When I first learned about the promise of real estate back in 2016, I invested in my first property: a four-bedroom house in Tacoma’s Hilltop neighborhood.
My brother and I purchased the fixer-upper for $138,000 with a loan of 3.5%. Altogether, we only put down $8,000 (including closing costs), and that small investment ended up being one of my most profitable to date.
Today, the house is valued to be worth more than $500,000. Within six years, our investment has brought us a return of over 42x our money or 4500%, all thanks to the thriving real estate market.
With our monthly mortgage payment at $1,050 and the rent we charge tenants at $1950 per month, we are able to generate a positive cash flow of $600 each month (after accounting for capital expenditures).
But the cash flow is only the cherry on top of the property investing sundae. Here are three important reasons to invest in real estate.
Safely leverage your money:
The ability to safely leverage your money is not available with most investments, such as stocks. As for real estate, you could simply use $3,500 as a down payment on a house that costs $100,000. This means you are able to leverage significantly and potentially earn a greater long-term return on your money. It’s a great way to make your money truly work for you.
Significant appreciation of houses:
Real estate is also a great investment tool due to the increase in value of an asset over time. On average, annual economic inflation is reported at 2.5%. Real estate appreciation clocks in at a yearly rate of 14%, while this year alone has seen surges as high as 20%. That gives investors incredible year-over-year returns on the money.
Utilize hard-earned equity:
Another wonderful quality about real estate investing is the ability to utilize your property’s equity to purchase more assets. If you are a homeowner, you can use a HELOC (home equity line of credit) or cash-out refinancing to borrow against your house. This allows you to borrow up to 80% of the equity in your home to purchase another asset, such as a rental property, and create passive income.
All these reasons are exactly why real estate investment is the most essential tool for anyone wanting to grow their wealth. Owning multiple properties has given me the freedom to pay off credit card debt, buy my dream car, and have time and money to do more of what I love.
This is why I recommend that all serious investors consider real estate investment as a tool to get them the wealth--and lifestyle--they desire.
Ready to get started building an investment strategy through real estate? Contact Ludomir Wanot, 253-266-3973.
Ready to get prequalified for a loan, receive a quote on a HELOC, or refinance your home? Contact Augustus Bukowski, 206-380-9989.