There is no question that real estate builds wealth and mortgage strategist Kevin Martini discusses this topic in the 44th episode of the Martini Mortgage Podcast.
One way real estate creates wealth is by appreciation. Simply put appreciation is the increase in the home value over time. According to Zillow, nationally, there was over a 7% increase in appreciation in 2018. Zillow predicts over 6% appreciation in 2019.
Appreciation is not the only way that real estate creates wealth. Another way that real estate creates wealth is when you have a mortgage. A mortgage allows you to multiple your return on investment. If you compared the ‘cash-on-cash’ return on investment between one that paid cash for a home versus one who made a down payment and secured a mortgage, if there is appreciation the one who has secured a mortgage would have a multiplied ‘cash-on-cash’ return compared to the one that paid cash for the home.
“A house does not care how much you put down…it is going to appreciate at the same rate regardless if you have a mortgage or not.”Kevin Martini
There is no connection between appreciation and the amount of money that you have invested to purchase the home…in other words, if you paid cash for a home or if you financed it with a the help of an experienced local trusted mortgage strategist your appreciation is the same.
Leverage, in my opinion, is one of the most powerful forces available to build wealth with real estate. A mortgage provides leverage…leverage is another way that one builds wealth with real estate. Leverage amplifies ones ‘cash-on-cash’ return.
There are many ways to make wealth in the Raleigh…in the Triangle of North Carolina…in North Carolina and the U.S. for that matter but one of the easier ways to create wealth is though real estate. Real estate creates wealth.
If you or someone you know has questions about building wealth with real estate or questions about the current home loan rate environment or the unique home loan programs offered by the Martini Mortgage Group at Benchmark Mortgage, then reach out — our number is (919) 238-4934
Kevin Martini | NMLS ID 143962 | Branch Manager | Martini Mortgage Group at Benchmark Mortgage | Ark-La-Tex Financial Services, LLC NMLS ID 2143 | 5650 Six Fork Road, Suite 101, Raleigh, NC 27608 | (919) 238-4934 | www.KevinMartini.com | Kevin@KevinMartini.com | Equal Housing Opportunity