You certainly can build generational wealth by utilizing real estate. I don’t know where I heard this, but I think someone famous said one of two ways to become super wealthy is through the acquisition of real estate. The other way is through inherited wealth but very few of us have a rich uncle or cousin somewhere.
Real estate can create passive income. How can that help towards building an empire of wealth? If it’s your primary residence, obviously you’re not utilizing that for passive income but the fact is that real estate almost always appreciates over time.
If you are fiscally responsible enough to pay down your debt correctly, i.e. if you buy a home and pay down the mortgage over time, you are creating personal wealth with the increased equity you have in the property. Simultaneously you expect that property to increase in value as well. Thus, in this scenario, the homeowner is building equity in two ways.
At the National Police Federal Credit Union, we have had members who have owned multiple properties. A number of police officers buy an income building, like a two-flat or a three-flat. You can buy up to a four-unit property and still finance it as a conventional mortgage loan. Anything over four units is considered a commercial mortgage.
In the case of a three-flat, the owner lives in one unit and rents the other two units. Now they’ve created passive income. They’re paying down the mortgage and covering expenses. At some point, that property is going to be generating free and clear cash flow.
It’s important to remember that nothing is done quickly. This isn’t a get-rich-quick scenario but I can’t remember ever speaking to a person that has owned multiple properties that said it was a bad idea after the fact.
Creating generational wealth usually takes a long-term approach. Owners need to be disciplined in not accessing that capital because there is real value in the unrealized gain.
Right now it might be easy to kick real estate to the curb, forget about Mortgage Chicago, and look to the stock market or other wealth generating activities. There is definitely a group out there that would think that way.
However, scarcity is your greatest commodity. So, depending on where you buy real estate, depending on what your goals are, owning property is a wealth generator. There’s a reason why property values are high, and that’s because there’s a scarcity of inventory available, particularly multi-unit buildings,
I’m a believer that real estate is still a very viable way of achieving wealth. I doubt that way of thinking will be going to go out of style anytime soon.
Police Mortgage specializes in conventional mortgages, purchase money transactions, FHA loans, and VA loans. Led by founder and CEO John Aretos, Police Mortgage is known and respected for providing clients with exceptional service, customized terms, quick and easy closings, and low money down options. To learn more about Police Mortgage, go to www.policemortgage.com or call 312-499-8878.
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