If you’re still chasing the dream of becoming a millionaire, real estate may be the best way to do it – and here are three reasons why!
That’s right – even you could be a millionaire!
There are so many benefits to purchasing real estate. While you will definitely benefit from being a homeowner, greater profits can be enjoyed through rental properties because you get to own an asset of increasing value while someone else pays down your mortgage as you bank any leftover cash.
Once you understand these three things and use them together, you can make money in a way that’s easily accessible and understandable. Keep at it and eventually you’ll be on your way to making yourself a millionaire!
Using the following three points together will help you capitalize on your rental property:
1 – Property Appreciation
Property appreciation is the increase in value of your property over time. The longer you own your property, the more money you’re going to make when you eventually decide to sell.
As long as you make sure you sell when the market is on your side before selling your property, you can make big bucks on the sale of your home. This is usually the case in most situations as real estate is one investment that, outside of extraordinary circumstances, generally goes up.
The benefit of appreciation will make you money during the sale of your property, as purchasing a lower-value home and selling it at a higher cost will give you a profit of the difference between the two amounts.
2 – Property Income
Property income is the profit earned after expenses on a property are paid. For example, if you’re making money on a rental property while simultaneously paying the mortgage and utilities, your cash flow in the money left over after all your property’s costs are paid for.
While your property is gradually increasing in value through appreciation, you can also make immediate profit with your cash flow. This is money you make back as payments come in, generally monthly, which ensures you have a constant influx of monetary value.
This benefit will make you money as you profit over time, and if you save or invest this money appropriately it will make your immediate profit even more valuable.
However, if you don’t charge enough for your property, you won’t be making any profit, forfeiting this benefit, as you can’t do much with profit you aren’t making. It’s also very easy to see money that comes in this often as spending money, so you need to wisely manage your cash flow.
3 – Debt Repayment
Repaying your property debt is the process of paying back your original loan to the lender of your mortgage, which is usually the bank.
When you make your mortgage payment, you make a monthly payment of a principal payment that has added interest. Principal is the amount of money you pay toward your original borrowed amount, while interest is the percentage of profit you are paying to the lender.
This benefit can generate money by increasing your home’s equity. Equity is the difference between the home’s worth and what you still owe on the property, and as long as your property value remains the same (or hopefully increases!), an increase in equity will increase the value of your property’s profit. This is money you will eventually make back in the long run when you sell or refinance your home.
Paying for a property entirely upfront will forfeit the use of this benefit. Paying the full amount of your home may seem like a good idea (especially if you have that kind of cash!), but will negate you from qualifying to earn equity on your home.
Purchasing real estate does not guarantee you’re going to make millions. If you really want your investment to make you a profit, you need to put in time and money. The more you put into your investment, the more you’re likely going to get back. If you want your investment to make you a millionaire, you need to put the work in to get yourself there.
Using these three points will benefit you, but they’re not going to make you wealthy unless you use them all together. If you’re smart and brave, and have the right resources, you could also put these three benefits to use in the purchase of multiple properties at once, which would increase how quickly your preferred payout makes its way back to you.
Overall, you need to do what’s right for you. If getting to your first million dollars is your goal, contact The Raymond Yong Real Estate Group at (416) 906-9863 or [email protected].
