The market has cooled in various cities across the country and fair weather investors are starting to worry about how they'll be able to make money now that their houses aren't escalating at astronomical rates.
I just have to say to these folks -- breathe. If all you want to do in real estate is make money on the basis of appreciation (asset growth), then you need a primer on how to make really good money in real estate.
The authors of Investing In Real Estate, Andrew McLean and Gary Eldred (2006, John Wiley & Sons Inc.), have provided that primer, listing eight ways to grow your wealth in investment real estate.
The key to building true wealth in real estate is through buying and holding. A good tenant can create wealth for you by paying for the mortgage, insurance, taxes and monthly fees through their rental payment to you. In addition, consider this: you have just taken over an asset leveraged by a fraction of the value. In other words, let's say you purchased a condo at $150,000 for $15,000 down payment. If it grows at 5 percent per year ($7,500 first year, etc.) you're making more than 50 percent on your money that you actually invested -- can't get that kind of power behind mutual funds.
Real estate investing allows investors several ways to make and/or save money that other investment tools will never allow or have the ability to provide. As Mr. McLean and Mr. Eldred point out, no one can predict short-term price increases -- but that's why the savvy investor doesn't look to just appreciation to make money.
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