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5 Ways to Improve Your Real Estate Wealth

Aug 6, 2012
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People often want to know how to get rich on real estate.

The overall answer is pretty simple:

  • Plan to own every property you buy for a long time.
  • Drop the get-rich-quick schemes. Go for the get rich slowly method of money management, an over-a-couple-of decades-plan — complete with a few clogged toilets, some roof leaks, and nutty neighbors, but plenty of time to let inflation increase the value of your asset.

You have to take a long-term view with property, and if you do, the chances of having significant wealth down the road are much higher.

Here are a few tips you might consider if you want to know how to manage your money better when it comes to real estate:

Strive for long-term ownership

Long-term ownership is the key to earning wealth on real estate. If you own for the long term, you pay down your mortgage, hopefully see some appreciation in value and skip paying the exorbitant buying and selling transaction fees that decrease your net wealth each time.

Buy properties that are assets, not liabilities

A personal residence is an asset if you can comfortably afford the payments, along with all the rest of your bills. If you can’t comfortably afford the payments, it’s a liability and will not lead to real estate wealth. Rental properties are assets, too, if the rents cover all expenses and leave some positive cash flows. They’re liabilities if they are negative cash flows — and many people buy these to their own detriment. So start buying assets!

Carry the proper insurance

We all know that sometimes things go wrong in life, especially with real estate. Fires, floods, tenant issues, dog bites, etc. can cause losses to an owner. If you have the proper type and amount of insurance in place, you will be covered if there is a loss, as nearly all who give money management advice agree. It’s not too hard to have the right insurance, but talk to your agent and do a review every year.

Skip fixers or communities where the HOA is in bad shape

Skip the fixers! Rarely do fixer-uppers sell at a big enough discount to compensate for all the work that you need to do to get them in shape. Additionally, you will add value to a property by doing renovations, but probably not as much value as it costs you to make those improvements.

Also, watch out for HOAs in bad financial, operational or legal shape. Higher HOA fees and/or special assessments will be coming your way in these communities, and good real estate wealth management avoids them.

Long-term financing

Go long on your loan, especially with the outrageously low interest rates in the current marketplace. Lock that 3.5 to 4 percent loan, sleep well and look forward to 2042 — when you will actually own your property outright.

All of the above tips can help you reduce your risk and improve your wealth on the largest, most complicated and riskiest thing you will ever do — buy a home. The more you reduce your risk, the higher the chances you’ll earn real estate wealth. Good luck!

5 Ways to Improve Your Real Estate Wealth” was provided by

The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on your taxes, your investments, the law or any other business and professional matters that affect you and/or your business.

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