Real estate has been a sour subject for the last five years. This country has gone through a real estate bust that people will never forget. Foreclosures have been at levels never seen before. Our current recession/depression was caused by an overinflated housing market.
However, things are starting to looking better. Like all markets and economies, real estate moves in waves or cycles. Prices go up, down and sideways. Sit with any old timer and ask them about it. They have seen all kinds of markets with this one probably being the worst since the depression. We have been in the cycle for 5 years and it looks like we might be hitting a bottom.
How can you profit from this?
Massive amounts of money has been made and lost in real estate. You can be a develop, flipper, Realtor, home builder or buy and hold for the long haul. One benefit of buying and holding is that you don’t have to time the market precisely. Timing a market can be difficult.
If you are a flipper you have to buy a property below retail, often times fix it up and then sell it for a profit before further price declines. It can be extremely lucrative however it is also risky. I see a bunch of novices try to do this. Where they go wrong is buying retail and trying to raise the market. That rarely works.
If you buy for the long haul you can real create a nice portfolio of properties but it takes time. The formula many investors use is to buy property cheap, in safe areas that produce a break even or positive cash flow. It can be difficult to find these properties however with the recent drop in home prices it is getting easier.
Time Value of Money
Money will grow over time with appreciation. Real estate will eventually start increasing in value again. Imagine if you purchased near the bottom of this real estate market and held on for 20 years. The house you buy will not only increase in value but your tenant will help pay off your mortgage.
imagine buying a rental home for $75,000 with a low interest 15 year mortgage. In 15 years when the home was paid off the value of the home would be:
* 2% appreciation a year – $100,940
* 3% appreciation a year – $116,847
* 4% appreciation a year – $135,070
* 5% appreciation a year – $155,919
What if you bought several rental properties? Within 20 years using the tortoise approach and assuming increased home prices you could be worth millions. Not only that but you would have a portfolio of homes providing a nice monthly income. 20 paid off homes generating $1,500 a month each is a nice way to retire. Don’t you think?
Marc Rasmussen specializes in Homes for sale in Sarasota, Florida
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Topics: Real Estate | Comments Off
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Rasmussen, Marc "Slowly Get Rich With Real Estate." Slowly Get Rich With Real Estate. 22 Jun. 2010. uberarticles.com. 11 Aug 2014 <http://uberarticles.com/real-estate/slowly-get-rich-with-real-estate/>.
APA Style Citation:
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