Now you’re going to see why real estate investing offers you greater opportunities to build wealth than any other type of investment. With real estate, you can make money in dozens of different ways.
Each year and every year the Federal Reserve System increases the money supply. As more money chases after a slowly increasing supply of properties, property prices go up—even without an overall favorable change in the underlying forces of supply and demand (market appreciation). The Federal Reserve specifically designs its monetary policies to create a modest (1.5 to 3.0 percent) annual gain in the Consumer Price Index (CPI).
Higher Interest Rates? Lower Interest Rates? You Gain Either Way
Say you buy today and secure a long-term mortgage interest rate of 6.5 percent. If interest rates go down, you can refinance and take advantage of lower payments (more on this topic later). Yet, if inflation again goes wild and interest rates head up to 8, 10, 12 percent or higher, you’ll gain as inflation pushes the price of your property up and slices the real dollar (inflation-adjusted) amount of your mortgage balance. You borrow dollars when their purchasing power is strong. You pay them back when their buying power has fallen. You gain
Serial Home Sellers
Growing numbers of Americans are profiting from investing in their homes tax free. Here’s how it works. Generally, when you own an investment property, you will pay a capital gains tax on your resale profits at the time you sell. However, when you sell your personal residence, your gains come to you tax-free.
As you might suspect, most small-time investors mismanage their rental properties. Why? Because they get lazy. They fail to keep up with changes in the market. They fail to make desirable improvements to their properties. They fail to develop a sound strategy of target marketing.