You work hard for your money, but does your money work hard for you? When you store your cash under your mattress (or in a bank), it will produce next to nothing. Investing is how you become wealthy plain and simple - When you put money into an investment, your cash go to work for you. The government cannot save you or your family, or ensure your financial freedom. Set your mind right about earning money. More cash = more freedom!
Money itself won’t make you happy, but it will give you the ability to provide a better life for yourself and your loved ones. You must invest with income streams that give you positive cash flow, learn to leverage your debt, learn to handle inflation and take control of your physical assets.
But what is the best "job" for your cash? How can your money earn the most and offer the least risk? One investment stands head and shoulders above the rest: real estate.
Here are reasons why investing income producing real estate is an excellent choice for protecting and growing your wealth....
1. Positive cash flow.
One of the biggest benefits to income producing real estate investments is that leases generally secure the assets. This provides a regular income stream that is significantly higher than the typical stock dividend yields.
2. Using leverage to multiply asset value.
Another important characteristic of real estate investing is the ability to place debt on the asset, which is several times the original equity. This allows you to buy more assets with less money and significantly multiply asset value and increase equity as the loans are paid down.
3. Low-cost debt leveraged to multiply cash flow.
Placing “positive leverage” on an asset allows for investors to effectively increase positive cash flow from operations by borrowing money at a lower cost than the property pays out. For example, if a property generating a 6 percent cash-on-cash return were to have debt placed on it at 4 percent, the investors would be paid 6 percent on the equity portion and approximately 2 percent on the money borrowed, thereby leveraging debt.
4. Hedge on inflation.
For each dollar that is created, there is a corresponding liability. Real estate investments have historically shown the highest correlation to inflation when compared to other asset classes, such as the GSE, 182-day Treasury bills and bonds, your paltry interest on your bank savings.
5. Capitalize on the physical assets.
Income-producing real estate is one of the few investment classes that, as a hard asset, has meaningful value. The property’s land has value, as does the structure itself, and the income it produces has value to future investors. Income producing real estate investments do not have red and green days, as does the stock market. You can touch and feel.
6. Maximizing tax benefits.
The Ghana Tax Code benefits real estate owners in a number of ways, including mortgage interest deductions and depreciation accelerations that can shield a portion of the positive cash flow generated and paid out to investors.
7. Asset value appreciation.
Over time, more and more inflation has made it into the economy, drastically reducing purchasing power. However, income producing real estate investments have historically provided excellent appreciation in value that meet and exceed other investment types. Properties historically increase in value as the net operating income of the property improves through rent increases and more effective management of the asset.
8. Feeling the pride of ownership.
The right property in the right location with the right tenants and ownership mindset can produce a tremendous pride of ownership factor that is highest among all asset classes. Homeownership is out of reach for most people. Imagine owning thousands of multi-family housing units instead?
9. Quit Renting
Why contribute to someones mortgage payments when you could be paying off your own? With programmes available via The DCANS Group such as the new 30-year amortizations and no money down with a good credit score or rent-to-own, it is easier than ever to own a home. And with the current market increase in rent it can sometimes be cheaper to own than it is to rent and there is no fear of your mortgage payments suddenly increasing.
10. Security & Stability
You don’t have to worry about your house being sold out from under you to out-of-town investors or debtor action. If renting and faced with this scenario, you could find yourself faced with an unreasonable increase to your rent, thereby leaving you potentially homeless or too poor to eat. These increases could continue indefinitely so the investors can make more money or so that you will feel forced to leave and they can turn your building into a condominium.
If you own your own house, you don’t ever have to worry about the owners checking up on you, since you are the owner! You will gain much more independence and privacy when you have your own property.
One of the best things about owning a home is that you are building equity, which gives you more freedom financially as you can access a home equity loan. You may then borrow against the equity you have built in your home for a wide variety of reasons including home improvements, paying for school for your children, medical reasons, or even starting your own business. Check with your lender, as these vary from one to the next.
You are free to do what you want in your own home, whether you want to paint the walls in pink and black zebra or put carpet on the ceiling (not recommended of course!) You have the freedom to express yourself and your personal tastes and change the house to suit your needs. You can hang as many pictures as you want and do renovations as you please. Just keep in mind that when you are ready to sell your home, not everyone may like what you do.
14. Sense of Community
Owning a house gives you a feeling of belonging in that neighborhood and gives you the sense of putting down roots and getting established. There are also many neighborhood groups that you can become involved in, and if you have children it may be of benefit for schools and friends
15. Interest rates are incredibly low.
Although the "Brexit" scandle that just rocked the world and caused financial markets to tumble, there is one segment of investors who will benefit from the news: those with money tied up in real estate. Why? Two words: Interest rates. Low interest rates lead to low monthly payments, which is great for real estate investors looking to maximize their profits.
16. Banks (and Non-Banks) 'always' lend on real estate.
In the collapse of the real estate market in 2007 and 2008, many banks tightened their lending standards to such a degree that obtaining a mortgage became next to impossible for many people globally (and Ghanaians as well). However, gradually over the past several years, banks have once again begun opening their vaults and relaxing their standards. Irrespective of the lending environment, you can always raise quick cash against your property.