Yes, you can rent the entire property, but each part of your home can be valuable to someone. One thing that can make you some cash is to rent out rooms to a few tenants. If you have three bedrooms, you can rent each room to someone. Doing this makes you a little more cash and also ensures that you continue to get paid, even if one your tenants moves out and it takes you some time to find a new tenant.
Those who prefer an even safer renter may want to consider renting to a business. A business will likely stick around for some time, and you can usually charge high rent, which is just another plus worth considering. Another neat trick is to profit off a refinance after you do some major improvements. Say that you buy some property that needs some sprucing up and you do the work. Sure, the improvements can be costly, but that amount can be paid by your tenants. Now, your property has additional improvements and its total value is much higher than it was before, which is how you make money.
Investing in Real Estate is Less Risky
Investing comes with some risk. You are putting in a lot of hard earned cash, and no one is promising you a thing in return, which is part of the reason many people are scared to jump in. It is okay if you have reservations, which is the reason I think you should try to scope out less risky opportunities like real estate. Sure, you can invest in things like stocks, but these are way to volatile. You can lose your money in a heartbeat, which is no good.
I want to remind you that in real estate you can actually invest a mere $5,000 in a property that is $50,000 and immediately start renting it. In essence, you do not have to wait to own it. This rent money can help you finish paying it off so you can move on to your next property.
Sure, it's possible that your property is not rented out quickly enough, but all that happens is you have to pay the mortgage on your own. That's better than losing your entire investment, which can happen in the stock market. Still, you can see how you can profit off of this market with minimal risk to your assets. No one is saying that real estate investing is perfect but it's a good choice.