Real estate investing is one of the best ways to build wealth, and it's based on a simple principle of compounding interest.
A mortgage broker since 2001, I have been through over 1,500 real estate transactions, with most of that on the mortgage financing side. We know 85 percent of all millionaires in the United States have created their wealth through real estate investing
The formula is a simple process and is for the long-term planner. Your first home purchase you live in it for three to five years. Keep it and buy your next home to live in for the next three to five. Do this four times over the next 12 to 15 years and you are on your way.
As you progress you are working the law of compound interest and it will grow your net worth while you are going about your life. It looks something like this:
Home One: 300,000 value of a home in the Law of Compounding.
Home Two: 400,000 value. Now there is 700,000 into the law of compounding.
Home Three: 500,000 value. Now 1,200,000.00 into the law of compounding.
Home Four: 600,000 value. Now 1,800,000 into the law of compounding.
Over time the value of your homes will increase and your principal balances on the mortgages will decrease. If you stay the course and let the law of compounding interest do its job you will be the benefactor of wealth generation through real estate investing
How To Get Started
Call a mortgage lender and get pre-approved for a new mortgage amount for wherever you are in the home buying process, whether it's your first home or fourth.
Work with a good Realtor that understands the market and can give you good data on the growth of the areas you are interested in.
Do your research, surround yourself with trusted advisors that are experts in this industry and lean on their expertise to help you make good purchases for the long term
Greg Manzanares is the owner of Ophir Financial and Residential Mortgage.