The attainment, management, and growth of wealth is one of the greatest American dreams.
When you hear the word wealth, you probably think of a big house, beautiful cars, a yacht and perhaps even more than anything… financial security.
So what is wealth, exactly?
Is it a lot of money, or is there more to it than that?
Wealth Defined
In my opinion, the true definition of wealth is simple – your wealth is defined by the number of days you can go without working and still pay your bills.
For example, if your monthly bills are about $4,000 and you have $2,000 in cash – then you have a wealth of about 15 days.
On the other hand, if you have investments that generate $4,000 or more per month whether you pay attention to them or not, then you have perpetual wealth.
In other words – you’re financially independent.
How to Build Infinite Wealth
So how do you make this happen? Stocks, bonds, a savings account, a 401K… or is there a better way?
Is there a wealth building vehicle that has all of the attributes of a truly desirable investment such as:
- Regular monthly income
- Enormous tax advantages
- The ability to increase its cash output
- The ability to increase the overall value of the asset
- Direct control
- Security against economic change
Can you guess what such an asset is?
Build Wealth Through the Best Kind of Real Estate
It probably seems improbable – or even illegal – that buying apartments can give you such tremendous advantages and build solid and long-term wealth.
The truth is, however, they are indeed the real deal.
Let’s begin here by illustrating to you how buying – or buying into – a good apartment deal is the first step to true wealth creation.
The foundation – A working example
For this example, we’re going to work with several factors.
- You have $100K in cash or from a self-directed IRA to invest
- That you’re buying into a 200 unit apartment complex
- That this complex has a price tag of $7 million
- That the annual net cash flow paid to the equity investors is $250,000
- That the property is purchased by 10 investors and each equity investor owns 6% of the deal
- This means that you get an annual cash on cash return of $15,000, or 15% ($15k / $100k Investment) – try and get that from a bank or mutual fund!
Oh, and by the way – you also get to split up the tax advantages like depreciation, which come out to about $200,000 each year. Wait a minute…
The property only makes $250K – so what does that $200K mean?
It means this:
- You don’t pay any taxes on that $15,000
- You get to take an additional tax write off on your personal taxes based on your share of ownership of tax depreciation.
- You get to write off $4,200 (200k x 6% Ownership x 35% tax rate).
Is the bulb going off yet?
This is just the beginning. You haven’t even raised rents, added extra income or gotten your initial cash back yet.
You’ve already got $1,250 per month in tax free, economy-proof, recession-guarded income coming into your house, mailbox or bank account. You’re probably not independently wealthy yet – but you’re on the way, aren’t you?
