It is said that about 90% of self-made millionaires obtained their wealth by investing in real estate and many invest in real estate to maintain and grow their wealth. Investing in real estate can bring passive income, freedom, and wealth. Real estate is very broad and there are many avenues you can take to invest in real estate. For example, you could flip a home, have a short term rental like AirBNB, or even own a strip mall. There are likely hundreds of ways to invest in real estate and many different types of properties: retail, medical, single family, multifamily, industrial, and more.
Another reason we like real estate is that it can provide passive income. Property managers will manage the property. While that sounds redundant, it is a major benefit of owning a property. Property management companies will screen a prospective tenant, provide the leasing agreement, and handle work orders and evictions (if needed). All of this obviously comes at a cost, but a good property and property manager are absolutely well worth the cost. A good property management team can help ensure the property will provide cash flow and be a good passive investment for the investors.
Real estate is also a hedge against inflation. Market rents will typically rise as inflation increases the costs of goods and services. Your loan may be a fixed or variable interest rate, but the cash flow and valuation of the property should increase as the cost of goods and services increase. Since 1990, a home worth $100,000 is worth about $300,000 as of 2020. If you had $100,000 sitting in a bank account in 1990, it has only about $210,000 purchasing power now. Real estate beats inflation. Cash sitting around does not help grow wealth. Banks only give you about 1% interest, if you are lucky.
As mentioned above, investing in real estate can be a phenomenal avenue to create wealth. Many investors have bought additional properties just from the cash flow of other properties. Building wealth and generational wealth is often a target or goal for many people. Real estate can provide passive streams of income while the investors maintain their current jobs.
If you have been looking for a way to earn passive income or build wealth, real estate may be a great way to accomplish your goals. Our team is passionate about real estate and providing passive income for our investors.