A few years ago, I read an article that changed my life. It was about how to achieve financial freedom through real estate investing. The writer of this article spoke at length about the benefits of buying a cheap house and renovating it.
He discussed all the ways owning a home can add to your wealth, from the monthly payments you make (rental income) to the potential capital gains when you sell it. When you invest in a property, he explained, you’re actually putting money into your business, so your earnings grow over time!
I thought about his insights for several days before acting. But once I did, I couldn’t wait to start my own investment journey.
So I bought my first rental property, and since then I’ve invested more than $500,000 in additional rentals that produce significant passive income every month.
I’ll be sharing my experience with you here.
Buy a house
As we mentioned, owning a home is one of the biggest investments you can make in your life. This is especially true if you want to consider yourself wealthy.
A lot of people talk about how important it is to own a house, but very few actually do. There are always reasons why they don’t, like “I can’t afford it,” or “It’s too expensive, I have other priorities right now.”
But none of those things matter when it comes time to invest in a house. It will just take care of itself!
And while it may not be easy to come up with the money for a down payment, most experts agree that you should be able to spend around a percent of your income per month on a stable, modestly-priced residence.
So what does this mean? It means that you shouldn’t worry so much about having enough money to buy a house. Rather, you should focus on whether or not you will have enough money to maintain a house once you own it.
Furthermore, there are many ways to go about buying a house without spending a large amount of cash. By being aware of them, you will know how to maximize your savings.
Rent out a room
This is one of the easiest ways to make additional income in your life. All you have to do is rent out a room in your house or apartment that you don’t use anymore!
There are many people out there who earn extra money by renting out their bedrooms, living rooms, or even full apartments for a few hours per day. It’s not only possible, but it’s easy to do as well.
By letting other people use your space, you get paid for using part of your home! And if you want to keep the rest of your home for yourself, you can always advertise it online or through word-of-mouth.
Many people find success in this business model, including Alyssa Milano, CEO of Re/Max Professionals and author of My Life As A Realtor. She owns a bedroom she rents out on Airbnb on at least an annual basis.
Beth Kanengiser also uses Airbnb to finance her traveling and teaching career while still keeping her private residence. Both are rich real estate investors because they invest in properties outside of just buying and selling them like most people.
Kanengiser has owned five homes since 2006 and now teaches others how to do the same via her website Inovateus.com.
Her students buy a property and then teach each other about mortgages, financing, and investing with them. They are all connected through a community platform where everyone shares knowledge.
Let your house sit and earn on it
Many people have a plan to buy a house once they have enough money saved up. They believe that this will happen in a few years, when their savings are high enough!
But what if we gave you a way to make even more money right now? What if you could create a second income stream out of your current residence?
This is possible through one of the least expected ways to increase wealth – investing in real estate.
Real estate investing can easily be done by anyone with a good amount of knowledge about properties, market values, and how to improve your net worth.
There are many different strategies for investment, so there is not necessarily one “best” approach (like there is with stocks). It really depends on your goals and personal preferences which ones appeal most to you.
A common type of investing in real estate is buying or renting a property and then doing some kind of business related to the area surrounding it. For example, owning an apartment complex, running a restaurant, or opening a gym next to your home.
These types of investments may sound complicated at first, but do not worry! There are plenty of free resources available online and through community groups who can help you get started.
Pay down your debt
It’s easy to get distracted with all of the things that life offers us, but ignoring your financial obligations is never a good idea. When you come out of debt free, you can focus on other things like saving for a house or investing in the stock market.
Many people start spending money after they graduate from college, so paying off student loans is important. If you have a lot of credit card debt, paying off those cards will free up cash you could put towards an apartment or a car loan.
By having less debt, you give yourself more freedom to do other things such as invest in the stock market or take vacations. Starting early is key- even if you are only able to contribute small amounts regularly, it will help you achieve your goal later on.
Your income should be no longer than your expenses, otherwise you will spend too much trying to make ends meet and won’t save any money. Check out how to manage your debts effectively using these tips.
Consider an RRSP and/or TFSA
Even if you don’t have a lot of money to invest, real estate is still a great way to get rich. A savings or retirement account like a Registered Retirement Savings Plan (RRSP) or Tax-Free Savings Account (TFSA) can be used for this purpose.
Both of these accounts allow you to save tax-free income that you receive from your house. For example, if you were to sell your home now and put the proceeds in your RRSP or TFSA, no capital gains taxes would be applied because it was being invested for retirement.
Instead, only ordinary income taxes would apply.
Buy a second home
If you want to be rich, then buying a house is not your best start. However, if owning a house is something that’s beyond your budget at this time, don’t worry! There are other ways to invest in real estate. One of the most popular strategies is investing in what’s called a secondary residence or a “second home.”
A second home is usually a duplex or a triplex (three units in one building) with part of it being an apartment and the rest being either a bedroom or a living room space. This way, you can have your own place to stay when you need to, while also having some extra income generated from renting out the whole house.
There are several reasons why having a second home is great investment materialism, but my top reason has nothing to do with money- it’s personal growth. By sharing a space with someone else, you learn how to work together as a team, which is a valuable life skill. You will also have to take responsibility for the other person, which teaches you about trust.
Another thing you will learn by staying in a second home is how to manage your moods, which is very important since people close to you will often look up to you.
A lot of people get upset with the real estate market, but instead of looking at the market as something that is down, use it to your advantage!
The more negative you are about the market, the harder it will be for you to find a home. If you keep an eye out for great deals, read up on strategies to maximize your profit, and remain optimistic, then you will have no problem finding a place to live that fits into your budget.
It’s impossible to know when the next boom will happen, or if one even exists in your area, so stay level-headed and prepare yourself for whatever comes your way.
Real estate is a long-term investment
While some may consider real estate to be a luxury, it is not! Owning a home is an incredible way to invest in your future. A house is a wonderful shelter that allows you to feel comfortable at night and gives you space for creating new memories with your family.
Real estate can also generate passive income by letting you rent out your house or apartment to someone else. This income comes in without you having to do anything beyond writing a check once a month!
Furthermore, people who sell homes usually have large amounts of money they want to spend, so they will often hire professionals to help them do this. By investing in these professionals, you get paid back later when they advertise for workers or offer services such as listing presentations, showing off the property, etc.