Most rich people keep a large portion of their wealth in real estate. The buying and selling of land, houses, apartment buildings and commercial real estate is a powerful wealth accumulation strategy. Investing in property can create huge wealth over time. People will always need somewhere to live and work and it makes sense to invest in real estate.
Unlike the stock market, you do not need to monitor how a property is doing minute by minute, and while shares can be passed down, they could be wiped out in one slump of the market. Even when there is a slump in real estate, it is still relatively safer than other investments at maintaining income.
Banks will think twice about giving you a loan to invest in shares. However, they cannot usually wait to loan you money if you approach them with a good strategy for acquiring real estate. Therefore your own money in real estate investment can be a fraction of the total worth. Furthermore, property purchasing is very attractive to banks as lending can be tied to the property you obtain the mortgage for. Therefore, it could be considered one of the securest investments you could ever make.
Real estate investment normally requires more leg work than most other forms of investment but probably less intellectual input. You need a handful of insight on where to buy, what to buy and how to wait for the right deal. As house prices rise along with their peers, there is hardly any nation or city where property investment does not do relatively well. Even in circumstances of disasters, it won’t wipe away property values, and besides, you can insure against such disasters.
How to accumulate wealth through real estate investing:
- Hunt for lenders who may want to cover valuation and legal fees or who may want to give you a large discount.
- Negotiate the standard variable rate on a mortgage
- Try to go for products that have no redemption penalties
- You are allowed to contact multiple mortgage lenders and ask if there is a better deal
- Always check for signs of aging and building problems of a property, don’t get carried away by the interior decoration.
- Aim to pay earlier than the number of years on the mortgage
- Do not let out your property without first informing your mortgagor
- Make sure there is a good demand for letting before you invest in ‘buy-to-let’
- Make higher repayments when you borrow against your home
- Check for infestation of ants, rodents or cockroaches. This makes properties hard to sell
- Avoid enticing mortgage schemes that have long term drawbacks
- Ask for a mortgage with a daily interest rate calculation
- Do not set out to build overseas unless you can personally supervise the work
- Only use the services of a good real estate agent as every business enterprise has its mickey mouse and sharks. Use a reputable one who knows their A’s and their P’s, who will give you the best service for your money.
- Keep abreast of the financial industry by knowing the various funding options available to take a loan for a mortgage to buy a property. For example, lenders may cater specifically to single parents, students, and older people.
- Get your finances in order. It is no use taking a mortgage if you cannot manage your income and expenditure and any outstanding debt. The word ‘mortgage’ itself comes from two Latin words, ‘mort,’ which stands for death and ‘gage,’ which stands for level, so a mortgage is more or less the level of your death. If you don’t manage your finances well, your debt level remains for long.
- Ensure you check the terms of a leasehold contract very well to ensure no carry-out and conditions that make it impossible to do anything with the property.
How To Accumulate Wealth (Assets & Wealth)
There are certain things you must do that will put you on the road to becoming wealthy. So what is wealth? Let’s put it like this; wealth is what you own after all your liabilities have been deducted. Thus, wealth is the valuables you own. The dictionary defines assets in accounting terms and calls it ‘The entries on a balance sheet showing all properties, both tangible and intangible and claims against others that may be applied to cover the liabilities of a person or business.
Assets are property that a person owns. Assets can be goods, money, stock etc., that you own, which can be used to clear the debt in the presence of bankruptcy. For example, if you own a property with a mortgage, your asset is the equity (the financial amount left after the mortgage is completely paid). However, the whole property is not your asset if you are still paying the mortgage because the building still carries liability.
Fixed assets are also part of wealth. These are those that keep on providing benefits year after year. These include equipment, buildings, real estate etc.
Your net assets measure your true wealth. This is the excess of assets you have over your liabilities. For example, if you count all the properties you own without deducting the money you owe on mortgages, you may consider yourself wealthy when you are not.
Next, we are going to summarise some steps that can lead to an increase in wealth.
Without a wealthy mind, one cannot have a wealthy life. If you desire to have a better life and enjoy it, you have to first have a wealthy mindset. If you do not have a happy mind before wealth, you will not have a happy mind when wealth comes, and in truth, you need a productive, healthy mind to generate wealth. A negative and critical mind will have problems generating wealth. You need to change the way you think about money. Otherwise, it will take wings and fly from your hands. If your thoughts are wrong, you may resent those who have wealth, and you will not increase in what you resent.
Great armies are built by the recruitment of individual soldiers, one soldier at a time. Therefore saving in bits or investing in bits is a good start. Don’tHowever, don’t wait until you are earning hundreds or thousands before you start saving. You will be surprised how much you can save in a year by putting away those excess coins every week and or dedicating a certain amount each week or month, no matter how small.
Applying the eighty/twenty (80/20) principle is a good rule during the early stages of creating wealth. For example, allocate ten percent for saving, ten percent for charity, while the remaining eighty percent is applied to expenses, mortgage, utility bills, transportation, food, etc.
Many people never pay themselves anything. You have worked all month for the money, and now you give it all out to creditors? That’s not a wise move! Ensure you pay yourself by saving a minimum of ten percent. Paying all your creditors first means you have not learned the power of delaying money in your investment.
Accumulate Wealth by Being Debt-free
You can be debt-freeAre you serious about getting out of debt? Then you need to read this and carry out these ten (10) practical steps.
Cut up the credit cards and the store cards
This will prevent any further impulse spending. If you receive any new cards from new creditors, DO NOT BE TEMPTED; cut them up also. You are embarking on a life-changing road. Each positive step you take brings you closer to your freedom and into your wealth.
Stop all forms of borrowing
No more borrowing from family, friends, or banks. When you borrow, you MUST pay all of it back plus interest and a lot of interest. Don’t add more pressure to your situation. Many borrowers lose friends, trust from family members and a bad credit rating from institutions.
Create a budget and stick to it
It’s imperative that as soon as you decide to get out of debt, you create a budget. This will show what you earn, all your expenses and all your debts. From this, you can assign excess money to your debts and if there is no excess money.
Live below your means
Whether you get paid weekly or monthly, ensure your budget fits your wage, cut back and trim where possible. Remember, it’s only for a season. But, if you are serious, you will engage in this exercise, using number 5 to help you.
Reduce all expenses. Spend based on need only, not want or desire.
We all tend to spend way over what we need to, as much of our spending is on impulse. So start making your lunch instead of buying, no more eating out and wear the clothes and shoes you have, do not buy extra for an occasion.
You too can be debt-free
Write a shopping list; if it’s not on the list, do not buy!
Impulse buying is a major financial error unless you are not in debt, and even then, you need to be careful that impulse buying does not lead you into debt! Write your list AT HOME, and if it’s not on the list, do not buy, simple!
Contact your creditors and make arrangements to pay based on your budget.
You must contact ALL your creditors as soon as you have completed your budget, as you will now know how much you can afford to pay each one. They may request a copy or do a budget over the phone with you. If your creditors are contacting you and you have not yet created a budget sheet, DO NOT ignore them.
Let them know what you are doing. I know it can be quite intimidating speaking with people you owe money but remember, 99% of the time, you are not talking to the actual person you borrowed the money from, especially if it’s an institution. The person has a job to do, and if they can get an arrangement with you, you have made their day! They’ve done their job and pleased their boss, and you’ve lifted a weight off your shoulders! So don’t be shy.
Sell what you no longer need or use, and use the extra cash to pay your debts.
We all have things in our homes we no longer use or have not used for months! So sell it, do not be sentimental. You need the cash now!
As each debt is paid, re-assign the extra cash to clear another debt.
This is an amazing strategy many do not do, be the exception!
Use the above wealth accumulation tips and keep smiling – you will get there!