How To Build Generational Wealth With Smart Investing

By strategically investing in real estate, you can build generational wealth. Here’s my advice about strategizing successfully.

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A lot of people have been asking us about investing in real estate.

The truth is that it can be tough. This is not the market to just go out and buy anything.

However, I’ve recently purchased a home as a long-term rental property, and I’d like to talk through what I purchased, why, and what the long-term outlook is. Follow along in the video above to see a visual representation of what I mean.

I identified an area in town where the prices had skyrocketed over the course of this market cycle. Yet there’s another, separate neighborhood which is a bit older, but it’s still a desirable area that has stayed a little bit flatter. The high-priced neighborhoods are newer, but they also carry Mello Roos. The older neighborhoods don't.

These neighborhoods are west of the 15, a great area with good schools and jobs nearby. Even though they all have access to these resources, the prices have still risen disproportionately.

I bought a home as an investment property in the older neighborhood for $704,000. That identical home in the newer neighborhoods would be anywhere from $1 million to $1.1 million. My thought process as I look into the future for the next market cycle is that, because of the disproportionate pricing in the next market cycle, there will be those who want the lifestyle and the schools that the newer neighborhoods have, causing disproportionate pricing in the older neighborhoods.

I plan to purchase anywhere from one to three homes in that neighborhood on a yearly basis, but there are more available than I could possibly buy. For our key clients, we want to share the strategy. If we can start to control enough inventory and rents, as well as improve the neighborhood, we will do very well in the future.

As a long-term investment, it’s such a beautiful thing. If you think about it, I’m essentially partnering with the bank. Say you put 25% down; the bank will give you 75%, and then some person comes and pays off your loan for you. Fast forward 30 years and you have no loan, and you’ve been able to depreciate the property along the way. You’ll get about a $12,000 deduction per year for owning that property, and you’ll get the debt paid down by your tenant.

What’s my retirement plan or my kids’ college savings plan? It’s not my 401(k), it’s my investment properties. If we can intelligently fund the right properties that will cash flow and have rising rents over time, then we are building generational wealth.

If you want to discuss a strategy that fits you and become an expert on your area, feel free to reach out to us. If there’s one that really gets us going, it’s building generational wealth for our clients.

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