Money Monday: Growing Wealth

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Part 1: Why You May Consider Real Estate Investing

Today’s Money Monday is the first in a series called growing wealth. You might be familiar with the names Taylor Swift or Shaq O’Neal from the sports and entertainment worlds; but did you know that they have also earned a significant amount of wealth from investing in or growing their wealth through real estate transactions? Sure!

I know your income or wealth may not be as significant as theirs, but why not consider real estate as a vehicle for wealth building? You have acquired stocks, bonds, Certificate of Deposits, Money Market and retirement plans, but what is your perspective regarding real estate and investing? Let’s take a look.

Choose Your Adventure 

Regarding real estate and investing, who do you want to be in relation to this asset or what role do you want to own? Do you want to be the person who wants to find, fix and sell houses for profit? How about becoming a landlord and renting property to create wealth and passive income. Perhaps you dislike interacting with people so you therefore opt for the role of investing in Real Estate Investment Trust (REIT). Finally, would you consider wholesaling property? These and other options are available but you must first decide  what strategy you will pursue.

Two Real Estate Realities

Property rentals will never go out of business. Whether that’s Airbnb or other more traditional forms of renting property, people will always need a place to live. Let’s also note that with the climbing cost of education, increasing student loan debt, and the rising cost of affordable homes, fewer people have access to home ownership, and thus the need for rental property.

The second reason I would suggest real estate is for the potential for passive income. There are several financial principles and concepts that if you can learn, understand and implement in your financial journey, your finances can be transformed in significant ways. One such concept to is that of passive income- the ability to earn income while being absent and compound interest. Earning income while you sleep is very powerful in growing wealth.

Three Real Estate Investing Perks

Positive cash flow comes in very handy. Who among us does not want to make extra money? Projecting cash flow from a rental property does not have to be a guessing game, or one in which you lose money. Knowing the historical data and industry average data are important in your analysis when it comes to acquiring investment rental property. You want to acquire rental investment properties that will provide positive cash flow immediately.

Tax benefits from investing in real estate will not make a bad deal good. However, it can make a good deal even better. In case you did not realize this, the United States Tax Code rewards real estate investors. For example your property tax deduction is limited when it comes to your residential property. On the other hand, your full property taxes are deductible on rental property.

And, finally, you already know that real estate generally appreciates. A simple explanation of appreciation is the increase in value of an asset over the original cost or purchase price of that asset. Your real property can appreciate just because prices have increased . Your real property can also appreciate by making capital improvements to the property. Either form of appreciation from real estate will grow your wealth. Post Covid-19, we have seen a steady escalation in real property prices which has translated into significant  gains for real estate investors and homeowners.

Takeaways

I am certain many have considered real estate investing as a strategy to increase income and grow wealth, but there are reasons why many have failed. Among the reasons would be not building a solid, personal educational foundation before investing; failing to understand the numbers before purchasing the property. In other words, “the math needs to be mathing”; and finally, understand that risk is a powerful but dangerous tool, so proceed with caution. Despite those challenges, there are many sectors of the business from which you can grow your wealth. You can engage in tax sales, liens on properties or auctions if owning a physical structure does not fit your skill set or meet your risk tolerance level. But if you want to invest financially, considering real estate is still a viable option.

WHAT’S UP!

Today’s What’s Up is about booking flights.  According to CheapAir.com the best time to purchase a domestic flight is 42 days before you travel. Typically flight prices change in their life cycle some $98 per rotation. The cheapest day to travel is Wednesday, while the most expensive day to travel is Sunday. And that’s what’s up!

Ruthven R. Phillip, Esq., is a tax attorney, Stewardship and Philanthropy Ministry Assistant, and CEO of Give2Getrich, LLC. Give2Get Rich, LLC 2024. All Rights Reserved. Any distribution or reproduction of part or all of the contents in any form is prohibited.

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