Why Owning Real Estate Can Make You Rich

I’ve personally used real estate as a valuable investment that can generate wealth and provide financial security. It's a tangible asset which has the potential to appreciate in value over time and generate passive income through renting and leasing, through short and long term rentals. Here are some ways that owning real estate can make you rich:

1. Appreciation in Value

One of the most significant benefits of owning real estate is the potential for appreciation in value. Real estate tends to increase in value over time, especially in areas with high demand and limited supply. As the property's value increases, so does your net worth. You can then leverage that equity to purchase more properties, further increasing your wealth. I bought my first home in 2017 and took advantage of higher prices in 2021. This allowed me to see what usually takes 10-20 years appreciate in under 5. The difference is, we took advantage of what was in front of us.

1. Rental Income

Another way that owning real estate can make you rich is through rental income. If you own a rental property, you can generate passive income by renting it out to tenants. The rental income can cover the mortgage, taxes, and maintenance costs, leaving you with a profit. Over time, rental income can provide a steady stream of cash flow that can significantly increase your net worth. We love short term rentals in the Ozarks but have enjoyed long term rentals and hope to reenter the mid term market in KC! It’s amazing having a form of income outside of our main jobs that pad our monthly income.

1. Tax Benefits

Owning real estate can also provide tax benefits that can help you save money and increase your wealth. For example, you can deduct mortgage interest, property taxes, and depreciation expenses from your taxable income. Additionally, you may be eligible for a capital gains tax exemption if you sell a property that you've owned for more than a year. If you’ve lived there personally - you have even more advantages. My personal favorite is the mileage to and from the home since it’s a little further away.

1. Diversification

Real estate can also provide diversification to your investment portfolio, reducing your overall risk. While stocks and bonds can be volatile and subject to market fluctuations, real estate tends to be a more stable and predictable investment. It's also a tangible asset that you can physically see and touch, unlike stocks or bonds. If you know me, you know I love index funds and real estate. Not quite 50/50 but tends to fluctuate around this.

1. Leverage

Finally, owning real estate allows you to leverage your investment by using financing to purchase more properties. You can use the equity in your existing properties to secure loans and purchase additional properties, further increasing your net worth and generating passive income. I can’t say I do this yet as we only have a few properties, but know this is a fantastic option for riskier individuals at the beginning or safer individuals once you have a few more under your belt. Either way, one or multiple properties will help your overall financial standing.

Owning real estate can potentially make you rich through these reasons and so may more! It's important to remember that investing in real estate involves risks and requires careful research and due diligence. With the right strategy and approach, owning real estate can be an excellent way to build wealth and achieve financial freedom. If you ever want to learn more - set up some time to chat! I’m happy to share my journey as well as properties in any market that can help you get started on your journey!