Friday, September 16, 2011

The Standard of Living You Enjoy . . .

. . . Depends on which side of the check you sign.

Owning commercial/investment property is a personal choice. One that frequently has investors weighing personal needs against pure, cold business analysis and decision making.

But what it really comes down to is this:  The standard of living you enjoy depends on which side of the check you sign!

Signing the front of all your checks? You likely work for someone else and pay your bills and taxes like a lot of Americans. Signing the back of lots checks on a monthly basis? Then you are llikely invested in income-producing real estate and enjoying all the benefits associated with homes, an apartment building, a commercial building, a warehouse or two, perhaps even a ground lease or a Triple-Net single tenant structure.

Further, if you leveraged the property at closing you know all too well that the lender was sitting at far greater risk than you on Day 1. Every buyer does it their own way, but there are distinct advantages to borrowing to make a purchase rather than paying cash. Especially since investment real estate is one of the few opportunities in which lenders will loan money for speculative ventures. Think about it -- Lenders will not loan money on stock purchases. They won't loan you money to buy gold. So if lenders are willing to lend, why wouldn't you borrow?

Simply put, use real estate to leverage your money.

Here's another one. Who received at closing -- and continues to receive -- all the tax benefits? That would be you, the investor. Not the bank, which took the majority of the risk. Pretty cool, huh?

In several years, whether you own a small commercial building, that 55-unit apartment complex, or the NNN leased property belonging to a successful national restaurant, when equity increases, you can refinance your property in order to give yourself "a raise" by way of reducing your monthly mortgage payments. Or, you can use your growing equity to acquire more real estate to build your portfolio, and ultimately, your wealth.

So there you have it. Friday's lesson. The standard of living you enjoy depends on which side of the check you sign......

Enjoy your weekend!

No comments: