Real Estate Investments are About Equity3 min read
I invested in my first property when I was in my early twenties. I’d saved money over a few years and was able to come up with a down payment which was minimal at this time. I always knew that I wanted to be a homeowner because my father stressed the importance at a young age.
I lived in an apartment for a few years and was ready to start investing in my own home. So, I found a small house and purchased it. The process was easy at the time because I was familiar with real estate having grown up with a father that invested in multiple properties. I was an example of “kids do what you do, not what you say” child-rearing.
Home purchasing was very different during this time than it is now. That is primarily because the economy was such that you could have a pretty low paying job and still purchase a home. That’s because the cost of homes and wages were aligned more closely. That is very much, not the case now.
My generation and older folks [Generation X and older] tend to forget how much easier it was back in the day to buy a home. That’s because salaries were constant, it wasn’t a gig economy and homes were much lower priced. Ok, I digressed and almost went on a rampage about old folks that “go in” on Millenials with that tired, “back in my day we could buy ABC with 123” yeah, whatever man.
So, anyway I never minimized the importance of equity, even at a younger age, when I didn’t understand it. However, now at an older age when equity has kicked in, I could never express the complete appreciation, I have for it.
Home equity is the property value minus the amount owed or liens on the property. For instance, if you have a home worth $200,000 but you have a mortgage for $150,000, you have $50,000 in equity in that home if there are no other liens on the property. If you have a home you purchased for $30,000, 25 years ago, you don’t have liens or mortgages, and the property is worth $150,000 you have $150,000 in equity.
The above scenario is the beauty of property ownership that is often not discussed, and that’s the beauty of real estate investing. Think about this, suppose you took the property above that I described where you have $150,000 worth of equity and used that equity to purchase another property. YOU would then be taking advantage of one of the best perks of real estate investing. You could also be on your way to building generational wealth if you focused on that.
The great thing about equity is that you can use the equity in a property indefinitely. You can borrow some, pay it back and then borrow some more until you’ve amassed multiple properties. So one property could turn into two, two could turn into three, and so on and so forth. You could indefinitely use this method to amass a fortune and create an abundance of generational wealth to pass down to your heirs.
I was lucky to have some properties deeded to me, and I will be using this method to build generational wealth for my son. These properties were deeded to allow me to build generational wealth for my son. I will be recording my journey, so you can realize how you can make this happen for yourself as well. Take a look at the video and follow my journey.
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