Forget the "I got to
get the mortgage paid off" syndrome.
You've probably been taught that having a
mortgage is a "bad thing"... a necessary evil that should be paid off as
quickly as possible. In real estate investing, the opposite is
true.
Intelligent use of leverage or financing is the key to creating wealth
in real estate. There are many techniques you can use to
select the right kind of financing. A couple of them are included
in other areas of this site. By using leverage
intelligently, you can build your wealth in a much larger investment
than if you had to pay all cash. The first thing you need to
understand and believe is that, in real estate
investing, financing is good and not a necessary evil!
Making use of leverage is the key to creating wealth.
For example, suppose you can buy a $25,000 property, all cash or a
$100,000 property using your $25,000 as cash down and financing the
remaining $75,000. Assume both properties appreciate 4% during the
next year. Your $25,000 property will be worth $1,000 more
than you paid for it (25,000 X .04), but the $100,000 property will be
worth $4,000 more than you paid for it (100,000 X .04). You are
now earning profit on $100,000 worth of real estate with only $25,000 of
your own money invested.
That is how you create wealth in real
estate investing. You cannot do it in any other investment
vehicle. Financing is so important that one entire chapter in this
course if devoted to various financing techniques, complete with
examples on how YOU can reap huge profits using someone else's money.
Order
Real Estate Investment Program Now
Continue your Tour
Return to More Tips page
