Real Estate Blog for Buyers & Sellers

Real Estate – Why it’s Like Buried Treasure

  January 24, 2013   Karen Stanko

Ever wonder why 80% of the millionaires made it because of real estate?  First of all,investing in real estate provides an attractive return on investment (or ROI).  To start, investors can generally use only a small amount of their own capital as a down payment, and receive the remaining amount of money required to purchase a property as a mortgage (for example, 20% down payment and 85% financing from a mortgage).  This is known as the “principle of leverage”.  Then, because real estate appreciates at an average of 5% per year (and has for the past 25 years), the investor can recuperate their investment, plus any profit made after repaying the mortgage.

RENTAL PROPERTIES – Investors are still able to use a relatively small amount of capital to start (although more capital could be required because of the nature of rental properties), and then are able to charge rent for tenants to live in/at the property.  Any rent that is above and beyond the mortgage payment and cost of maintenance is profit.

Real estate investment is also beneficial for those who have a hard time saving money, as it can act as a sort of forced savings account.  Essentially, as you pay down the principal of a mortgage, you’re reducing debt and building equity.  Then, when you go to sell the property, the money you receive back from the sale is considered your “savings” – or buried TREASURE! 

Karen Stanko
Realty Executives Polaris,  Edmonton, AB