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Real Estate Investing Methods for Maximum Wealth
By
Steve Majors
Real
Estate investing can be used to gain wealth in three major ways –
1.
Long-term Real Estate investing is most often utilized using appreciation
as a planning tool.
Historically,
Real Estate has doubled in value every 11 years (6% per year on average
over the period).
Of
course, not all areas have seen that much appreciation, while others (like
sections of California and Nevada) have seen double or triple that rate,
but overall, a 7-11 year cycle of doubling value has been the ‘rule’.
So,
a house worth $100,000 today will be worth $200,000 after 11 years (on
average).
The
best part about this plan (when it comes true) is that the debt on the
house after 11 years will be less than the original $100,000 (because
payments were made for all that time), while the property is worth $200,000.
The
difference makes a great retirement ‘nest egg’.
2.
Instant cash is available in many types of Real Estate investing transactions
where money is made within days or weeks (sometimes hours, and even minutes!)
of the purchase.
These
transactions are often referred to generically as ‘flips’
(a more detailed description of these transactions is given below).
When
the money made from these transactions is used to reinvest in other ventures,
the return rate highly exceeds any other method of Real Estate investing.
The reason for this is that, on a property valued at $100,000, the purchase
price is often 10-50% less.
With
an example of 15%, the purchase price will be $85,000. Selling the property
at a discount to another buyer for $95,000 will net well over $5,000 (after
closing costs and all expenses).
The
$5,000 used as investment money for another transaction will yield an
additional discount on that property, and when you continue to ‘roll’
the money made from such real estate investing activities, you eventually
lead to ‘full cash’ purchases, which is usually what is needed
to acquire most 30% or more discounts from sellers.
This
method of Real Estate investing (buying low, selling high and re-investing)
yields extreme wealth – plus, the first property could have been
done as a ‘no money down’ transaction!
Extreme
wealth from nothing – where else can you find this except in Real
Estate investing?
3.
Cash flow properties are often used in cooperation with appreciation (one
of the biggest benefits of Real Estate investing), however, is listed
here as a separate system because many investors do not count appreciation
into their calculations when purchasing a property.
Cash
flow properties are those with some monthly income – that is, the
difference between what is paid in and what is paid out. Traditionally,
these are ‘rental’ properties, and bring in a constant flow
of cash for the investor.
Sadly,
many investors use this cash for their living expenses and never grow
the wealth they could by simply reinvesting this money into another property.
Although
slower than other techniques, this method of Real Estate investing can
yield a very high rate of return for the careful investor.
Steve
Majors - The Lazy Investor
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