Generate Wealth in 4 Simple Ways

Want to make money and build wealth in multiple ways? Real estate offers investors the opportunity to make it big in not just one but four different ways. Many people hear about how real estate is a great investment but do not know the extent of how true the statement is. In my opinion real estate is the best investment for any person to get into because of the powerful ways it can change a person’s life for the better. Through four different ways, a real estate investor can securely know they will build wealth.

1. Cash Flow

Cash flow is the first way an investor can generate money to build wealth. This method is the fundamental idea that people picture when thinking about real estate. Cash flow is the money left over after all expenses have been accounted for. This amount could be only a hundred dollars per property or it could be a much larger amount. Either way, cash flow has the potential to be incredibly powerful because with each property you purchase this amount will go up.

2. Loan Pay Down

When purchasing an investment property it is not likely that you will be buying it completely with your own money. More than likely you will take out a loan on the property and pay a bank each month for the use of the money. A mortgage payment consists of two parts: principal and interest. Principal is the money that actually goes to paying down the loan amount that you have while interest is the payment to the bank for the use of their money. With each monthly payment, you are building equity within the property and in turn building wealth.

3. Appreciation

Throughout history, real estate values have gone up over time. The term for this is appreciation and it can make you the real estate investor lots of money. Appreciation is not guaranteed year after year but over time it does steadily rise. This is why real estate is not a grow rich quick kind of game, rather, it benefits those who hold properties for a longer period of time.

4. Tax Benefits

The U.S. Government offers many many benefits to those who are investing in real estate. As of the current date, the government does not tax appreciation or cash flow as a normal form of self-employment income and therefore will not tax in the same manner. An investor looking to sell and purchase a larger property can also benefit from a 1031 exchange where they defer the taxes of the sale of the property. This keeps more money in the pocket of the investor. On a side note, always check with a tax professional before using any of these methods to make sure you are in the clear.

Conclusion

Through these 4 ways, a person who invests in real estate is likely to make and keep more money. Over time real estate will allow a person to build wealth and even get to the point where they make enough money off of their properties to live off of. Real estate is powerful and I encourage each investor to take full advantage of these four generators of wealth!