Real estate has been a sour subject for the last five years. This country has gone through a real estate bust that people will never forget. Foreclosures have been at levels never seen before. Our current recession/depression was caused by an overinflated housing market.
However, things are starting to looking better. Like all markets and economies, real estate moves in waves or cycles. Prices go up, down and sideways. Sit with any old timer and ask them about it. They have seen all kinds of markets with this one probably being the worst since the depression. We have been in the cycle for 5 years and it looks like we might be hitting a bottom.
How Can You Make Money From This?
There are several ways to make money in real estate. You can build, develop, flip or buy for the long road. People have made and lost massive amounts of money in all these areas. One way to make good money and at the same time plan for your retirement is buying rental properties and planning on owning them for many years.
If you are a flipper you have to buy a property below retail, often times fix it up and then sell it for a profit before further price declines. It can be extremely lucrative however it is also risky. I see a bunch of novices try to do this. Where they go wrong is buying retail and trying to raise the market. That rarely works.
If you are a long term investor you don't need to worry as much about timing the market. You can buy a property right and sit back and let the market do the work for you. To oversimplify things many investors use the formula of buying good properties at reasonable prices in good locations. Hopefully, you can do that and get a break even cash flow. It has been very difficult to find these properties but as prices have moved south they are getting easier to find.
Time Value of Money
If history repeats itself and it usually does then real estate will start to increase again. It won't stay low forever. Just imagine if this is the market bottom and prices move up for the next 15 years. You can build a nice portfolio of properties and wealth over the next 15-20 years.
Assume that you purchased a rental property for $75,000 and obtained a 15 year mortgage. In 15 years when the home was paid off the value of the house would be:
* 2% appreciation a year - $100,940
* 3% appreciation a year - $116,847
* 4% appreciation a year - $135,070
* 5% appreciation a year - $155,919
Imagine if you bought several of these homes and they grew in value slowly. Within twenty years you could have a portfolio of real estate worth in the millions. Are you worth several million dollars now? Here is a road map to get you there assuming we see an increase in house prices. Wouldn't it be nice to have 20 paid off homes producing $1,000 a month in income? That does not sound too bad to me.
However, things are starting to looking better. Like all markets and economies, real estate moves in waves or cycles. Prices go up, down and sideways. Sit with any old timer and ask them about it. They have seen all kinds of markets with this one probably being the worst since the depression. We have been in the cycle for 5 years and it looks like we might be hitting a bottom.
How Can You Make Money From This?
There are several ways to make money in real estate. You can build, develop, flip or buy for the long road. People have made and lost massive amounts of money in all these areas. One way to make good money and at the same time plan for your retirement is buying rental properties and planning on owning them for many years.
If you are a flipper you have to buy a property below retail, often times fix it up and then sell it for a profit before further price declines. It can be extremely lucrative however it is also risky. I see a bunch of novices try to do this. Where they go wrong is buying retail and trying to raise the market. That rarely works.
If you are a long term investor you don't need to worry as much about timing the market. You can buy a property right and sit back and let the market do the work for you. To oversimplify things many investors use the formula of buying good properties at reasonable prices in good locations. Hopefully, you can do that and get a break even cash flow. It has been very difficult to find these properties but as prices have moved south they are getting easier to find.
Time Value of Money
If history repeats itself and it usually does then real estate will start to increase again. It won't stay low forever. Just imagine if this is the market bottom and prices move up for the next 15 years. You can build a nice portfolio of properties and wealth over the next 15-20 years.
Assume that you purchased a rental property for $75,000 and obtained a 15 year mortgage. In 15 years when the home was paid off the value of the house would be:
* 2% appreciation a year - $100,940
* 3% appreciation a year - $116,847
* 4% appreciation a year - $135,070
* 5% appreciation a year - $155,919
Imagine if you bought several of these homes and they grew in value slowly. Within twenty years you could have a portfolio of real estate worth in the millions. Are you worth several million dollars now? Here is a road map to get you there assuming we see an increase in house prices. Wouldn't it be nice to have 20 paid off homes producing $1,000 a month in income? That does not sound too bad to me.
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