Buying investment real estate

Are you in the market to buy an investment? Did you look at paper investments that most people look at; stocks, bonds, annuities, & mutual funds? How about commodities? Did you search through the commodities market for something that could increase your cash-flow, build equity, and not take a loss or plummet? In today's market, did you find anything? Now, real estate is a different market altogether! In the real estate market, you can buy a house for $50,000, using hardly any of your own money (depending on how you design the deal), and instead of paying $50,000(as in purchasing a paper investment), you might only pay $5,000, and have $30,000 in equity the minute you settle on the property! Now, how does that work? It's called "OPM" - other people's money. Now, why would other people want to give you money to buy an investment? You generally cannot buy into the stock market using other people's money. If you decide to buy gold bullion, you generally cannot borrow money to buy it. If you decide to buy any insurances, they won't finance the policies over time. Then, why can you buy real estate with only a small fraction of what the "investment" is worth instead of full face value?
Can you see a stock? No, not really. You are able to "see" the printed value (at that particular time) of the particular stock or fund that you are looking at "on paper". But you cannot "see" the stock itself. Can you meet the board of directors of the company that the stock is offered by? Would you be able to boost their sales in that company, so that your stock will eventually appreciate, or split? Not unless you are in the day-to-day operations of that company in a position of authority, and you are made a stockholder as part of the "perks" that you receive. If you would need money for something, would you be able to "borrow against" your stock? Even in a classic 401k, you would not borrow against stock, but against the money that you, your company, and the appreciation has put there.
Now, let's talk about real estate! Why would someone want to lend you money on real estate? Can you see real estate? Of course! It is a brick and mortar building of some kind, or a piece of property with no improvements would be called a piece of land. Land has always been , from the dawn of time, an investment that everyone wanted. Historically, the nations fought wars for land, built civilizations on land, utilized the land for all sorts of purposes, bartered with land, and much more. Even today, there are wars being fought for land.
So, now, you have an investment that the banks, lenders, and brokers, can see, lend against, and attach a lien to. There are many people that would need to buy this investment from you, so that they could use it instead of you. You could do all sorts of improvements to the property, so that it is worth 100% more to someone else to either rent it from you, or buy it from you. You could take money out of it to start a business, or anything else that you would want to do with the money.
Wow! Now we know that real estate is an investment, with many options of making money, using OPM with very little, if any, of our own money. What is the next step? Remember, in a previous post, we talked about knowledge? We still need to learn all that we can, so that we can make some very informed and intelligent decisions on what and where we are going to invest. Let's touch on that next time. Talk to you soon.