Unlocking A World of Real Estate Wealth
Here you will find tools and information you need to get started on the road to building wealth through real estate. All you need to do now is contact me today – I’m here to answer your questions, and to provide you with the keys to unlock a world a real estate wealth!
People invest for an array of reasons, but chief among them is the desire to secure comfortable and stable futures for their families. Wealth secured for future generations—one’s children and children’s children—is known as “generational wealth,” and it allows one to shape the quality of the educational, economic, and social opportunities available to future generations. Building generational wealth, however, takes prudent and careful investing. For many, real estate is an enticing investment option for its unique and lucrative benefits such as cash flow, appreciation, and leverage.
Unlike other investments, such as stocks, bonds and CDs, where quick returns are rare or nonexistent, the returns from a real estate investment property are immediate, steady and build wealth over time. In real estate, it’s called cash flow, the return on investment in the form of rent after the mortgage and expenses have been paid. Today’s market provides incredible investment opportunities with great cash flow potential. In fact, rent prices increased 5.1% nationwide from 2011 to 20121, while interest rates and the median existing home sales price remained low, providing investors with even greater cash flow returns.
While one should always invest for cash flow, appreciation is still a very lucrative benefit of real estate and an incredible opportunity for investors looking to secure long-term, generational wealth. The real estate market has long operated in cycles of rapid and slow appreciation, and even with the recent fluctuation in the housing market, median home prices have still risen at a rate of 5.2% every year when adjusted for inflation. That means a home purchased in 1969 for $21,800 (which was the median sales price that year), would have been worth $172,900 at the end of 2010.
With real estate, investors also maximize the power of their investment dollars by leveraging their money. Generally speaking, leverage is any technique that increases gains. In real estate, an investor leverages her investment dollars as a downpayment for a property, so as the property appreciates, she earns money on the full value of the property, not just the original payment.
For example, if you leverage $20,000 as a downpayment on a $100,000 property, as the property appreciates, you’re earning a return on the full $100,000, rather than just the $20,000 invested. Leveraging this way allows an investor to get as much as four to five times the buying power of each dollar.
Considering all the advantages, real estate is one of the best investment vehicles for building generational wealth. However, when considering investing in real estate, it is crucial that you partner with an agent who has the knowledge and tools to find the property that suits your specific needs and goals. Certified Investor Agent Specialist (CIAS) agents are trained in serving investor needs and can help you find your next investment property.
By investing carefully and for the long-term, you can build a financial legacy and ensure that future generations of your family have secure, comfortable futures and increased opportunities available to them.
Many people believe that to build wealth one must invest in the stock market. The underlying concept is straightforward enough: You purchase stock in a company and they in turn work to increase their profits, which increases the value of your stock. If you’re lucky, they may even send you a dividend, but it’s not likely. If they do, it won’t be much. For serious investors, what’s missing from this process is control. The truth is that those who invest in stocks are at the mercy of the companies they’ve invested in to generate profits and increase stock value.
For those who prefer a more active, hands-on approach, real estate has proven to be a lucrative alternative. Many are choosing investment properties with great cash flow with the help of an expert agent experienced in real estate for investment. Once they have acquired a property, these investors have control over a variety of elements affecting the size of their returns, including property condition, rent charged and tenant screening. These decisions have a direct impact on creating a steady stream of cash flow while building equity, both of which will work to build wealth over time.
But it’s not just this control that makes real estate as an investment so attractive. In fact, the numbers are on the side of real estate investment. When you look at the performance of stocks versus real estate, the stock market has proven to be much more volatile. If you had invested $100,000 in the stock market in in January 2000, your investment would only be worth $97,680 in June 20121. That same investment in real estate would be worth $135,670 according to median sales price figures from the National Association of Realtors2. That’s a 2.32 percent decrease for the stock market and a 35.7 percent increase for real estate. And, based on Census Bureau averages of rental pricing3 during that time, cash flow from a rental property would generate $93,954. When combined with the average appreciation over that time period, this investment’s returns would total $229,624—even after the worst housing crash in our generation. Any investor can see that a 129.62 percent increase is a more attractive proposition than a -2.32 percent loss.
Certainly, investment properties will have expenses associated with them, such as insurance and maintenance; however, working with a knowledgeable agent to find the right property and do the math ahead of time can help mitigate risk and help ensure cash flow. Partnering with a Certified Investor Agent Specialist (CIAS) is essential in identifying and negotiating your purchases to ensure a great investment from the outset.
Considering all the great deals in today’s market, the lower-than-ever interest rates, tax benefits, and proven stability over time, it’s easy to see that when compared to other asset classes, real estate is indeed King of Investment Mountain.
1 CNN Money
2 National Association of Realtors
|Home Affordability Reaches Record-High Level 1981 Vs. 2011||
|Average Home Price||
|30-year Fixed Interest Rate||
|Mortgage Payment (P & I)||
When you adjust for inflation, $1,147 in 1981 is the same as $2,838 today. Put simply, you can buy 20 percent more house for a more than 60 percent discount. Couple high affordability with the fact that interest rates are at all-time lows, allowing people to enter the market with less money than ever before and produce cash flow at a higher rate, and you have an incredibly performing asset!
Contact me today, and unlock a world of real estate wealth!
Patterson-Schwartz Real Estate | Main Office: 302-733-7000 | 680 S. College Ave., Newark, DE 19713