THE NATURAL CREATION OF WEALTH
The Housing Market is, typically, a social indicator of economic well-being. If real estate investing is a catalyst to the creation of wealth – why do so many people ignore it when it is the most NATURAL way of creating wealth?
The two things that are basic human need and constant in your life are for food and shelter. If that is true then why not take something that is constant and make it a permanent investment towards the creation of wealth? If I were to tell you every time you eat you could be investing in your future, would you eat? I think so. Unfortunately, other than selecting foods that are good for you, there’s no ECONOMIC benefit to eating. Now, what if I told you that every time you paid for your ‘chosen shelter’ you were creating personal wealth - would you believe me? I sure hope so because it’s TRUE! Every time you make a payment for your ‘shelter’ you’re creating wealth for SOMEBODY. Hopefully, it’s for you. If it isn’t, take a seat and read carefully what I’ve got to say…
EVERYONE has the same opportunity to create wealth starting with where they chose to live. When you chose to rent over buying you are choosing to create wealth for someone else. You may be ‘sparing’ yourself of repairs and maintenance but you’re robbing yourself of the wealth to which you’re entitled to NATURALLY. When I say ‘naturally’, I mean that this is a basic need and expense which should be thought of differently than a monthly payment or ‘maintenance hassle’. As soon as a young adult is able to pay for an apartment, they should first consider buying a small condo, townhome or duplex. The lending programs are there for them to do that so why not take advantage and start building wealth? When you do that, your monthly payment for your ‘shelter’ becomes an investment and tax deductible item. That is just the beginning of your wealth creation. What happens next is nothing short of FANTASTIC!
It’s time to move from your small condo/duplex or townhome because you’ve married or need a bigger space. DON’T SELL OR REFINANCE!! You lease it instead. At this point you should get a professional and experienced property manager that will lease it out and keep your headaches at bay. Done correctly that property will soon be paid off and you’ll be drawing the FULL monthly mortgage paid by someone else. If you think that 15, 20 or a 30 year mortgage is too long a wait, then I say you’re not seeing the ‘big picture’. Why? Because if you bought that condo when you were in college (let’s say 20 years old) and at worst-case scenario you have a 30-year mortgage the property is paid off and additional monthly income at 50! (Not too bad when you’re trying to set yourself up for retirement.) In the mean time, you have now become an investor which qualifies you for even MORE tax deductions. Ask any CPA.
Now then – your family has grown out of your first starter home and you’re ready to move up. Repeat steps shown above. Now you have TWO INVESTMENT properties with very low interest rates because you purchased them at the onset for you to live. While a tenant pays for the mortgages on these properties – you are deducting your expenses (even on your own home) because you have a home-based business of investment properties. Per IRS you can deduct a portion of your car, car insurance, home insurance, home office expense, utilities and much more! Again, consult a CPA.
Now then – your family has now settled into your THIRD property. How wonderful is that? Structured correctly, you can start paying some principal off your smallest mortgage in addition to its monthly mortgage payment. Once you get to a point where there’s enough equity to purchase perhaps a duplex or four-plex; you’ll sell that property and move that equity into another that has cash flow. SWEET!!!!
If you follow these steps I assure you that you will have a happy and prosperous retirement just by using the NATURAL flow of things. Align yourself with a good real estate professional that’s going to guide you through while you learn the ropes. Some of you will read this and say ‘piece of cake – I can do this myself’ and may actually be able to from the onset. However; if you find that it isn’t going as planned, seek professional guidance. You see, you’re learning. An investor knows that numbers as well as experience in handling things is what make it work. With a good strategy and experienced partners you, too, will soon be reaping the rewards of NATURAL wealth building and managing risk like a pro!
Angie Borrás, GRI, SFR, CDEI is the Founder/Owner of Houses In San Antonio, Ltd. (A Full-Service Real Estate Brokerage in Castle Hills). She has been ranked #35 Hispanic Female in the Nation and #1 in San Antonio by the National Association of Hispanic Real Estate Professionals (NAHREP). She has been in the real estate field since 1996 and considers herself an ‘educator’ to her clients. Most of which, entrust her to counsel them on realty investments after their initial purchase. She also represents over 60 bank institutions that assign foreclosure listings for rehabilitation and sale to maximize the return on their non-performing assets. Most recently, Angie has been certified by the Texas Real Estate Commission to provide educational courses to her peers or those seeking to get into the real estate business. She’s the Founder/Developer of APlusAgent.com a real estate Learning Management System. She may be reached at her office (210) 366-1162, visit her website or email her at Angie@HousesInSanAntonio.com.
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