1 – Amortization
That’s the biggest part.
If you buy a property for 150,000 euros with a 20-year loan, you will repay 750 euros per month.
Of these 750 euros, 250 will go to the bank (this is interest) and 500 will reimburse the property. So those 500 will go…into your pocket.
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After 5 years, here you are with 32,000 euros more than at the start.
And after 10 years, here you are with 68,000 euros, that’s when you start to get rich in real estate.
Of course, this money you do not have in cash. But you can get it back by reselling the property. And you will recover money even if unfortunately you have to sell the goods cheaper than you bought them.
For example, after 10 years, you have 90,000 USD of credit left to repay. So even if instead of selling 150,000 you sell 120,000 euros, you will still have 30,000 euros in your pocket!
2 – The added value
Everyone knows. The capital gain is, for example, reselling for 200,000 euros the property that you bought for 150,000 euros. Result: 50,000 euros in your pocket (before taxes).
3 – The natural rise in prices
“I had bought that for 30,000 francs in 1970”.
This is the kind of phrase that our parents and grandparents can utter. And which makes us a little… jealous.
But in fact, nothing prevents us from doing the same!
Prices are naturally rising. And what was worth 30,000 francs in 1970 is worth much more today.
Investing in real estate today is buying something for “a pittance”. Because naturally, in 30 or 40 years, even if it hasn’t increased in value, it will be worth much more. And as it was bought with money from the bank, and financed with the rents collected, it would be a shame to deprive yourself of it.
In 50 years, the price of a meal in a restaurant has been multiplied by 20!
Over the same period, the price of cars has been multiplied by 15!
The best way to be able to say in 30 years “I bought this for a pittance” is to buy NOW.
In 30 or 40 years, that $200,000 house might make you a millionaire. Without you having paid a penny.
People will always need a roof over their heads. The population is increasing. Simply owning and letting time pass is enough.
For this, choose goods that are inexpensive to maintain.
4 – Positive cash flow.
As a reminder, this is the difference between:
- The rent collected, for example, 1,000 euros per month,
And
- The various costs incurred (credit, property tax), for example, 750 euros per month.
Here, the positive cash flow is 1,000 – 750 = 250 euros per month.
Unlike the other three, it’s immediate enrichment.
Bonus:
This one is less financial. But real estate investment carries with it something very virtuous.
Indeed, as it allows us a very important enrichment, it tends to make us “addicted”.
But the problem arises very quickly: the bank no longer wants to follow.
And that forces us to think. To find tips to be able to continue anyway.
Some then find the strength to accelerate their careers to increase their income.
Others buy and sell.
Still, others start a business or implement strategies to develop enormous profitability.
This enrichment is FORCING us to MOVE!
An investor who has seen his wealth explode in 3 years thanks to a few investments cannot stop everything and stay on his sofa for 5 years, waiting for his debt ratio to decrease.
So, without realizing it, he sets off on new adventures, each more exciting and stimulating than the next. He moves, he vibrates, he moves mountains, and he meets lots of people. In short… he LIVES!
