Why Real Estate Investing Is the Money Doubling Business and Albert Einstein’s Rule of 72!


Real Estate Is the Money Doubling Business, and Albert Einstein Say’s You Need to Get Involved!

Real Estate Investing is an exciting business right now due to historic once a century pricing, a Congressional Bail Out that allows banks to sell their foreclosures at artificially low pricing, and interest rates that are also historically low. Add to the mix the large number of tenants due to the large number of home owners that have been foreclosed of faced bankruptcy, and now is the perfect time to be a landlord! Real Estate is a cash cow that provides passive income that you don’t have to work for. My c0-host on the “Rich Life Real Estate Show,” Brian Patton calls it “Mail Box Moolah,” in his book by the same name.

Why is real estate such an incredible asset? Robert Kiyosaki of “Rich Dad, Poor Dad” fame, who I used to work with, always defined an asset as, “Something that puts money in your pocket.” Now bankers will let you count the equity in your home as an asset, or the stocks in your portfolio, but the truth is stocks don’t put money in your pocket every month, and they may go up or go down on a daily basis. This means that you could lose money on them depending on when you sell, and you have to pay an expensive commission when you do sell, while you are also taxed on your growth each year with very few tax advantages. Your home on the other hand is an asset if you can pull the cash out, but if you become unemployed or have medical crises that ruins your credit, that money is inaccessible and you now must sell the home because it’s monthly payments now become a liability.

Investment real estate on the other hand, under proper management, provides tremendous investment advantages:

  • When bought in foreclosure you may have large amounts of equity which later turn into large profits.
  • You can buy at large discounts, which can’t happen in stocks, bonds, precious metals or commodities.
  • Real Estate Investment may provide very steady income on a monthly basis that is passive (you don’t have to work for it)
  • Real Estate Investing is Tax Advantaged
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    because you may be able to write off all of the interest paid on financing, property taxes as well as depreciating the property for additional write offs. (Please seek the advice of a competent CPA who owns real estate and can explain these benefits).

  • Current pricing in many of our best investment markets allow you to earn 10-30% Returns On Investment (ROI).
  • Additionally it’s an asset you don’t have to pay for, your tenants instead buy it for you!
  • Real Estate is a limited asset, there is only so much land, and there isn’t any more of it being made.

Einstein’s Rule of 72!

Einstein said the Rule of 72 was the 8th Wonder of the World, take whatever interest rate you are earning on your investment and divide it into 72 and it tells you how many years it takes for your money to double. This means that real estate is the “Money Doubling Business.” Divide the return of your real estate into 72, and as long as you can invest the cash flow that you make into an investment that gets the same compounding return, you will know how long it takes your money to double.



The Money Doubling Business!

This 3 Bedroom 1 Bath 1,100 square foot 15% ROI home was built in 1971 explains:

It’s only a matter of how many years it takes to double! An 8% return the $50,000 invested in this property doubles in 9 years, at 12% it takes 6 years, but at 15% it doubles in an lighting fast 4.8 years.

Buy this property at age 31 earning 8% you have $800,000 at 67, at 12% you have $3,200,000 at 67, but at 15% you could have $12,800,000 at 69.4 years old.

Also, the property will appreciate and be paid off in 30 years, and it’s rents should go up each year, keeping up with inflation. Please remember that this case study involves the purchase of only one property, and assumes that you can figure out a way to take your monthly cash flow and invest it at 15% as well as the initial money that you invested (this is the only way that the return receives compounding interest, otherwise it is simple interest). If your ROI included taxes, insurance, maintenance and management fees these numbers could be pretty realistic.

Now this illustration may oversimplify, and it also takes into account compounding interest on your 15% return, which is hard to do because your cash flow might not be reinvested at 15%, but I know professionals that can help you take the $6,000 or so and invest it at 8% where it does compound and grows in a tax advantaged manner, while also providing death benefit, and living benefits in case of cancer, heart attack or stroke. This strategy also allows you to pay for college expenses, borrow for more down payments or even go on a vacation without pentalty. The best part of it is, one real estate deal can potentially pay for all of those benefits, while providing a very nice tax advantaged retirement later.

The faster you can get your annual cash flow back into another 15% property, the easier it is to come closer to hitting this illustration. Imagine what you could do with multiple properties. If you would like to plug some numbers into our model and get an illustration of what might be possible for your situation, call me and we can sit down with the professionals that can make it happen. Perhaps you have an old 401k or IRA that could be moved into a self directed IRA to purchase real estate with these types of returns. It might just make sense to provide this type of diversification for your portfolio, and we work with a team of dedicated financial professionals

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that can perform as your own personal “Board of Directors.” These professionals include CPA’s, Insurance Agents, Financial Planners, and top Real Estate Investment Experts.

Call 404-718-9126 and let’s talk about your situation and goals.

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