Create Wealth by Investing in Real Estate

A new book by authors Catherine McBreen and George Walper Jr called “Get Rich, Stay Rich, Pass it On” shows you the way to becoming wealthy through investments in real estate over a period of time.

Despite the large population of the country, there are just 7 million American households that can claim to have over a million dollars or more in net assets. The authors claim that it is far more likely that “You’re among a group we call the mass affluent, people whose total assets add up to anywhere between $100,000 and $1 million, not including their primary residence,”

Part of the Spectrum group, Catherine McBreen is the Managing Director, and George Walper is the President of this prestigious research company that has been consulting and studying the rich since 1991. They have interviewed over 5,000 millionaires and megamillionaires. Megamillionaires are those who have more than five milion in net assets apart from their primary place of residence. At Spectrum, they monitor investments made by these people, the way they allocate funds to different asset classes, and the thought and rationale that goes into making such decisions.

After interviewing around two dozen people who can be called ‘perpetually wealthy’ or those who have enough dough to last a lifetime, the results were still quite cliched, and had some familiar pointers.

1. Tie up your loose ends and pay off your credit card debt
2. Pay off and own your own home as soon as you can
3. Put money into saving instruments that will pay you dividends over a long period of time.

However, two particular ways to get richer and create wealth were identified by the authors. One was to invest in an idea, service or product that is innovative, and the other was to invest in real estate.

When they studied mega millionaires, they found that the asset allocation was leaning towards real estate investments, which comprised around half the portfolio. This is not to say that there were no other investments. The other half of the portfolio comprised of stocks, bonds, and mutual funds, along with savings plans.

The authors tell us that the sure way to get rich and create wealth is to invest actively in real estate. The key is to invest in real estate that has the potential to produce income for you at present or in the future.

The authors suggest that a 23% to 29% chunk of your wealth should be allocated to investment in real estate. They say that 11%-13% of your wealth should be equity invested in your primary residence. 5% to 7% should be a second home, and 3%-5% should be other real estate holdings like REITS. An investment of 2%-4% can be considered in a third home or in undeveloped land.

The key to financial growth is to keep your eyes open, and also invest around a quartr of your wealth in companies that are developing radically new technologies, products or services. Though this is not as easy as it sounds, it is possible to have a wealth creation plan like this with a bit of research, and a keen eye of sensing when you may be part of something big that can transform the way things are done in a particular field.

Article Source: http://www.real-estate-article-directory.com

Julia Vakulenko is a licensed broker associate with Tampa4U.com Realty. She has one of the hardest working Tampa Real Estate team in Florida. Please feel free to copy any of Julia's articles as long as you credit her and a link to her website. Include our Tampa Real Estate Blog to your regular reading as well.

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