Booming Markets for Real Estate Investing – Why They Aren't All They're Cracked Up To Be
I find that in the United States, people want to know how real estate fortunes are made but also tend to be rather impatient. For instance, companies tend to be concerned with their short-term prognosis, their quarterly reports, and so on. In the real estate space as well, there are a lot of people looking to make some quick money. There are the fixer-uppers who will flip homes, hoping to make some quick money. Sure, it works some of the time, but it very often does not as well. In my experience, it helps to play the waiting game. This is how real estate fortunes are made. Get into real estate for the long term if you want to genuinely create wealth.
A loan whose repayment amount remains the same over a 30-year period? A loan that is insulated against the vagaries of inflation and price rise? Something that remains the same when commodities, services, and groceries continue to become more expensive? This, to me, is an unbelievable gift! A lot of Americans simply take this for granted, probably because they grow up thinking of it as normal. However, this is how real estate fortunes are made. It just isn’t something that people have in other countries.
It is an amazing thing: the mortgage payment that you have today will remain the same years later as well. The only difference is that while the amount seems large today, it will keep getting eroded with inflation. It will become easier to repay and seem smaller as the years go by. Also, don't let the name – 30-year loan – mislead you. It may as well be called by another name. You can actually choose to repay it early as well. Let me explain with the story of the guy who retired rich at age 50.
An investor client of mine was the VP of a chemical firm. He had started investing some years back. He realized how easy it is to buy homes using the 30-year loan. He put down the minimum down payment and then earned a rental income from them. So, he continued to buy homes and ended up buying 24 of them. About 16 years after he started to invest, he found that some of his mortgages were just about 20% to 22% of the value of the homes. He then took five of the homes he owned and sold them. From the proceeds of those five homes, he paid off his taxes and the remaining loans.
Now, he had 19 homes in his name – with free and clear titles. The value of the homes is now around $9 million. He was able to retire at age 50. He was able to create wealth for himself over a 16-year period. I have seen it done in less time. Investors have become rich in 10, 12, or 13 years. The long and short of it is that the 30-year loan helps you defeat inflation and creates wealth for you. Your loan amount seems to get smaller while your rental income rises to keep pace with inflation and the cost of living.
My client was able to buy as many homes as he did because he understood how real estate fortunes are made. He realized that it is easy, it is doable, and takes very little time. If you would like to know more about our Remote Control Retirement Riches system, join our next quarterly event where you can learn more.