Money makes money

Same goes with real estate investing. Landlords get money from tenants and that enables later possibilities to grow and expand.

I don’t believe in doing something for nothing. I like the idea of making money with money. I also think that it is unwise to leverage your investments (whatever the asset class) when you don’t know exactly what you are doing. Don't just dive in head first, do your homework. One always needs to know WHAT, WHY AND HOW. A backup plan is never a bad idea. Money is still just money even though everybody needs it and it always seems that there is never enough. Plan, manage risk and only invest as much as you can lose. 

Real estate investing is a way via a bank. Leverage is almost always used - it is ”easy”. And in the investing world leveraging means often double digits returns on equity. Money makes more money and borrowed money is more money. So you can make even more money. Yes, you do have a higher risk but this time it is not the theme, it is good to remember though. 

If a real estate investor do not have his/her bank, what would he/she have? Much lower ROE and much smaller businesses and ideas. Real estate is one of the most easiest assets to leverage. And just that makes it "easy" and interesting. Appreciation is not nearly always the key component of the wealth accumulation. It is a key factor when using leverage, the bank has to use something as a collateral and it needs to have a value. Over time the tenant pays of the leverage, appreciation gains are merely a nice plus. Leverage can be used again and again and again. After many years or even decades it is more likely to gain some appreciation too.

Without a bank real estate investing would be a much more difficult investment class. It is true that there are nowadays many options to invest in real estate markets instead of direct real estate assets. One could buy REITs or invest in other stocks that are holding a position in real estate markets. One can make money with them all.

So tenants pay to real estate investors who have invested (their own and bank’s money) in real estate. Money comes to money. It takes time to build up really good if you start from scratch, but it does build up. Especially when you invest all your gains again and reuse the leverage possibilities - often real estate investing grows to even bigger portfolio of real estate assets. An apartment grows into another and/or into a house and/or duplex and/or a multifamily complex or even an individual whole apartment building with multiple flats. Money just keeps on coming.

If one starts investing (it really does not matter if it is real estate or something else like stocks) one really can more easily understand how money comes to money. Starting is the hardest part. But the second hardest thing is to keep on track, don’t look back or even sideways, you might fall... and never get back on track again. I don't mean that you don't learn or see what everybody else is doing. My point is to keep on doing it on your own way, if you had a plan stick to it, keep your pace. Of course along the way things change and investors must change and adapt too. Training, learning, doing, living, loving... All above and beyond.

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