We’re back again now with our special show “First Time Investors!” An in-depth look at you, your future and your investment portfolio. And what real estate might mean to all of it…in 2020 and beyond.
We’re going to wrap up this hour of the show with a look at how real estate can help grow your household wealth over time
You probably already know about how your house does that! When you own a home, and it grows in value, your equity also grows. So if you buy a home with 20% down, you immediately have 20% equity. And then — ten years down the road….if its value has increased by 15%? Well the simple math would indicate you now have 35% equity. Nice!
But – in most cases it would be more than that. Because for those 10 years? You’re paying down the mortgage every month. Now at first, most of that payment goes towards interest. But at around 10 to 14 years, you start to pay much more principal than interest every month. So the longer you make payments, the smaller that mortgage balance becomes.
So. Say that over 10 years you reduce your mortgage balance by 15%. That’s awesome.
So let’s add it up!
You started with 20% equity….and the, add in 15% for increased market value, and also, add in that 15% mortgage pay-down?Again, using simple math that would indicate that by the end of 10 years you might have 50% equity in the property.
So that’s how it works with the house you own.
But when you add more real estate to your portfolio, that wealth-building process is happening on multiple properties. And just like your home? As you pay down those mortgages, and property values increase, you are generating wealth. Except not just on one property – on two….three…four or maybe more!
But here’s the bottom line. Investing in real estate can help you create multiple income streams. And over time it can help you accumulate substantial wealth.
And the fact is it’s not that hard to do. You need some money to get going, true, but if you jump in, and invest in real estate… chances are in the long run it will prove to be a solid investment.
Of course, like any investment, there’s no guarantee. But talk to your accountant. Talk to your financial professional. And talk to your Realtor about joining the millions of Americans who do it. Paving the way for you to become – a First Time Investor!’