Investing in real estate is a smart move, as there are three different ways it makes you money.
Should you invest in real estate?
My answer to this question is always yes—as long as you can afford the down payment and have the stomach to handle a little bit of risk.
Real estate investing does carry a slight risk, but there’s a huge upside to it. In general, there are three ways you make money when investing in real estate:
1. You’re buying an asset that appreciates. It’s not guaranteed, but historically speaking, if you buy a house and own it long enough, it’s value will increase.
2. The property creates a monthly cash flow. You can pay off some of your mortgage with this money, or put it into what we call the “sinking ship” fund (i.e., the fund you dip into if something breaks). Even while covering these items, you still make money each month.
3. Someone else pays off your property’s mortgage. While your mortgage goes down, your property’s value goes up—the difference is how much money you’ll make every month you own the home. Once the mortgage is gone, you’ll make even more money each month.
I’m a big believer in real estate investments and I think everyone should have them as part of their portfolio.
If you have questions about this or any other real estate topic, don’t hesitate to reach out to me. I’d love to help you.