If you’ve ever thought seriously about obtaining a 7-figure net worth – or maybe even just dreamed about it – you may be curious about how it’s done. The result may shock you! The fact is that nearly 90% of all millionaires built their riches by investing in real estate.
There are few other methods to invest money that give the type of stability and growth that real estate can offer, mostly with regard to single-family rental properties. Why is rental real estate your easiest route to becoming a millionaire? Here are various ways owning Novato rental properties can make things happen.
Monthly Cash Flow
When executed right, owning rental properties may help you generate a reasonable monthly income. In fact, not only should your rental payments cover the mortgage, insurance, and other expenses, but many investors enjoy positive net cash flows as well. While it’s possible to achieve positive monthly cash flow with just one or two properties, most investors work their way up to a steady income by buying multiple properties.
As your rental payments pay your mortgage, each one allows you to pay down your mortgage and build equity in the property. This equity may subsequently be leveraged in several ways to help you further increase your wealth-building potential. For illustration, equity loans or refinancing a mortgage might help provide you funds to invest in another property. You also realize that equity in your profits when the time comes to sell the property.
Together with building equity, single-family rental homes are likely to appreciate in value year over year. This can help increase the amount of equity you have in the home and, by extension, increase your investment activity as well. While not all real estate markets see gains every year, and some markets will see home prices rise quicker than others, if you pick your location wisely, you might witness significant upswings in value when the opportunity arrives.
Investing in rental real estate is also an ideal approach to access wealth-building resources that several other investors don’t have. After you have your rental properties leased and expertly managed, you can spend more time on activities that directly contribute to your bottom line. Allowing somebody else to manage the day-to-day tasks enables you to focus on more productive investing activities.
Investing in real estate is also one business that can allow you to leverage other people’s assets to help you succeed. Investing partnerships and collaborations are popular, mainly with a mentor or trusted business associate. By pooling resources, you can do much more than you could do alone.
One more benefit that’s important not to overlook is a federal tax. Many tax deductions are available to investment property owners, from operating costs to mortgage and property taxes. Many rental real estate investors end up paying far less tax on their monthly income than they would if it was earned another way.
With so much potential, it’s simple to understand how investing in rental real estate could be your road towards becoming a millionaire! Yet, to get started on the right foot, it’s vital to have professional Novato property managers on your team. At Real Property Management SonoMarin, we partner with rental property investors to assess markets, set accurate rental rates, and even locate off-market properties for sale.
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