7 Tips For Building Wealth With Rentals
“Real Estate Investing, even on a very small scale, remains a tried and true means of building an individual’s cash flow and wealth. – Robert Kiyosaki”
If you ask the most wealthy people in the world how they created and sustained their wealth, they would say with Real Estate. Real Estate is still to this day one of the best investment vehicles to put your money into. Rental properties are amazing because you get to purchase property with other people’s money, build equity while someone else (the tenant) pays off your mortgage and enjoy some great tax benefits that your tax advisor will tell you all about.
Here are seven tips on how to build long-term wealth with rental properties. Rental properties can be extremely profitable when the right buying opportunities occur.
1. Properties that are expensive don’t always pay you back
Expensive properties may look like the best investment at first, thinking you will get a bigger return on rent. In actuality, an average property will cash flow more than an expensive home.
2. Building wealth with rentals doesn’t happen overnight
Start with one property at a time. Learn from your mistakes and do not over-build your portfolio too fast. A few months of vacancies with more than one property can clear your residual bank accounts quickly. Play it just like you would monopoly.
3. Start small and build upon experience
Begin with one property and let it grow naturally. Once the rent from the first property is generating income, only then can you add a second property. Once you establish each property is generating positive income then you can repeat this over and over until you have a portfolio big enough to quit the day job!
4. Get a tax advisor
You need a tax guy to guide you through all the various avenues of deductions like depreciation, property taxes, repairs and even travel. As a landlord you can also deduct for legal and professional services related to your income-producing properties.
5. Become a professional
Most of us here are realtors. The best part is that the 3 percent commission sure helps with off-setting costs from the purchase of your properties.
6. Look at various financing options
Money is cheap right now. I know you can buy a place all cash and your profit will be nice, however leverage the same cash purchase and you will see your portfolio expand a lot faster and the mortgages will give you some good write-offs. Talk to your tax guy of course.
7. Never sell!
The only time to sell your investment property is when it is an alligator eating away at your profit each month. If you are helping pay into the mortgage, Gardner or insurance than you have an alligator property. The goal of these rental properties are to keep tenants in for 30 years until they pay off your mortgage. Once each home is paid for you have free and clear profit minus taxes, insurance and if there is HOA.
Long term wealth from rental properties can be achieved with the correct knowledge, location, opportunity and of course timing is everything! The first thing you have to do is act. Just go and buy your first rental property. Know your numbers, learn from your mistakes and you will be able to build a portfolio that will help you, your family and loved ones for generations to come.
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