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Money is not Good or Bad, It’s how you use it that counts

As my mother used to say be careful what you wish for. Some money is a lot better than no money. Agree? With wealth comes the responsiblity to manage it. So while I am all about living well, there is a lot to be said for simple is better and downsizing is a good thing when you retire. If that is not you, then go fly you Gulfsteam to Paris or something. I will be soaking up the rays.

One of the most important investments and expenditures in your lifetime is your home. How boring is that? As a mortgage consultant in my last life I can tell you it has a whole lot to do about the quality of your retirement years. For me and mine we do not want to sleep on a park bench at age 95.

There are many benefits to homeownership. When was the last time you washed a rental car? There is a pride that comes with ownership that usually translates into a sense that this is my home, therefore I will protect it and take better care of it. If you buy a home in a good location that appreciates in value, your hard work taking care of our investment along with appreciation over time, will begin to build wealth. It all starts with home ownership. (Boring but Important!)

Remember what it was like to scrimp and save for that first house. Now if you have done things right you are about to reap the rewards of your hard work and discipline. If you are young, learn while you are young. Don’t become a member of the “if only I would have done this or that” club. Real estate investing and saving will make you wealthy. The more time you have on your side, the more significant it will be to build tremendous wealth.

Owning a home or homes will provide tax advantages, automatic adjustments for inflation and the opportunity to build wealth.

Hopefully, by the time you retire you will have bought several homes, fixed them up, kept them up and sold each one for a profit or rented them out to build equity and rental income. Visionaries, look beyond just owning a home, but view the process as a fairly safe way to accumulate wealth. As you buy and sell homes, the profits that you made can be used to buy other homes. Since you can only live in a couple of homes at a time, the more you own the more you can rent out to let someone else build equity in your homes. If not now be a great time to start building your own real estate portfolio.

Think of the possibilities of knowing that by the time you retire you will have paid off your mortgage, paid off two or three other homes over the years which you have bought in good areas, kept in good shaped, sold and continued to invest wisely in more profitable real estate. Perhaps you kept the homes for rental income for your retirement. There is only so much land and so many houses being built as the baby boomers retire. So what is happening? Homes in the more desirable areas of the country are increasing in value at rates that blow the socks off most other forms of investment.

This is not financial mumbo jumbo. After a home is purchased, payments on the loan each month reduce the mortgage. Usually houses increase in value. When these two things both happen at once, the net worth to the owners increases in value. As the equity in the home continues to increase each year wealth is created. This equity can be used through refinancing the home and taking cash-out or opening a home equity line of credit. Smart real estate investors take that money to buy another home and repeat the wealth building process. If they are really smart they will double up on some of the payments, apply it to the principle and save thousands in interest payments while the home is paid off in fewer years. This savings in interest and term reduction can be almost unbelievable.

A school teacher in Myrtle Beach, SC, managed to buy a new home every year for 15 years. She did it on an average salary of $35,000 a year. As she approaches retirement she now owns 15 investment properties. More than half are paid off through rental income. All are producing income above and beyond her mortgage payments. Soon she will own them all free and clear and have over $15,000 a month in rental income coming in for the rest of her life.

A young lady, age 22, bought her first home on Daniel Island, SC, in 2004. She sold it a year later for a staggering profit of $210,000. Can you imagine? While there are no guarantees what the future holds, it’s a fact that home ownership is truly an investment that can make you wealthy. We don’t buy into the whole real estate bubble bursting bull.

While I could have bought a piece of beachfront property in a swamp called Marco Island in the 60’s for next to nothing, today you are looking at major bucks for the same land. But mark it down, in ten years what ever you pay today will still look like a bargin. If I am wrong, remember no one twisted your arm. We just shared a little dumb insight and blew it. You see we just don’t know when the AntiChirst is actually coming. I used to worry about all that but when things happen they happen. I deal with what I can handle and you run your life. If the world comes to and end in my lifetime, I bought my fire insurance a long time ago.

Did you know that according to the Harvard Joint Center for Housing Studies average home owners had a net worth of $250,000 while renters had a median net worth of $8,700. Conclusion: The net worth of homeowners, on average, is much higher than those who rent property. The difference is startling. Even when you compare people with similar incomes, home owners had a significant advantage in net worth.

Net worth is the amount you have left when you subtract your debts from your assets. Look at it as your own bottom line. As they joke, the one who dies with the most toys win. In the context of retirement, those that plan and invest for a greater return on their home investments will have more disposable income for their retirement years.

Wealth building is possible for anyone that understands that everything begins with home ownership. Are there other ways to build wealth? Of course, but you may not be willing to take the risk of more complicated or risky investment strategies. Most people can comprehend that if you buy, sell it in a few years for a profit and repeat that process several times in your lifetime you will most likely retire a wealthy man or woman.

Let’s say you managed to own four or five homes that are paid for by the time you retire. You no longer want to deal with renters or managing the properties yourself. You can sell them and put the profit in a safe investment that generates you monthly income; or, you can hire a property manager to take over the burden of the properties as you enjoy the income.

Rather than buy apartment units as a rental property, it may be smarter to buy a small house or condo. Why?

1. They hold their value longer.
2. The demographics suggest that the demand for homes will increase as the baby boomers retire.
3. People are staying single longer. But they understand a home appreciates in value faster than an apartment.
4. The seniors may downsize but they prefer the freedom of ownership and maintaining control of their lives.
5. Seniors prefer to stay close to family and friends in the comfort of their own home as long as possible.

If you don’t take anything else away from this short article, remember this simple formula: Your home is your ticket to building wealth. The more homes you buy and sell at a profit in your lifetime without wasting the profits, the greater chance you have of retiring as a wealthy person. You may never become a stock market genius or invent the greatest new product in the world, but you can learn to buy and sell homes at a profit.

Need a good mortgage deal I can still help you. Go to http://www.fnmortages.com (Licensed in 50 states. Contact info on site.