And there shall be evening, and there shall be morning

#Innovator of the Week David Levy
#post2.
Why real estate?
I dedicate this raider to the potential investors, those whose real estate is currently the fence they are sitting on????
(Let's assume for a moment inflation that makes names for money that doesn't work, we'll only talk about real estate)
I assume you have heard about the benefits in real estate. Appreciation, rent and improvement. All of these are familiar to you - and the fence still sounds like the best investment to you - perhaps because the first step is particularly scary and along with all the good things in real estate there are also falls and scams and just failures in good faith. And everything is big and requires a lot of money. Any mistake in real estate can cost a lot and of course the profit accordingly.
So today I will write about investors, entrepreneurs and the investment you must have. I'll start from the end.
In my opinion, real estate is not a substitute for other investments. The real power of an investor or an investment portfolio comes from the diversity it has. Real estate can take the lion's share of the portfolio, but it is desirable to have more avenues and more markets that your portfolio is built from. If you want, think of it as a group that plays for you in the financial market. One day one player is weak and the other bombards, and the next game is a bit the opposite - but the main thing is that the team wins.
But specifically we are here for real estate, so let's talk about real estate: the significant profit from real estate can come in several ways, each of them has its own power and importance:
1. Increase in value.
Yes, we are in a complex period, but over the years the value of real estate increases. (Yes, shares too, I know, but remember that this is not a competition, it's a team). In the last 20 years, real estate has increased by more than 3% per year (this is of course an average and it varies from region to region, etc.). The big advantage is twofold - the annual increase is on top of and includes the previous increase, which means that every year there is a profit on the profit, the so-called "de-interest interest" (here it's more "yield de yield", but you get the idea). The profit part of the increase in value is that it is on the entire value of the property, while we aim to take financing and therefore do not take the entire value of the property out of pocket. In other words, the increase in value also takes place on the financing money and since you are not going to share it with the bank - it is a double profit, and sometimes even more! This is really a big thing.
Coming back to you, definition people: and just for this thing - you must start investing as soon as possible. It is true that there is a profit here and it sounds fun to make a profit every year - but it is really only significant after a few years and we must start it as soon as possible.
2. Rent.
Rent is the fuel that allows everything to happen. While the increase in value is the locomotive of your profit - rent is the fuel that allows this locomotive to move over the years. And since the rental also generates profit in itself - there is a situation where it is the best fuel in the world...
Don't expect mountains and heights, the profit from rentals is nice and solid, and of course in the US it exceeds the profit in Israel, but this is the part that separates the "investment" from "passive investment" and the "passive" part is eroded. Renting requires tinkering. It's not terrible, and it's possible to outsource, but it's not sterile and not completely passive. But that we have a strong WHY and we remember the destination and that we have a drive to enter - it's really much easier than most of the jobs in the market that we do and they don't have such an attractive destination. In short, it's worth the effort in a big way.
3. Financing.
Let's spend a moment in the financing itself. This financing has another effect that integrates with the rent: a significant part of the rental income will be directed to the loan payments you took, right? And this payment consists of both principal and interest, right? magnificent. Once every few years, between 5-10 on average, you will be able to refinance your property and receive back the principal you have transferred over the past years back to you. That is, you will increase her mortgage again and on purpose so that in one fell swoop you will receive all the payments you had - and the monthly repayment will not change (only the years left to finish). magic. And if the value of the property increased as expected? In general, great - you will also be able to extract part of the initial equity you invested (but in this case there will often be a jump in the return).
4. no.
The last thing is tax benefits, but since it mainly concerns US residents, and most of you don't - we'll leave that aside for now.
5. Improvement.
There are so many possibilities in this world and in this channel good entrepreneurs have the real possibility to flourish. Improving a property can increase its value by dozens of percent. This of course comes with a higher level of risk, respectively, and there are many variables and other factors involved in such an investment, so it is even more important to know that you are working with real professionals, especially if you are just starting out. Most of the problems I've heard of have come from problems with contractors, keep that in mind. I'm not against, not at all, but take the biggest safety margins you can and work with the best factors you can, even if it cuts into your profit, because it usually pays off in the end. Here, time matters, the opposite works - the goal is to finish as quickly as possible and with as few delays as possible. Delays are the biggest source of new problems that arise, avoid them at almost any cost. And, naturally, it is significantly less passive, until it can become real work.
I think at this point you have already understood that in my view real estate is time. Investing in real estate takes time, it's not that new, I know - but it's so important that it's worth saying it endlessly.
In conclusion, in my opinion, 2 conclusions can be drawn: (a) You need to start investing and start investing early so that the effect of time will give its signals as soon as possible. (b) You need to invest in long-term investments, otherwise time has no meaning and you lose the strongest parts of real estate investing.
"I don't have any inspiring proverbs to praise a post, you have to read the post" - David Levy
In the picture: I invest in a costume for Purim ????