- Warren Buffett, for example, is the perfect illustration of a billionaire who not only makes his money through real estate investments, but also saves himself money through real estate investments. It's one of the biggest reasons why people love real estate. It's a way to get rich and to keep making you richer, without a high amount of risk. In fact, real estate is a much lower risk investment than stocks, but we’ll get to that.
- So instead of getting envious are angry with those who continue to grow richer through real estate. Why not instead will learn their secrets as to why they do with they do? In this article we've laid out 7 ways that the rich become richer through real estate.
- Billion Dollar Tax Benefits
This is the first way that real estate tycoons save themselves money in real estate. By owning your own real estate business and investing in property, you can be the benefactor of massive tax benefits. In fact, some of the biggest earners use these advantages to make millions a year, while paying less in taxes and the average worker making $60,000 a year. This may not seem "fair”, but in fact it's actually just smart business.
- Tax-Free Growth
Yes, tax-free growth is just another way to save you money through real estate. Not only can you receive big tax breaks, but also 1031 exchanges and self-directed IRAs can help investors make more money on that money tax-deferred or tax-free. Who knew there were so many ways to save you money through taxes?
The Power Of Compounding
The power of compounding is a strong and real link to making millions in the real estate world. The reason being is that when you put capital into real estate it builds returns. And those returns build returns on top of returns on top of returns. For example, just by investing $10,000 you can turn that into millions if you give it the proper amount of time and let the power of compounding do the work for you.
- Passive Income
When you earn income from real estate it is considered to be passive income. Meaning, your properties are working to make you money, even while you sleep. For example, if you have 5 rentals that actually means you have 5 households working their 40+ hours a week to make you wealthier. And you don't even need to get out of bed to do it. Plus, this income is often taxed at a much lower rate than income that is earned through a salaried or hourly job. (We bet by now you’re seeing the real link between real estate and tax breaks huh?)
A strong advantage of real estate is that it is a hard intangible asset. Meaning, it protects your wealth. This goes back to what we were saying about with stocks, and them being a far more risky investment than real estate. If you have stocks, those have a chance of being completely wiped out. The crashes in the stock market have proven this to be true. Real estate however, is tangible. It's made up a foundation and land that will always be there. And the key to getting wealthy often times isn’t about how lucky you get in generating big returns, rather it's not losing what you make.
Unlike cash, which will devalue over time due to inflation, real estate will typically appreciate and grow in value over time. Cases in point look at how much a dollar was worth 20 years ago versus what it's worth today.
Not only does real estate appreciate in value, but it throws off cash dividends as well. The reason the wealthy love this as much as they do, is because that means that they don't have to dig into their nest egg. They can instead live on yields. And if they don't need the money at the time, they can reinvest back into their real estate.
- While it may seem that the wealthy have it easy, they in fact just played it smart and worked very hard to get to where they are. Real estate can be a very lucrative investment. But, you have to be willing to put in the time, energy, and do what it takes to become successful. If you do this, you too can become rich, and even richer, through real estate investment.