Why Is Real Estate Investing The Best Way To Make Money?
- April 5, 2020
- Posted by: Jim Pellerin
- Categories: Buy, Rent and Hold, Educate, Fix and Flip
Why is real estate investing the best way to make money – the best investment that’s better than any other type of investment out there?
The first reason is, and people say this all the time, is they’re not making any more of it.
People are always going to require real estate to live in and to work in. Whether you buy residential properties or whether you buy commercial properties or raw land – whatever, the investment.
Raw land is a bit different though. I wouldn’t say that’s the best investment, right? Or even a good investment.
The reason why a real estate investment is the best investment is it’s something that people are always going to want.
You can make money from Real Estate Investing in several ways.
You can force the appreciation.
The return on property appreciation is huge because of the way you can leverage your investment.
For example, you can buy an investment property, let’s say a rental, and let’s say you’re required to put 20% down. For your investment that costs $100,000, you only need to put down $20,000. If that investment goes up 10% over the next year or two, whatever the timeframe, if it goes up 10%, that investment’s now worth 110,000. You only put 20,000 down. Therefore you’ve just made 50% return on your investment. Not to mention the ongoing profit that you’re going to make from that investment, by the difference between what you’re paying for mortgage and expenses and what you’re charging for rents. And hopefully that’s a positive difference. And that’s what creates a positive cash flow.
Another reason why real estate investing is the best investment is because in normal times you get what’s called appreciation.
Meaning your property will increase in value naturally.
While your property is increasing in value, you’re also paying down the mortgage through mortgage payments, if you have a mortgage.
The mortgage pay-down combined with appreciation will actually increase the equity and the overall value of your investment through the difference between what your property is worth and what you owe.
So those were a few reasons why real estate investing is the best investment.
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