The thought over the past decade of “getting rich” buying
and selling real estate may seem like a thing of the past to some. That “some”
may define “rich” as someone who can buy most anything they want at any given
time. True wealth is not in fact a dollar amount one holds in the bank, but
what they are worth overall if they had to sell everything they have. If what
you want is to drive brand new cars and wear all the latest clothes, then real
estate as an investment was never for you. If what you want is for your
children and grandchildren to be comfortable later in life, and for yourself to
have a nice nest egg, then real estate as an investment may be just the thing.
The key words here are long term, and not immediate. Building true wealth takes
patience and very careful decision-making.
Let’s talk about real estate in the present tense, and lets
leave the past where it belongs. Still living in the past is what in my opinion
seems to still be holding back the market in some sense. So presently there are
a lot of HUGE opportunities out there for those with the ability to buy and the
positive cash flow to hold real estate as a long term investment. Also, a cash
buyer may with the right advice purchase distressed properties in nice areas
and remodel them for resale. This model seems best suited for buyers with
building abilities or connections.
Many rehab buyers do tend to turn the home around in the
same market, and some are able to make a decent amount of money doing so. The
long term model though still seems to be a better option for those who are able
to hold these properties and allow them to be paid down and appreciate.
Remember that life is long, and immediate pleasure can cloud our ability to
think far forward to our retirement and the possibility of creating positive
cash flow for that point in our lives.
Typical buyers, whom I should be focusing on here are buying
a house for themselves or their family to live in. In that case though the long
term model still absolutely holds true! Buy it to hold it! Take care of it,
update it, make it a quality home. One day if you decide that a bigger or
better house is what you need, you can sell this primary residence for top
dollar. Buyers are savvier every year and they recognize a home that needs very
little compared to someone’s old money pit.
One of my favorite questions for an older person with a home
in a prime neighborhood is “May I ask what you paid for this place?” Of course
with a few strokes on the keypad I can gather this information, but it is so
much more exciting to hear from the horse’s mouth. Typically the answer is in
the 5 digits!! I constantly thank my stars that my dad kept our childhood home,
because sadly he sold many others in the wrong market. He bought that place for
around $75,000.00 and it has been worth anywhere from $825,000.00 to as low as
$625,000.00. The fact that the market price fluctuates is of no concern because
when the market price is low the rent gets higher. Also, the market has
continuously swung back upwards eventually. He could never have saved that kind
of money with a family to support! The cash flow he has gotten renting that
place over the years has enabled him to save down payments for other investment
properties. He has built a long term wealth vehicle without selling for any
type of immediate gain.
I hope my point is made here because I need to move on to
organizing my real estate files….Good wealth and good luck.
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