5 reasons why the Millionaires invest in Real Estate

Are you wondering why millionaires invest in real estate ? Investment property is a lucrative opportunity to get limitless wealth, and 99% of millionaires have gotten wealthy through real estate investment. Read on for more.

Dubai Real Estate investments: Why the Rich Invest In Real Estate

Think of all the millionaires you’ve met. 9 out of 10 have an investment in real estate. And even if you haven’t met any millionaires, those are the facts. The billionaire Andrew Carnegie stated that 90% of millionaires got their money through real estate investments. Real estate has given many people opportunities to acquire limitless wealth and work on their terms. Some even become billionaires due to property investment. Whether it’s an investment in Dubai , New York, or other prime locations, millionaires love to be on the lookout for new property investments. But why is this investment so lucrative? Read on to find out!

Income

Millionaires increase their wealth through passive cash flow from real estate. Through tenants, they can make monthly recurring income for years to come. They don’t earn money by trading their services because there are only a few hours in a day. Instead, they focus on making investments that bring returns in the long-term such as real estate. Wealthy people know earning money from only trading your time is limited. Building wealth involves creating many passive cash flows not limited by your time, check & read more on how it works.

Equity

A part of the mortgage payment goes towards paying the principal value. The other part goes towards interest payment on the loan. The more payments you make, the more property you own. So, how does real estate come in?

You get a mortgage, build real estate rentals and use income from the rentals to pay your mortgage. The remaining money is used for building maintenance and other costs. This is how millionaires think- long-term. They don’t use their money to pay the mortgage but use the tenants’ monthly rent to sort out the mortgage. Once the mortgage is fully paid, they remain owners of the entire property.

Appreciation

Properties can lose value. But the value almost goes up over time. A millionaire will invest in markets where value will appreciate later. Appreciation applies in two ways; one is where you wait for real estate value to increase or where one forces appreciation by making targeted improvements to a property. Both methods are great because the investment property gains equity or value; so, your net worth increases.
A wealthy person can invest in an old, under-market rental building. They then renovate and modernize the building, which allows them to charge more rent and increase building value.
When investing in real estate, it is crucial to look at the appreciation potential of a property. For instance, making an investment in Dubai property can prove to be rewarding since the market value is set to rise in the coming years.

Leverage

Millionaires aren’t limited to their resources. They understand leveraging another person’s resources in real estate to increase their net worth. Here are some ways you can leverage resources in real estate:

• Leveraging with money– Using mortgage or investor money is where you leverage someone else’s cash to buy property.
• Leverage with time– If you don’t have time, you can passively invest in projects by leveraging time from other people. Here, millionaires provide funds for people who have the time and energy to invest in a property. The money then bears fruit long-term.
• Leverage other people’s experience– This choice is perfect for newbies in real estate. You can leverage a realtor who knows their way around properties to get properties that will be of value over time. If you have all the time but no experience, get someone to evaluate and underwrite the deals. Also, brokers or lenders take you more seriously when you have someone known in the industry on your team.
• Leverage with property– Many units in a property give you higher leverage. Investing in a single-family rental means that no money flows in once you lose a tenant, and you still have to pay the mortgage. If you have two units and one tenant leaves, you still have 50% of your income. And if you have 100 units within a property and one tenant leaves, you still have 99% of your income. It is crucial to leverage your investment property to have a higher net worth.

Federal Tax Benefits

Owning property provides millionaires with various tax benefits. The government wanted to encourage people to invest in property, so they introduced benefits that help people lower taxes, such as:

• Depreciation
• Mortgage
• Property tax deduction
• No self-employment tax on rental income

Many millionaires invest in real estate because they pay fewer taxes on property which brings more income. This means the property makes you money and lets you keep more money.

The Bottom Line

Investing in real estate is a fast and safe way to build wealth and increase your net worth. Of course, there are risks, but many millionaires are willing to put their money on property. But why do they invest in real estate? Here’s a round-up of why millionaires invest in real estate and why you should too:

• Income
• Equity
• Appreciation
• Leverage
• Federal tax benefits