Thursday, August 04, 2005
Invest in real estate foreclosures
The Benefits of Real Estate
Before we begin, I want to discuss some of the benefits of real estate. It is important to have a basic understanding of how real estate investing works so you can determine what your goals and objectives will be.
Be Your Own Boss
If you are anything like me, you are sick of working for someone. Have you ever wanted to get out from under the thumbnail of your boss?
There is a scary statistic that states a very small percentage of the population owns all the businesses in this country. Even more disturbing is that over 90% of the workers in our country work for that small percentage.
As stated previously we know that the vast majority of people will retire broke at the age of retirement. If we know that the majority of people will work for someone else and that the majority of people will retire broke, that leaves only a small percentage of people who will retire financially secure. That small percentage is the group of people who own all the businesses.
With that known, it is clear that working for someone else leaves you next to no chance to be financially secure when you retire.
Real estate affords the average person an opportunity to build their own business while simultaneously securing their future. What’s even better than that is real estate investing is fun and exciting!
It’s not like going to a job everyday. As a real estate investor you will be out there making things happen for yourself. This is extremely invigorating. It is nice to know that you will be rewarding yourself, as opposed to your boss or your company, for how hard you work.
The truth is your employer is paying you just enough so that you don’t quit and you are working just hard enough to not get fired!
When you work for yourself, you set your own hours, you go to lunch when you want, you go on vacation when you want, and most importantly YOU determine how much you are worth. The opportunity is there for you to make as much as you want to make.
Appreciation
Perhaps the most powerful benefit of real estate investing is appreciation. Appreciation is the increase in value of real estate over time. Appreciation is one contributor to building equity in a property. Equity is the difference between what is owed on a property and what it can be sold for.
For example, if you buy a house today for $60,000 it is almost guaranteed that the same house will be worth more than $60,000 fifteen years from now. Let’s assume the house is worth $90,000.
If you subtract $60,000 from $90,000 you are left with $30,000. This is your equity in the property. (In fact your equity will be higher because you are also paying down your mortgage balance every month when you make a payment. For further explanation visit:
www.nomoneynocredit.com
Historical evidence shows that real estate has been increasing in value for the last 150 years. Now that is a solid track record! Does that mean that there are NEVER downturns in the real estate market? Of course it doesn’t. Just like most facets of our economy, real estate can fluctuate with ever changing economic conditions. However, if you look at the long-run it is almost guaranteed to appreciate.
What is even more exciting is that for more than 10 years, real estate has appreciated at a rate close to 5% per year. So, what does this mean to you? Let’s look at the following example.
If you were to buy a house today for $100,000 and assumed that real estate is going to appreciate at only 3% per year, that house will be worth $235,656 thirty years from now
Pretty powerful, huh? Don’t ever underestimate the power of compounded interest. What is exciting to me is that this is an example with one house.
What if you bought two or three? How about ten or twenty? How about fifty?
Before we begin, I want to discuss some of the benefits of real estate. It is important to have a basic understanding of how real estate investing works so you can determine what your goals and objectives will be.
Be Your Own Boss
If you are anything like me, you are sick of working for someone. Have you ever wanted to get out from under the thumbnail of your boss?
There is a scary statistic that states a very small percentage of the population owns all the businesses in this country. Even more disturbing is that over 90% of the workers in our country work for that small percentage.
As stated previously we know that the vast majority of people will retire broke at the age of retirement. If we know that the majority of people will work for someone else and that the majority of people will retire broke, that leaves only a small percentage of people who will retire financially secure. That small percentage is the group of people who own all the businesses.
With that known, it is clear that working for someone else leaves you next to no chance to be financially secure when you retire.
Real estate affords the average person an opportunity to build their own business while simultaneously securing their future. What’s even better than that is real estate investing is fun and exciting!
It’s not like going to a job everyday. As a real estate investor you will be out there making things happen for yourself. This is extremely invigorating. It is nice to know that you will be rewarding yourself, as opposed to your boss or your company, for how hard you work.
The truth is your employer is paying you just enough so that you don’t quit and you are working just hard enough to not get fired!
When you work for yourself, you set your own hours, you go to lunch when you want, you go on vacation when you want, and most importantly YOU determine how much you are worth. The opportunity is there for you to make as much as you want to make.
Appreciation
Perhaps the most powerful benefit of real estate investing is appreciation. Appreciation is the increase in value of real estate over time. Appreciation is one contributor to building equity in a property. Equity is the difference between what is owed on a property and what it can be sold for.
For example, if you buy a house today for $60,000 it is almost guaranteed that the same house will be worth more than $60,000 fifteen years from now. Let’s assume the house is worth $90,000.
If you subtract $60,000 from $90,000 you are left with $30,000. This is your equity in the property. (In fact your equity will be higher because you are also paying down your mortgage balance every month when you make a payment. For further explanation visit:
www.nomoneynocredit.com
Historical evidence shows that real estate has been increasing in value for the last 150 years. Now that is a solid track record! Does that mean that there are NEVER downturns in the real estate market? Of course it doesn’t. Just like most facets of our economy, real estate can fluctuate with ever changing economic conditions. However, if you look at the long-run it is almost guaranteed to appreciate.
What is even more exciting is that for more than 10 years, real estate has appreciated at a rate close to 5% per year. So, what does this mean to you? Let’s look at the following example.
If you were to buy a house today for $100,000 and assumed that real estate is going to appreciate at only 3% per year, that house will be worth $235,656 thirty years from now
Pretty powerful, huh? Don’t ever underestimate the power of compounded interest. What is exciting to me is that this is an example with one house.
What if you bought two or three? How about ten or twenty? How about fifty?
