If you’re wanting to learn how to invest in real estate, just like anything else, there are things you should do, things you should not do, and things you can do to make the process easier, build wealth through real estate, and even achieve financial freedom.
Investing vs. Saving: What’s the Difference?
Before you can decide whether or not investing in real estate is right for YOU, it’s important to understand some basic money concepts. Namely, the difference between saving your money and investing it. Here’s a simple comparison between the two.
When you SAVE money:
- It’s typically readily available when you need it (i.e. you can withdraw money out of your savings account).
- There is usually a low risk of losing money – what you put in is what you’ll get out, along with a small amount of interest if placed in an interest-bearing account.
- You can earn interest, albeit at a low rate.
- You’re putting money aside for later use, typically for short-term purchases or emergencies.
When you INVEST money:
- It’s typically NOT readily available until something is sold, such as real estate holdings, stocks, or bonds.
- There is usually a higher risk of losing money – in some cases, you may actually get back out of your investment less than you put into it.
- The amount of money you can gain is typically much larger than what you get through a savings plan.
- You’re putting money aside for long-term gain or reward.
If you choose to invest in real estate, then, you need to understand that yes, there is a risk of losing money but there’s also a good chance for significant gain.
4 Key Reasons to Invest in Real Estate
Now that you know more about ‘what’ investing means, let’s talk about the ‘why’. Specifically, we’ll address four reasons why investing in real estate could be a smart plan for your future.
- Cash flow – When you invest in real estate such as rental properties, you can realize positive cash flow. The rent that tenants pay covers expenses you have on the property, including taxes and a mortgage. Beyond that, it can be used to reinvest in the property or support other financial endeavors that you have.
- Real estate appreciates – A smart investment plan includes investing in things that will increase in value over time. When you build your real estate portfolio with the right properties, the value of what you own steadily grows, adding to your net worth and giving you a greater return on investment.
- Leverage someone else’s money – When you purchase real estate with funds from the bank, you don’t have to come up with the entire purchase price all by yourself. This increases your purchasing power while leaving your own money reserves intact.
- Realize tax benefits – When you utilize real estate investments as a stream of income, you can generally deduct expenses tied to the operation and maintenance of that property on your tax return. These include things like mortgage interest, property taxes, repair costs, depreciation, and more. Always remember to work with a qualified tax professional to ensure you’re getting all the tax benefits you’re entitled to.
How to Invest in Real Estate to Get the Biggest Return
Okay, now that you know the ‘what’ and the ‘why’, let’s talk about the ‘how’. To be completely honest, learning how to invest in real estate is not something that can be taught in a single article. That’s why we recommend working with a mentor – someone who has been exactly where you are and who has achieved the goals you’re aiming to achieve.
Just like the greatest sports players wouldn’t be where they are today without an exceptional coach, those individuals who are the most successful at real estate investing get there by working with an investment coach. It shortens your learning curve and helps you achieve your goals much faster. If you’re looking to build a real estate portfolio that will provide you with a serious income stream and even lead to financial freedom, I invite you to work with me. I’ll teach you exactly how my wife and I went from owning NO real estate to owning over $5 MILLION in real estate by the age of 30. You absolutely CAN learn how to invest in real estate to get the most return on your money and I’ll show you exactly how to do it … Let’s go!