Talking Real Estate

“Comfort Money” Part 1

A whole lot healthier than “comfort food”, comfort money is having enough to live your life style even if you don’t go to work today. There are many ways to achieve “comfort money”, but short of inheriting from the rich uncle, owning productive real estate is maybe the best way. The simple definition of productive real estate is that which produces income on a consistent basis.

Owning investment real estate is a very simple concept for most people. We generally understand that there are 3 basic needs in life, food, clothing, and shelter. Owning and renting real property allows the investor to make money by supplying one of the basic human needs to those that do not want or are not ready to own their own home.

Consider this, if you were to have purchased 10 homes or condos 15 years ago at the then average price of $120,000., today you would have a portfolio worth 2.8 million dollars! Had you palced 15 year loans on all ten, you would have a free and clear 2.8 million dollars, with a monthly income of over $10,000. The only real question is what are you waiting for?

Well, like most things that have large rewards, it’s not easy, but it’s not difficult either.

There are few simple things a real estate investor needs to know:

First, by investor, I mean those who buy and hold for the long haul, not “flippers”. Holding allows you to “leverage” your investment to protect against inflation, and more importantly, increase dramatically your rate of return.

Second, your tenants are buying you a house (or condo). Properly structured, you have other people not only paying the costs of your ownership, you are doing it with leveraged money.

Third, real property tends to appreciate. Although there have been a few bumps in the real estate market, the fact is real estate has steadily increased in value since the mid 1940′s.

In the next posting, we will continue to discuss the benefits of ownership, and discuss wealth building. Later I will provide a few examples and a simple analysis tool.

-that’s 30-