The Source for all Future Earnings
The most important investment in any person’s lifetime
is the acquisition of their first home.
Naturally when people acquire real estate they want to know four basic things.
- What to do with it
- How to improve it
- How to pay for it
- How to make it work for them
The most important investment in any person’s lifetime is the acquisition of their first home. Over time that home is the source for all future earnings. If you are able to access that equity and reinvest it into your first home and then buy other homes, you’re quickly on your way towards the second of our 3-step program…Property Management.
I have several clients who have several properties in their portfolio. I was able to talk them out of selling the home they were living in to buy their next home. That’s really common for a financial planner to do but not very common for a loan officer or a mortgage representative. A mortgage representative cares about selling the easiest product at the highest price to get a quick turnaround and make a really good buck. And that’s not me.
I think everyone knows that the best place for you to invest your money is in real estate. I’m not talking about flipping houses, which you can do if your portfolio is large enough. I’m talking about long-term real estate investments. It looks something like this.
- Buy a home below market value
- Use the equity to renovate and update the home, which raises the value of the property
- Rent out a portion of the home (or place an ad on Air B&B) that brings in money that pays for the monthly mortgage
- Use that savings to prepare to buy your next home
- Repeat steps 1 – 4
If you do this a few times you could grow your portfolio pretty quickly. Plus if you ever get tired of managing the properties you can sell them off for a profit. Reinvest those profits into an index fund or an annuity or buy more property at a later date. It’s a tried and true strategy that I like to move my clients into because life moves pretty fast. Before we know it 20 years have passed us by, and living a comfortable retirement is far from reach. By leveraging the equity in your home(s) you can plan to let your money work for you rather than you have to work for money.