Real estate millionaire Robert T. Kiyosaki is a believer in ‘making money work for you.’
This means that instead of you spending your hours slave away to make money, you find an asset that continually generates money for you with minimal personal effort.
Kiyosaki defines an asset, not as something with value that you own, but as something that you own that is generating an income for you.
He found his assets in property ownership—and made $80 million doing it.
You can make money work for you too, but first you have to escape the pitfalls of getting into the real estate game.
Real estate can be an easy way to generate relatively effortless money, which is part of why so many people clamor over the concept.
But people often think about things in the wrong way. People see purchasing a house as an asset. But really, it’s a drain. Sure, it’s a property in your name, but is it doing anything for you?
Some people realize this mistake, but they go about solving it the wrong way, taking out property loans or selling their property all together in an attempt to see some of that money back in their hands.
Some people make it a little bit closer to success, buying properties and selling them for a profit.
But that’s a lot of ongoing work, and the earnings are risking and far from consistent.
People are always looking for short-term solutions, and so buying and reselling property has become one of the biggest trends we’ve seen lately.
But let’s look realistically at the cost and earnings of something like that.
The national average price cost of a home in the United States is $230,100.If you buy a home in poor condition and fix it up, buy in a slump and sell on a high, or negotiate a lower than expected cost, you can knock an average of about $100,000 off your buying price.
So, if you buy the property for $130,100 and sell it for the average of $230,100, you make $100,000, maximum. However, most homes need some sort of updating even if they aren’t in poor condition upon purchase, which means more costs for you.
In order to hold your property to the standard of the average home selling in America, you can say goodbye to about 10% of that $100,000, leaving you with a profit of $90,000.
Still a healthy amount, but didn’t 6 digits sound better to you than 5?
Well, what if I told you that your profit could go up to $265,900 instead of just barely reaching $100,000?
Want to know the best part?
You can make that extra $175,900 with the same property!
All you have to do is stay in the game a little longer.
The average cost of renting a property is $1,650 a month in the united states. That’s $19,800 a year straight into your pocket for a completely average rental property.
Now granted, it takes you longer to break even, but once you do, your property will be a constant source of income for you, and all you have to do is go on owning it and collecting rent from the people who live in it!
It would take you 2 decades to reach that $175,900 figure at the national average, but here’s the thing—that’s just the baseline. Renting offers huge potential for increasing your rental price by making small changes. Adding newer appliances allows you to up your price.
Also, finding a property in a prime location can make a rental house jump from $1,650 per month to $2,500 a month! Just think of the potential for profits if you choose your property wisely.
Now, I know that running the long game is never anyone’s favorite tactic, but I promise you it’s worth it.
Just think of it this way. If you are saving for retirement and your income is the around the average of $50,000, you are tucking away $10,000 a year to earn meager 6% increases until you retire.
But with real estate, you are MAKING an extra $19,800 or more a year after you break even, and you can keep putting that annual amount in your pocket even after you retire.
In other words, playing the long game and renting your property can set you up for the good life—permanently!