4 Proven Ways Real Estate Can Build Sizable Family Wealth

Dated: 01/31/2019

Views: 23

4 Proven Ways Real Estate Can Build Sizable Family Wealth | MyKCM

Recently, David Greene, co-host of the BiggerPockets podcast and a nationally renowned author and speaker, wrote an article in Forbesexplaining how investing in real estate could help build wealth. Many of the points he made also apply to a family owning their own home. Here are a few:

1. Appreciation

“The rising of home prices over time, is how the majority of wealth is built in real estate. This is the ‘home run’ you hear of when people make a large windfall of money. While prices fluctuate, over the long run real estate values have always gone up, always, and there is no reason to think that is going to change.

One thing to consider when it comes to real estate appreciation affecting your ROI is the fact that appreciation combined with leverage offers huge returns. If you buy a property for $200,000 and it appreciates to $220,000, your property had made you a 10% return. However, you likely didn’t pay cash for the property and instead used the bank’s money. If you consider that you may have put 10% down ($20,000), you actually have doubled your investment, a 100% return.”

2. Leverage

“By nature, real estate is one of the easiest assets to leverage I have ever come across—maybe the easiest. Not only is it easy to leverage the financing of it, but the terms are incredible compared to any other kind of loan. Interest rates are currently below 5%, down payments can be 20% or less, and loans are routinely amortized over 30-year periods.”

3. Paying Off the Debt

“One of the best parts of investing in real estate is the fact that … you’re slowly paying down your loan balance with each payment to the bank… After enough time passes, a good chunk of every payment comes off the loan balance, and wealth is created.”

4. Forced Equity

“Forced equity is a term used to refer to the wealth that is created when an investor does work to a property to make it worth more…

Example of this would be adding a third or fourth bedroom to a property with only two, adding a second bathroom to a property with only one, or adding more square footage to a property with less than the surrounding houses.”

Though Green was talking about investors, the same could be said about a family upgrading their own home.

Bottom Line

Green put it best by saying:

There are many ways to build wealth in America, but real estate might be the safest, steadiest and simplest way to do so.”


#thisisboise #boiseidaho #blakeonboise #alisonblakegroup #kellerwilliamsrealtyboise

Latest Blog Posts

Holiday Gifts Are Not The Only Hot Things Right Now

Black Friday is behind us and holiday gifts are flying off the shelves in stores and online. Unlike last year, however, there’s another type of buyer that is very active this winter – the

Read More

A 365 Day Difference In Homeownership

Over the past year, mortgage rates have fallen more than a full percentage point. This is a great driver for homeownership, as today’s low rates provide consumers with some significant benefits.

Read More

Have You Outgrown Your Home

It may seem hard to imagine that the home you’re in today – whether it’s your starter home or just one you’ve fallen in love with along the way – might not be your forever home.The good

Read More

Millennials Are On The Move As FirstTime Homebuyers

Some Highlights: According to NAR’s latest Profile of Home Buyers & Sellers, the median age of all first-time homebuyers is 32. With more millennials entering a homebuying phase of

Read More