Become a Millionaire by Investing in Real Estate

by admin on November 29, 2019

Become a Millionaire by Investing in Real Estate

There is truly no other wealth building vehicle like investing in real estate. If real estate was a motor vehicle it would be a classy Mercedes Benz. It gets you to your destination slow and steady, it’s consistent and always reliable. It’s no coincidence that 90% of millionaires earned that title through owning real estate (and many happen to drive a Mercedes Benz). Here are my top reasons why real estate is the top performing asset class and why you should start your journey today.

• Appreciation – When demand outweighs supply, the housing prices will increase. In 2018, 35,000 new homes were built compared to 125,000 new immigrants into the GTA. With such strong immigration in Ontario. The average selling price is up 5.5% in 2019. That means your $500,000 condo just went up $27,500 in one year which is another income that requires very little attention. Not to mention that because of leverage you only had to put a minimum of 20% down which is $100,000.

• Debt Reduction – Whether you are an end-user or a landlord a portion of your mortgage payment is paying down the principal every month. During the first few years its approximately 50/50 principal and interest. A $400,000 mortgage amortized over 25 years at a 2.79% mortgage rate equals a payment of $1,850/month. That means you are paying down approximately $925/month on your property’s principal and a total of $11,100 in at the end of the year. This is like putting money in the bank.

• Cash Flow – Now let’s say you do decide to become a landlord and rent out this beautiful new condo. Let’s say your expenses of mortgage payment, taxes, insurance and maintenance fees total $2300/month. Our team finds you a great tenant who offers $2500/month. You are now earning a $200 surplus and $2,400 in cash flow annually. This is a great place to be in. The rental market over the last few years has really picked up and often a good property will receive multiple offers from professional tenants.

Let’s sum it up for you:

Appreciation = $27,500

Debt Reduction = $11,100

Cash Flow = $2,400

Annual return $41,000 / Initial Investment $100,000 = 41% Annual ROI (Return on Investment).

This is a tremendous return which is extremely challenging to find in other asset classes. Once you purchase your first income producing investment property, you’ll love the returns so much that you’ll want another and another. Lots of our clients keep calling us back to find out what great projects we have coming up next. Once you own multiple investment properties you will be well on your way to becoming a millionaire. The first step is to start on your path to real estate investing is maximizing your earning potential, live on less and save every penny you could and once you have enough for a down payment give us a call and we’ll guide you towards the perfect investment options.

“Don’t wait to buy real estate, but real estate and wait”. T. Harv Eker