How Does Real Estate Investing Generate Wealth?

If you’re still not convinced investing in real estate is a good idea, today I want to demonstrate how the numbers stack up in your favor.

Today I want to talk about my favorite subject—building wealth by investing in real estate.

I own many rental units and I love investing in real estate. I know you might not like the idea of investing in real estate for a variety of reasons, but I want to show you how the numbers add up and let you decide from there if you want to try generating wealth by investing in real estate.

Let’s say you locate a $300,000 townhouse. If you put a 10% down payment on it, that equals $30,000 you would invest into that $300,000 price for a total loan amount of $270,000. A $270,000 loan at 4% interest gives you a monthly fee of $1,289. Add to that fee $300 for taxes and $70 for insurance, and you’ve got a total monthly payment of $1,659.

A townhouse of this price in northern Virginia and Maryland can easily rent for $1,800 a month, so your cash flow would be close to $200 each month. You can also get a home warranty to protect yourself from unwanted expenses that might disrupt that cash flow.

The numbers tell the story.

Every time you pay that $1,289 monthly fee, $389 of it goes toward the principal, or paying down your loan amount, and $900 goes toward interest. Early on in the process, you’ll pay a lot of interest. However, if you hold on to the property for long enough—say, 20 years—your interest payment would shrink to $400 and the principal payment your tenants pay would increase to $864.

If the rent is $1,800 now, where do you think it will be in 20 years? Do you think it will be the same? Maybe a little bit more? Perhaps $2,000 more?

Actually, try $4,000. Your monthly payment after 20 years would still be just $1,289, and your tenants would pay $864 toward your principal. At that point, you’re printing money with this property.

For a moment, just think of the appreciation aspect. In the last 50 to 60 years, statistics have shown that homes in the U.S. appreciate anywhere from 3% to 5% annually. This means a $300,000 home would appreciate $9,000 in the first year alone. Add that factor on top of everything else, and the numbers tell the story.

If you have any questions or are thinking about investing in real estate, don’t hesitate to give me a call or send me an email. Talk to you soon!

How My Referral List Can Help You in All Walks of Life

When you sell as many homes as I do, you meet a lot of experts in many different industries. I’d love to introduce you to these experts.
Buying a home? Search all homes for sale

Have you ever started a DIY project and left it unfinished because the work didn’t go the way you planned? If so, we need to talk. I have a list of experts I’d like to refer you to.

If you sell as many homes as I do, you run into many different contractors, vendors, and other professionals in other businesses. Whether it’s a plumber, an electrician, an appraiser, a financial planner, a car salesman, etc., I have many industry-leading connections you can use whether you’re selling a home or not. 

If you’re thinking of making an upgrade, an improvement, or an addition to your house, I can recommend several different people who’ve done a great job for other clients of mine who can help you too.

I know hundreds of high-quality people who can help you with anything you want in life.

However, my service is not limited to real estate. If you have a need for any kind of business, odds are I know someone who can help.

If there’s anything you need, please don’t hesitate to give me a call. I’d be happy to speak with you!