Who wants to be a millionaire?
No, seriously, do you want to be a millionaire? Because one of the best ways to build wealth, reach your financial goals, and, yes, even become a millionaire is within your reach.
Here’s a hint: It’s all about investing in real estate.
While it may sound too good to be true, building wealth through real estate is very possible if you know what you’re doing.
In fact, real estate investment is among the safest, most lucrative ways to secure your financial future.
Read on to learn how proper real estate investment could make you millions.
How You Can Build Wealth Through Real Estate
Real estate investing offers a potential route to financial success.
But not everyone who invests in property ends up rich… so what’s the catch?
A few strategies come into play in successful real estate investing.
Let’s start with positive cash flow, or the money that you collect each month (or year) as the owner of a property. Cash flow varies depending on:
- Repair and maintenance costs
- Vacancy rates
- Capital expenditures, such as roof replacement, new appliances, plumbing upgrades, etc.
- Regular expenses, such as utilities and property management fees
Increased cash flow feeds positive equity growth. In most cases, real estate investors generate positive cash flow through rental income.
Median asking rent rates are at an all-time high. Residential renting vacancy rates are low, as demand for rental properties continues to grow.
Consider location when purchasing investment properties to rent. Look for homes near amenities such as hospitals, schools, public transportation, and shopping.
Vacation renting offers an alternative to residential renting, too. Revenue from vacation rentals has increased significantly year-over-year and isn’t projected to slow anytime soon.
Look for opportunities in popular tourist areas, such as near beaches, theme parks, or historical sites.
You can also make money simply through buying and holding property until its value increases.
While appreciation isn’t guaranteed, you can improve your chances of success by investing in properties in desirable, up-and-coming areas.
Historically, residential property tends to appreciate by about 3 percent per year. Of course, renting the property will help pay down the loan.
Real estate investing may also allow you to reap tax benefits. Look for tax deductions that may allow you to write off operating expenses, property tax, mortgage interest, and depreciation.
If you manage the property yourself, you may also be able to deduct expenses related to maintaining and repairing the property.
If you manage the rental through a home office, you may also be able to deduct associated business expenses, as well.
Consult with your accountant or tax attorney to be sure you’re not missing any tax benefits.
Tips to Succeed in Real Estate Investing (Here’s How We Did It!)
To build wealth through real estate, you have put in the time, effort, and research. This includes not only looking into which areas to buy in (pro tip: look for properties in appreciating areas) but also knowing yourself.
For instance, is your investment style active or passive? How hands-on (or hand-off) do you want to be?
Once you’ve figured out the basics, you’ll want to buy more properties. By increasing your cash flow to include multiple streams, you’ll build wealth faster.
An important key to success lies in finding better deals. When you’re seeking your next investment property, look for homes offered below market value that you can rehab and then rent or sell for profit.
The best place to find better deals? New Western.
Get Off-Market Deals Sent Straight to Your Inbox
Let our experts do the legwork! You can spend your valuable time growing your real estate empire and have peace of mind knowing that New Western can connect you with the best of both on and off-marketing properties.