“The
Royal Flush” of Investing in Real Estate
by: Dennis Henson
The author has permitted the reprinting and redistribution of this
article.
There are many options for investing your money. Here are some
examples:
• Stocks
• Bonds
• Bank Certificates
• Mutual Funds
• Other Over the Counter Investments
• REAL ESTATE
Department store tycoon Marshall Field once said "Real Estate is not
only the best and quickest way to make you wealthy, for the average
person it is truly the only way.“
What makes real estate such a great investment for the average person?
Why have so many wealthy people used real estate to amass their
fortunes? The answer is—
Only with real estate do you get “The Royal Flush”.
What does a royal flush have to do with real estate? Here is what I
mean. Every kind of investment has some advantages and the more
advantages the better the investment. For example with IRA’s
there are tax advantages and with stocks you may have leverage through
a margin account.
Real estate on the other hand has five advantages and all five cannot
be found in any other investment. I call these “The Royal
Flush” because having all of them makes it hard to lose.
Only with Real Estate do you have the advantages of...
• Leverage
• Inflation
• Revenue Production
• Tax Advantages
• The Power of Compound Interest
Let’s look at each of these separately…
Leverage—The Geek Inventor and Mathematician Archimedes once
said "Give me a lever long enough and a fulcrum on which to place it
and I shall move the world.“ Leverage will allow you to
control a $100,000.00 property for a little as $10,000.00 possibly even
less. When you mix this leverage with just a 3% Inflation your
$10,000.00 investment just grew by 30% and that kind of return is very
difficult to find with any other investment.
Inflation—Median Housing Costs in the U.S. in
1940’s was $2,000.00. By the 1970’s it had jumped
to $23,000.00 and by 2007 it was over $150,000.00. Don’t be
misled by news reports that insist that the real estate bubble is going
to burst. People will always need a place to live and real estate will
always hold value. History clearly shows that real estate always has
been and always will be a good investment.
Revenue Production—Wouldn’t it be nice if you could
borrow $10,000.00 – put it into the stock market and then
take that stock and rent it out to so that that rent would more than
cover your loan payments. That may sound ridiculous--but it’s
done every day with real estate.
Tax Advantages—Democratic Governments love real estate
investors and give them tax advantages to prove it. Even though home
prices may go up in a given year in most cases the owners are allowed
to take a tax deduction for the depreciation of that same home. There
are also deductions for repairs, taxes paid, interest, and the list
goes on and on.
The Power of Compound Interest—Albert Einstein called
Compound Interest “The 8th Wonder of the World.”
Has anyone ever ask you if you would rather have a thousand dollars a
day for a month or a penny a day doubled for a month? The thousand a
day would net you $31,000 in January but the penny a day doubled each
day would net you $5,368,708.80. That’s just one example of
the power of compound interest. By reinvesting the profits from your
investments you will receive similar results in just a few short years.
Using your Royal Flush it will only take one home per year to create
wealth.
“Over the years”
? Rents will go up
? Principal pay down will increase
? Property value should appreciate
? Tax advantages will add up
? Mortgages will eventually payoff
And you become wealthy.
For more articles on real estate investor training and to sign up for
free reports, articles and e-books please visit my website at
http://www.dennisjhenson.com. Also visit http://www.turbo-bidder.com
for great real estate investor tools.
For more articles on real estate investor training, visit my website at
http://www.dennisjhenson.com.
Also visit http://www.turbo-bidder.com
for great real estate investor tools.
http://www.biggerpockets.com/articles/