Why Invest in Buy and Hold Real Estate?

Why invest in buy and hold real estate?

First off, why invest in anything when you could have so much fun spending it right now?

You invest because you want to live a life of your own design. What would you have done this week if you didn’t have a boss or a 40-hour workweek to answer to? Go to the beach, take a walk through the forest or start that project you've been thinking about. What if your paycheck just showed up every month, increased every year and you decided how much it was? What would you do with your life if money didn’t matter?

“Forget the money, Because if you say that getting the money is the most important thing, you will spend your life completely wasting your time. You’ll be doing things you don’t like doing in order to go on living — that is, to go on doing things you don’t like doing. Which is stupid.”    -Allan Watts

Investors value their time not money. They want the freedom to do the things that make them truly happy. Investing gives you the opportunity to escape the 9-5 and accomplish things most people only dream of. 

Get a sticky note and put this on your computer. “Every dollar I spend is an investment in someone’s life. Who will I give money to today?”

Is real estate a good way to get the future you want? Absolutely. It’s not the only way but it’s a good place to start and a lot of fun. Here are a few reasons real estate is awesome. 

• Morgan Stanley found that 77% of investors with over a million in assets invests in real estate. It's working for them. 
• Security - Insurance is based on risk of loss. Insurance to cover a $300,000 house with renters living in it is less than $100 a month. Life insurance companies hold almost half of the commercial real estate in the United States. Even risk adverse insurers want some of the action.
• Leverage- If you have $20,000 to invest in stocks, bonds, 401K’s etc. you get a return on $20,000. If you use that to buy a $200,000 house and rent it out, you’re leveraging a return on $200,000. Example: If the home appreciated at the national average of 6% you would have made $12,000 on a $20,000 investment the first year just from appreciation. The 401k or stock, even with a return of 10%, would have produced only $2,000 over the year.
• Someone else pays- You only have to pay for the initial investment. After that rent pays for the loan and repairs. If your renters paid down $8,000 of your loan and it appreciated at the national average you would now be at $20,000 for the year. Thirty years later your house will be worth $1,150,000. How much rent could you get from that?
• Cash flow- If done right, your rental will bring in a profit from day one. Rent increases almost every year but your mortgage payment stays the same. The extra cash can be used to buy more houses. Picture your initial investment growing up and having baby investments.

The question is what do you truly want and how fast do you want to get there.