How has Investment Real Estate fit into Our Lives?
You might be wondering why I’m talking about investment real estate versus real estate investment. It’s because there is a big difference. I want you to think of investment first and real estate as the investment vehicle second.
Investment real estate is a way of saving, sharing, securing, investing, and getting a return on capital. All these words represent stable concepts, unlike the terms typically used to talk about other kinds of investments. Speculation, outlay, deal, and venture capital …… are all words that carry a connotation of risk.
Investment real estate shouldn’t be overly risky; rather, it should be boring, so you have no problem sleeping at night and making money while you get a good night’s rest.
What benefits have we enjoyed having investment real estate in our financial portfolio?
- Strong Financial Foundation
- Sustainable Wealth
- A Living Legacy
According to Marriage.com, the Number 2 Reason marriages end in divorce is “Trouble with Finances.”
The trouble in paradise happens more often because of the two partners’ different spending habits and financial goals.
When I take couples on as coaching clients, the first requirement is to ensure the couple is on the same financial page during our initial meeting. Next, we review their financial goals and should investment real estate be part of their financial portfolio.
At the end of our first coaching session, I asked them to return with a completed Net Income and Net Worth statement.
If filled out accurately and completely, these two statements give the couple and me a picture of their spending habits and financial goals; are they a team or dominated by one partner?
The last part of the equation when deciding to take on these folks as new clients, the last part of the equation is whether they are ready to embrace or purchase investment real estate as part of their financial portfolio.
How substantial is their desire to add investment real estate or do the work to add investment real estate to their financial stability?
Don’t Let History Repeat Itself.
Gen Z, Millenials, and Gen Xers often let history repeat itself.
For instance, they don’t look and observe where their parents are financially at this point in life.
Are their parents in good economic health, have a solid financial foundation, have sustainable wealth to carry them through the back half of their lives, and what have their parents done to include them in their financial legacy?
I am not critical of anyone’s parents.
However, as Xers, Millenials, and Gen Z, you can learn by observing and asking your parents questions. Probing your folks about their finances might be challenging, but it is real life.
Don’t let history repeat itself; you don’t have to pass judgment on your folks; learn and grow.
Start building on this investment real estate knowledge; the return on this education is the best investment one can make.
Are you ready to jump into the driver’s seat and take control of your financial journey?
The 3 Main Drivers of Investment Real Estate
- Positive Cash Flow
- Appreciating Asset
- Mortgage Paydown
Having three main drivers that earn returns on your investment is a significant reason investment real estate outperforms most other investment products.
I challenge you to look at most financial products; few even have two elements to earning returns.
It is nice to have the security of three drivers through investment real estate. Look closely. Any of the three primary investment real estate drivers working for you will outperform the stock market, mutual funds, ETFs, and many other investment vehicles.
With Investment Real Estate, the real return starts when your tenant makes the first rent payment and you start making your mortgage payment, paying off the principal.
Earlier, I challenged you to review your return on your initial investment (down payment on your principal residence); this is where the real magic begins. Remember, your performance is tied to your cash investment to purchase the investment property.
Your initial investment is between 5% and 20% of the investment real estate purchase’s total price.
The financial institution that lends you the funds to purchase the property puts up most of the investment.
When tenants start paying your rent, your tenants are paying down your mortgage.
The money you begin to see as a return on principal paydown is a calculation against your investment as a return, not on the funds the banking or financial institution lent you for the mortgage.
Don’t feel sorry for the lender. They will not suffer in this deal; their compensation is the interest they earn on your mortgage.
Do the calculation, and you will see that the return performance of your downpayment funds is outperforming most of today’s stock markets, mutual funds, EFTs, and many other investment returns.
Investment Real Estate Return Philosophy
“Don’t wait to buy investment real estate. Instead, buy investment real estate and wait.”
The return rate on investment in real estate compounds faster each year than most investments. In the years when you get appreciation and positive cash flow, you, as an investor, almost feel guilty about such high returns.
Yes, I said almost.
Are you ready to use investment real estate to fill your life’s vault?
Thank you for taking the only asset you can never get back your time and joining me in living my mantra:
“Prosperity for all aspects of your life forever.”