Epic Real Estate Investing - Is Real Estate the Best Way to Build Wealth | 1208

Episode Date: June 2, 2022

Wealth building takes more than just your day job monthly income, and it includes your savings, investments, and other income-generating resources. Now, there are many ways to probably build wealth. However, in this episode, Matt reveals the advantages of building wealth using real estate investments. Are you ready? Let’s go! Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Terio Media. Is real estate the best way to build wealth? I mean, there are seemingly a million ways to make a million bucks, but which one is the best? Well, for the average person, it seems real estate is the best, but let's take a look as to why that's so. You ready? Let's go. Welcome to the all-new, epic real estate investing show. The longest running real estate investing podcast on the interwebs, your source for housing market updates, creative investing strategies,

and everything else you need to retire early. Some audio may be pulled from our weekly videos and may require visual support. To get the full premium experience, check out Epic Real Estate's YouTube channel, epicorei.tv. If you want to make money in real estate, sit tight and stay tuned.

If you want to go far, share this with a friend. If you want to go fast, go to r-e-a-a-a-com. Here's Matt. By the time we're done here, you're going to know whether or not real estate is the best way to build wealth. Why so many people choose real estate to do so,

then I'll give you seven different ways to use it to build your wealth. Oh, and by the way, if you're still looking to get that first deal under your belt, I put together a free training just for you to help you get that first one done. And then I'll show you how to earn $5,000 a month flipping contracts and properties working in as little as one hour a day. And you can access it for free at matsfreetraining.com. The answer to whether or not real estate investing is the best. way to build wealth depends entirely on your definition of wealth. I mean, your individual

long and short-term goals as well as your threshold for risk, those are all crucial factors in determining if investing in real estate is the right path for you. So let's unpack back first, your definition of wealth. And your specific definition is important because wealth means different things to different people. And to pull out your specific definition, we can just kind of draw on your goals. You know, are you interested in developing a stable investment portfolio, allowing you to live with a sense of financial security and to look confidently toward retirement? Or are you interested in generating steady monthly cash flow over the top of your regular income to help you meet other financial goals and dreams? Or do you have your eyes on multiple

vacation homes and exotic locations and a different colored Lambo for every day of the week? Well, the good news is investing in real estate can deliver on any one of those goals. Now, depending on your threshold for risk and goals for retirement, real estate investing can be anywhere from a solid piece of your retirement portfolio to an aggressive opportunity to build substantial wealth. Real estate is very stable historically. You know, over time, properties tend to appreciate thanks to growing demand and inflation. Understanding the different types of real estate investments and determining your comfort level with risk will help you decide if including real estate in your investment portfolio is the

right fit for you. Real estate is my favorite investment asset class to build wealth for the average person. You know, for hundreds of years, real estate has built tremendous wealth for millions of people, and I don't expect this trend to ever change, not in our lifetimes. Real estate, it's the main investment that enabled me to retire at the age of 41. Currently, real estate makes up about 35% of my net worth and generates roughly $250,000 a year and passive income from me and my family. Stocks, they amount to just about 5% of my net worth, and because of a few small, lucky

crypto picks in 2017, 60% of my net worth is now comprised of cryptocurrency. But before then, real estate represented almost 100% of my net worth. The crypto thing was a total accident, but I'll take it. Anyway, real estate is all about asymmetric risk and reward. You know, when the government gives you subsidies in the form of mortgage interest tax deductions and bailouts for overextended homeowners over and over again, you'd be silly not to invest in real estate. Also, when you have the ability to invest an unlimited amount of other people's money

and not have to split the proceeds when you make a killing, it makes real estate. it makes real estate a wonderful thing. But is it the best way to build wealth? There's a reason why every rich person you know owns multiple properties. There's a reason why enormous fortunes have been made through real estate as well. I mean, how can President Donald Trump still be a billionaire after declaring bankruptcy multiple times? It's because of asymmetric risk and reward. It's no wonder property owners were once called lords, or now more colloquially, landlords.

The wealthy own assets, while they're not so wealthy, lease. assets. You know, after 30 years of paying $2,000 a month in rent, your return on $720,000 in rent is negative. At least through a mortgage, you've got an asset which you can live in and build some equity to pass on to your children. In an inflationary environment, like we will probably experience for the foreseeable future, you want to own a property or properties with a long-term fixed-rate mortgage. You see, as inflation picks up, the cost of the mortgage declines in real dollars. Meanwhile, the principal value of the home increases with inflation. If it's an income property, your tenants will pay you more and more in rent as well. You know, this one, two,

three combination is one of the reasons why the average homeowner is so much wealthier than the average renter, 40 times wealthier based on the last numbers that I've seen. Now, if you own a second home, you're building at double the rate, 80 times wealthier than the average renter. And you can see by simply owning real estate and not doing really anything else, the wealth gap between you and your tenants, it widens significantly and rapidly. And this is keeping just to the bare basics, appreciation, income, and inflation. If you factor in depreciation, tax deductions, and amortization, all the while you use someone else's money to buy it for you, real estate, it's really tough to beat.

So if you consider the easiest way, the best way, then yes, real estate is the best way to build wealth. And just when you thought it couldn't get any better, here are some more reasons why real estate is a great wealth building asset. First thing, I touched on it a little bit, but it's a hedge against inflation. I mean, you only hate inflation if you don't have an asset that is inflating. If you own an oil field, a private university, an organic farm, a goldmined, or a rental property, you are loving inflation. The ability to earn higher rents and experience accelerated appreciation is and will be in the next several years and even more powerful combination in building wealth.

Number two, a money-making play on inflation. Hedging against inflation, that's one thing. But using inflation to make money, that's another thing entirely and very available. You know, if we happen to experience hyperinflation, as some economists have predicted that we very well could, your cash would be devaluing rapidly as your real estate would surge in nominal value. Number three, passive income. The most effort to deploying real estate to build your wealth happens in the beginning,

to fighting the right property, arranging financing, and then to find you. the right tenants. And I lean on my property managers to do most of the work for me after that. It's not totally passive income, but it's definitely marginally involved income. Still, it's really good stuff when you're making money while you sleep. And when done right, your real estate should do the work in generating your income and building your overall wealth for you. The idea is to get your money to work harder for you than you did for it. And real estate makes that possible. And when done right, probable. Number four, tax-free profits. You know, the first $250,000 in profits for singles and $500,000 for a married couple is tax-free

if you live in your property for the last two years before you sell. If you so happen to be in the top income tax bracket, this is absolutely music to your ears. Real estate is one of the final great tax shelters available to the average person. Number five, peace of mind, a good night's sleep, one absent of financial worries, that's priceless in and of itself. Knowing that you own a tangible asset that has a utility that you know will never be worth zero, significantly less risk than the stock market and other high-yielding investments. And as long as you pay your mortgage, no one can kick you out. You know, once you pay off your mortgage, there's an indescribable feeling, a very good feeling, that you own your home outright, that you own any real estate outright.

You know, if you're a parent, you know you've got something to pass on to your kids, and they likely won't have it as rough as you did because you're able to pass this on. Real estate is the best way to create wealth during good times and it's the safest way to preserve your wealth during the worst of times. And that makes my case for real estate investing being the best way to build wealth. Now, you might have heard that billionaire Andrew Carnegie famously said that 90% of millionaires got their wealth by investing in real estate. And I've heard that over and over and over in my life and I want to know if this is still the case. So is investing in real estate still a good idea when it comes to building real wealth? According to these people who made

millions by investing in real estate, the answer is a resounding yes. For example, Barbara Corcoran, founder of the Corcoran group, and more notably known as a judge on the hit TV show Shark Tank, said, buying real estate has made me rich, mostly through necessity, not by design. I bought my first itty-bitty studio after scraping together a few bucks because I needed to live somewhere anyway. A few years later, the studio doubled in value, giving me enough. cash to plunk down 50% on a one-bedroom apartment. That soon rolled into a two-bedroom, then a three-bedroom, and finally landed me in my 10-room penthouse on 5th Avenue, New York City. Buying that tiny studio was the most important decision I made because it got me in the game.

Then Bethany Frankel, founder of Skinny Girl and Be Strong, says this about real estate. Investing real estate is a great idea if you are in it for the long haul, not a quick return. Your best bet is investing in residential properties that produce rental income year-round. just make sure that you understand all of the associated legal fees and are prepared for unexpected costs. And then there's Grant Cardone, New York Times bestselling author and star of the hit TV show undercover billionaire. And he says this, real estate is real. And it's always a good idea to put your money in real estate assets. But let me be clear, that doesn't mean that all real estate is a good idea.

I only buy certain types of properties, generally multifamily ones and upscale locations that provide consistent cash flow and great potential for future appreciation. I stay away from low-income areas and single-family homes. But even those assets are probably a better place to store your money than letting cash depreciate while sitting in the bank. And then Peter Hernandez, President of the Western Region at Douglas Elliman, says this about real estate. Most billionaires, I know, made more money from owning real estate than any other investment. Real estate consistently increases in value over time and outperforms other investments. Plus, it isn't as vulnerable to short-term fluctuations as the stock market. You get a tangible usable asset, whether you're renting out an apartment or commercial building for

income or buying a home. And there can also be tax benefits for investment properties. It's always a good time to buy real estate. In fact, the real wealth is made by buying when everyone else is selling and vice versa. While many are talking about a recession, the market is strong with increasing prices and transactions. Renting a one-bedroom apartment can cost $5,000 a month in certain neighborhoods today. Yet you can buy a $1 million house with just $4,000 a month and mortgage payments, and the rate is fixed for 30 years, the best kind of rent control. So why would you rent? Besides, if you rent your property to someone else, you can cover your mortgage or better.

And then Robert Martinez, founder and CEO of Rockstar Capital. He says this, there's an opportunity for greater and more consistent returns with real estate than with other investments. When a property is built, it's because a group of people see a population large enough to justify it. The sheer number of new properties each year is a testament to the growing real estate market. Supply follows demand, and demand is continuing to rise. Populations almost never decrease, which is why the need for housing increases year over year.

The market for multifamily apartments in a particular is growing. As apartments become more attractive, people are less likely to buy houses. With multifamily apartments, you continue to generate increasing income over time. Once the property stabilizes, you can collect returns for your investors until you decide to sell. There's also demand year-round wherever you go. Whether you're looking to buy a home or that next income, property is calling your name. Research has consistently shown that owning real estate can be one of the smartest investments there is for building wealth and securing your long-term financial outlook,

even in these, especially in these unpredictable times. If you'd like to go deeper into investing in real estate, I've got some free information for you. Head over to Cashflow Savvy for your free download. And if you like what you see, you're going to have the opportunity to pick a time for us to hop on the phone and brainstorm some ideas about your next move. And that wraps up the epic show. If you found this episode valuable. Who else do you know that might too? There's a really good chance you know someone else who would. And when their name comes to mind, please share it with them and ask them to click the subscribe button when they get here and I'll take great care of them. God loves you and so do I.

Health, peace, blessings and success to you. I'm Matt Terrio. Living the dream. Yeah, yeah, we got the cash flow. You didn't know home for a world. We got the cash low. This podcast is a part of the C-suite radio network. For more top business podcasts, visit www.sweetradio.com