Oct 21, 2020
3 Ways Real Estate Can Make You Wealthy
When it comes down to it, building a successful real estate investment business requires the same work ethic and dedication as any other form of work. There is no shortcut to make money in real estate. It is possible to make $100,000 part-time in your first year. You can also slowly and steadily build wealth through successful real estate deals.
The most question you must ask yourself is, Do I want to create wealth? If you do, you need to be willing to learn how to invest in real estate, create cash flow, and put you more money in your pocket through tax advantages and capital gains. Let’s look at the three ways real estate can make you wealthy.
1. Cash Flow
Cash flow is the lifeblood of any household. Every adult with a house and a family must make enough money to cover their monthly household expenses. The question is, what kind of cash flow do you have in your household? More specifically, do you have rollout money or rollover money? What is the difference?
Rollout money is the kind of money you earn when you roll out of bed and go to work. You earn an income paid to you by your employer. Essentially, you work for the money. The money does not work for you.
Rollover money is money you earn, whether you get out of bed or roll over and go back to sleep. It is money that continues to flow into your bank account whether you work or not. This is money you generally earn in your business – not because you are working for someone else.
Which would you rather have; money that you work for or money that works for you? Real estate investing can help generate healthy cash flow through rental properties, multi-family, commercial leases, or other investment opportunities
2. Tax Advantages
Real estate is one of the few industries in which the federal government allows you to depreciate and offset your tax liability. The benefit is that you pay less of a percentage of your income.
If you get a full-time job, you pay higher taxes and make less money. For instance, if you make $50,000 a year in your job, you will likely get taxed at a higher rate. This is why most employees pay more taxes.
However, if you are making the same $50,000 in real estate, you are being taxed at a reduced rate because now it is no longer earned income. Instead, you are generating passive income. Furthermore, the federal government offers incentives for real estate development since you are providing housing in the U.S. Incentives and tax breaks put more money in your pocket.
3. Capital Gains
If you create the right value asset strategy when selling real estate, you will increase your net worth. For example, if you buy a residential property and add a bathroom, bedroom, or kitchen remodel, you have increased the property’s value. You now have capital gains, and you can sell it for profit.
The same goes for commercial property. If you buy a building and assess its business attributes and find ways to make it more functional or efficient, you have increased its value and created capital gains. The goal of capital gains is to reduce expenses and increase revenue. As your net operating income increases, your building’s value increases so that you can refinance and get some money out, or you can sell it for a profit.
Your net worth will increase through capital gains. The best thing about capital gains is that they are taxed much less than your income from a W-2 regular job.
You Can Be Successful in Real Estate Investing
Through our real estate training system, you can make your first $100,000 part-time in real estate regardless of your current circumstances. You simply need the ability to follow our proven system and use the resources and tools available. How can you get started?
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