The Power of Investing in Real Estate

In my experience, no other investment has ever come close to the performance of my rental properties. That's the power of investing in real estate.

There are so many quotes about the power of real estate investing that I can't list them all, but here are a few:

The major fortunes in America have been made in land. – John D. Rockefeller

Ninety percent of all millionaires become so through owning real estate. – Andrew Carnegie

Land monopoly is not only monopoly, but it is by far the greatest of monopolies; it is a perpetual monopoly, and it is the mother of all other forms of monopoly. – Winston Churchill

Every person who invests in well-selected real estate in a growing section of a prosperous community adopts the surest and safest method of becoming independent, for real estate is the basis of wealth. – Theodore Roosevelt

Real estate investing, even on a very small scale, remains a tried and true means of building an individual’s cash flow and wealth. –  Robert Kiyosaki

I think you get the idea. It is undisputable that real estate investing is a powerful wealth-building tool.

Real Estate Investing vs Traditional Retirement Savings

Have you ever used one of those online retirement calculators? I’m talking about the online calculators or planners where you enter your financial finger print and the calculator adjusts for inflation and spits out how much you need to save every month in order to reach your retirement goals 

These calculators typically result in the user throwing their hands up in the air and thinking  Impossible!

I entered all my numbers without my rentals into the Fidelity Retirement Calculator and it spit out that I needed to save an additional $2,000/mo! 

Then I added my rental properties into the same calculator. I didn’t have to put away another dime EVER in order to meet my retirement goals. This means that future equity, appreciation and income from my rental properties will sustain me during retirement. That's the power of investing in real estate.

  • How would that feel to see that result?
  • How would it feel to know you and your spouse would be ok financially in retirement?
  • How would it feel to know that you wouldn’t be a financial burden on your family as you get older?

I want to clarify that I do contribute to my 401k every paycheck. My company used to have a match of 25% before The Great Recession, then it dropped to zero. Now they automatically contribute 3% for everyone no matter if you want them to or not. 

There were a number of years during that time when I did not contribute, but for the most part I have been fairly consistent with my contributions and it's still not enough. 

Everyone I talk to can’t believe how expensive homes are or how high rent is. Have you ever heard anyone say…My retirement account is kicking butt right now!! 

The Power of 5 in Real Estate Investing

Real estate investing is so powerful because you are building wealth in 5 different ways with one investment. I explain these 5 separate wealth building opportunities that rental properties offer in my post The I.D.E.A.L. Investment.

Another reason real estate investing is so powerful is because it is more difficult to access and spend your money. In order to access your equity in a rental property, you would have to either sell the property or refinance the property to pull cash out.

Both of these scenarios would force you, your realtor or your mortgage broker to analyze the financial implications of accessing those funds. Both of these professionals would offer you advice about whether it was a good time to sell or refinance based on the market and interest rates.  

Then after all that, you would have to start the process of a refinance or a sale which could take months. It would take tremendous amount of time and analysis.

On the other hand, if you had a brokerage or a savings account, it only takes a few clicks to sell and transfer for you to spend tomorrow. Most people are not disciplined enough to never touch those funds. 

Do you know in your gut that real estate investing is what you should be doing from a financial standpoint, but you think it is out of your reach? Well, it's not.

I've spoken to so many people who think that there's just no way that they can get into real estate. They're wrong. I live in Southern California. The median home price of the area where I live is over $600,000. 

Real Estate Investing Doesn't Have to be Hard

The approach I took with real estate investing is to buy one small investment property at a time. My properties were only a few hours away from where I live currently. All I had to do was just come up with that very first down payment and that's it.  

Do you need tips on getting your financial house in order so you can start saving? If you want some alternative approaches to saving for your first down payment, read my post titled Get in the Game for ideas. I want you to experience the power of investing in real estate for yourself.

If you have any questions at all regarding real estate investing, let me know! You can leave a comment in this post and I will respond or you can email me directly at dholland@passiveincomedesign.com.

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