How to Create Wealth in Real Estate

January 4, 2023

Do you want to get started in real estate investing this year? Real estate is one of the oldest investing methods that continues to return profits for investors over many different financial cycles. Continue reading to find out the best ways to create wealth in real estate and how you can get started investing today.


Why invest in real estate?


If you’re reading this article, you probably know that investing in real estate is a great way to build wealth and generate passive revenue for yourself and your family. Here are some less common benefits you’ll find if you decide to invest in real estate this year:


  • Diversification. Traditional investments like stocks and bonds are tried and true and tend to return modest but consistent returns for investors over a long time period. However, these investments are subject to short-term fluctuations that can diminish their value overnight. Real estate investing is one way to diversify your investment portfolio with an asset that tends to appreciate over time.
  • Tax benefits. Real estate investors enjoy plenty of tax benefits that traditional investors can’t take advantage of. For instance, real estate investors can deduct many of their expenses from their taxable income–allowing them to pay less in taxes at the end of the year. Expenses like property taxes, maintenance costs, and interest payments are typically tax deductible for real estate investors. 
  • Leverage. Since most real estate investments are too expensive to buy outright, investors typically use leverage to finance their investments. Leverage allows investors to accumulate many investment properties that generate consistent monthly income. Additionally, flippers use short-term loans as leverage to finance their investments.


Creating wealth in real estate


The best part about real estate investing is that there are so many resources you can use to get started as a beginner. Additionally, there are many different ways you can build wealth in real estate. Below are two of the most common ways beginners get started investing in real estate.


Owner-occupied properties


Also known as a “house hack,” an owner-occupied property is a property where the title holder lives at the property they own. The term is typically used by real estate investors who rent out space in their homes to paying tenants, which helps to cover or reduce their monthly mortgage payment. Getting started as an owner-occupant is very easy. Some owner-occupants decide to buy multi-family homes like duplexes or triplexes while others buy single-family homes and rent out one or more bedrooms to tenants. 


Rental properties


Investing in rental properties is one of the best ways to build passive income through real estate investing. In fact, rental property investing is one of the oldest real estate investing methods that continues to provide consistent returns to investors. There are plenty of ways you can get started investing in rental properties. However, most investors buy investment properties using leverage, meaning they work with a lender or bank to finance the purchase of the home. Once they acquire the property, investors find tenants to rent the property which generates monthly income that can be used to finance additional rental properties.


Final thoughts

Are you looking to buy or sell your home in the Massapequa area? The Kim Holland Homes Team has the experience needed to help you reach your real estate goals. Contact Kim at 516-236-6303 to get the process started today!