Is it me or do most people not really value the power of time? Maybe we don't think about twenty five years from now because it's to far away to feel real.
However, most worry about retirement 10, 20 , 30 years out and then just sigh and say I'll just work forever.
Why think like that?
If you've read anything I've written in the past (and if you haven't - I mean, come on, really?) you know that I love rental property investing because it builds income and most importantly WEALTH!
Money for Nothin' and Retirement for Free
If I told you that you could give me 20% of the price for something and then 20-30 years from now you would own 100% of it for that 20% without ever taking more money out of your pocket - would you not do it?
In fact, it will likely put some money in your pocket every year while time passes before you have the 100% value.
Seems like a pretty sweet deal - is that why so many people are afraid of it?
Or are we just that lazy?
Rental Properties
The scenario above is exactly what you are getting with owning rental properties. And that assumes you are putting a 20% down payment, which we know is not a must.
Most people worry about losing money in real estate, which I find to be a lot more difficult for people to do as opposed to something like the stock market, where in the past couple weeks 15% of investor money went poof!
Meanwhile rental properties create a scenario where your tenant is paying down your mortgage and building wealth for you. You provide them housing, they provide you wealth a couple decades later.
Once that mortgage is paid off you now have an asset worth 100k, 200k, 300k, whatever.
Plus, once it is paid off now you get to keep much more of the monthly income coming in - so basically you have a paycheck once you stop working for a paycheck.
Don't Do Dumb Things
Listen, anyone can catch a bad break and have a bad deal no matter how prudent and experienced they are. However, that isn't the norm. Most people that lose money on real estate made poor or careless decisions.
Rental Properties are long-term wealth builders when done right! When done where the numbers makes sense, where cash flow is produced after factoring in all the "bad stuff" that can happen.
Things like:
- Vacancies
- Maintenance
- Capital Expenditures
- Evictions
The irony is these are not bad breaks. All those things are a normal part of the business!
I will tell you what - it really isn't all that bad. There will be problems times and low maintenance easy times. It all even outs in the end.
Learn How to Buy Right
The bottom line is if you learn the correct steps to analyze a rental property deal you are vastly putting the odds in your favor. You will use that information to run the numbers with realistic info and only pursue properties that produce an acceptable return.
Knowing what the average rents are, rental demand for an area, and desirability are all important. However, you must couple that with the financial calculations and allocate for all the potential "bad stuff" to find the true return.
If the rents coming in cover all that and then some, you have put yourself in a position to build long-term wealth.
If you need to learn how give the book or education page a look.