Building Wealth Slowly Through Real Estate | Found Useful

Real estate has been a thorn in the side of many people in the United States. People are turning over their keys to the bank left and right. This real estate bust will never be forgotten and is the worth market since the great depression. Our current recession was caused by the bursting of the housing market bubble.

However, things are starting to looking better. Like all markets and economies, real estate moves in waves or cycles. Prices go up, down and sideways. Sit with any old timer and ask them about it. They have seen all kinds of markets with this one probably being the worst since the depression. We have been in the cycle for 5 years and it looks like we might be hitting a bottom.

How can you profit from this?

Massive amounts of money has been made and lost in real estate. You can be a develop, flipper, Realtor, home builder or buy and hold for the long haul. One benefit of buying and holding is that you don?t have to time the market precisely. Timing a market can be difficult.

If you are a flipper you have to buy a property below retail, often times fix it up and then sell it for a profit before further price declines. It can be extremely lucrative however it is also risky. I see a bunch of novices try to do this. Where they go wrong is buying retail and trying to raise the market. That rarely works.

If you are a long term investor you don?t need to worry as much about timing the market. You can buy a property right and sit back and let the market do the work for you. To oversimplify things many investors use the formula of buying good properties at reasonable prices in good locations. Hopefully, you can do that and get a break even cash flow. It has been very difficult to find these properties but as prices have moved south they are getting easier to find.

Time Value of Money

If history repeats itself and it usually does then real estate will start to increase again. It won?t stay low forever. Just imagine if this is the market bottom and prices move up for the next 15 years. You can build a nice portfolio of properties and wealth over the next 15-20 years.

Assume that you purchased a rental property for $75,000 and obtained a 15 year mortgage. In 15 years when the home was paid off the value of the house would be:

* 2% appreciation a year ? $100,940

* 3% appreciation a year ? $116,847

* 4% appreciation a year ? $135,070

* 5% appreciation a year ? $155,919

Imagine if you bought several of these homes and they grew in value slowly. Within twenty years you could have a portfolio of real estate worth in the millions. Are you worth several million dollars now? Here is a road map to get you there assuming we see an increase in house prices. Wouldn?t it be nice to have 20 paid off homes producing $1,000 a month in income? That does not sound too bad to me.

LuxurySarasotaRealEstate.com is the best resource for finding Sarasota homes for sale.

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