Every year, Forbes, a business magazine, publishes a list ranking the world’s wealthiest individuals. How do they compare everyone? By using their net worth.
What is net worth? It is the sum of all of an individual’s assets (positive number) and liabilities (negative number). In other words, everything you own minus what you owe. It’s also important to note that in order to grow financial wealth, it makes sense to track your financial decisions that contribute to your net worth.
Not all assets are created equal. Some appreciate while others depreciate. Take cars for example: cars are an asset, but it is a depreciating asset. How many times have you heard that after purchasing a car, it’s value instantly decreases as soon as you drive it out of the dealership lot? One’s net worth goes down with a car purchase. However, with real estate, an appreciating asset, although an investor incurs debt to purchase a property, the property’s value adds to a person’s net worth. The mortgage acts like a built in “investment plan” with each payment adding equity and lowers debt.
Now imagine having more real estate properties and also having someone else pay down the mortgage. How much faster would your net worth grow? Even better, what if the rent paid on the property was greater than property expenses and there was something left over every month generating positive cash flow! Wouldn’t that be amazing! Investing in real estate is definitely one sure way to grow net worth.
Real Estate has 3 immutable facts. Immutable facts are things that are true and will not change. The 3 immutable facts of Real Estate Investing are: 1) create cash flow growth, 2) build equity, 3) store wealth. In successful real estate investing, you make your money going into the investment deal. In so doing, you create cash flow – money that comes to you without having to labor for it. As you hold on to the investment, the property grows in value, which translates to the growth of your net worth. In the financial world, your net worth is like your report card- a measure of your success.
There are so many more added benefits as well: so many TAX BENEFITS built into real estate investing; different modes of investing to match the level of involvement an investor is comfortable with, and remarkable profits from disposition- multiple examples of money working hard to make more money for you.
We invite you to join us and start the journey towards investing in your financial freedom. (Contact us to be added to our newsletter.)