Build Long Term Wealth With Real Estate

[Norberto Villanueva]

Preferably sooner than later, it’s important to save for the long term. The question is, where? A certificate of deposit, checking and/or savings account? The employer's 401k? A college savings plan? 

What about real estate? I know. The prospect of mere single digit returns can be really exciting, but real estate is a rock-solid savings vehicle! Really. 

Here are just a few reasons to consider real estate over other investment vehicles:

• Control – you decide the acquisition and exit strategy. In a strong seller’s market? Focus on buy and hold strategies that emphasize long term cash flow over instant profits. Distressed market? Buy low and sell high with fix and flip, wholesale, even fix and hold strategies! always implement non-traditional seller financing, lease options, exchanges...
• Leverage – use OPM to invest, freeing up investment capital for other opportunities or perhaps additional properties. By the way, OPM isn't necessarily a rich uncle but could also be the ordinary mortgage lender
• Tax advantages – Done correctly, real estate can be sold at a profit without an immediate capital gain, deferring them as far out as retirement
• It's less volatile, more tangible, easier to analyze and quantify
• Protection against inflation with scheduled rent escalations
• The market pays the mortgage, decreasing the principal balance while the asset's historical value increases at a somewhat predictable rate

Any investor will agree, real estate is local. The staple, arbiter of any economy. A zombie apocalypse? Change strategies accordingly and real estate somewhat insulates its investor from the local, national, even global economy. Yet, the most compelling reason to choose real estate over other investment vehicles for building long term wealth? Real estate consistently beat stock market returns from 2000 - 2011 and is estimated to continue the trend today.

Though not illustrated here, it's been estimated that over the last twenty years and at about half the performance, only one traditional investment vehicle came close to matching it, the S&P 500. 

Long story short? When properly acquired and managed, undervalued real estate assets become desirable homes to quality residents who must pay market rents no matter what, providing the investor a turnkey, "mailbox money" solution that is time tested and Buffet approved.

Thanks for reading.