Union Leader - Avenues - New Hampshire Real Estate

Here is a well written article on the Real Estate Market in the Manchester Union Leader

Union Leader - Avenues - New Hampshire Real Estate

Inside the article there is an interesting paragraph that is well worth pondering:

Today's lower rates also offer a unique opportunity for buyers to significantly increase their net worth. A study completed by the Federal Reserve indicates that the average homeowner's net worth is $171,000, which is nearly 46 times that of a renter's, who has an average net worth of $4,800.

First do we believe this very profound statistic? Absolutely we do. Why is this so profound? The average net worth of a renter is 1/46th that of a home owner.

FORTY-SIX Times! That is a lot of times!

Now let’s use this amazing statistic to ask some further questions. Is it likely that the real estate investor has a greater net worth that the single home owner? Again the answer is yes.

If it is good for your net worth to own a home, then it is probably better for your net worth to own two homes. What about five or ten? Real Estate Investing is usually good for your net worth and if for some reason it is not, then wait awhile and it will be. Holding Real Estate for a long time has a way of healing bad purchases ---- if you can hang on.

One of my tenants in our four family apartment on Spruce Street this week signed a new lease for a $50 increase in the rent. Is that a lot of money? Not enough to cause them to move but what does the $50 increase mean to me. It means I will be receiving $50 more each month……probably for the rest of my life…..and into the lives of my heirs….if they are wise enough to continue to hold on to this real estate. $50 a month for the rest of my life isn’t bad. Sounds like a game show wining or a lottery prize. Now I said this is one of our tenants in our four family apartment. What if I can get this $50 increase from all four of my tenants this year -- as I plan to do? Now I have $200 a month for the rest of my life. This is getting better. Now what if I have fourteen different tenants and I can get $50 from all of them? That is $700/month for the rest of my life. Now this is starting to sound like it could change somebody’s life. Now we fast forward into 2009 and we are able to do it all again now we are talking $1,400 more each month for the rest of my life. And so on. Do you see how holding real estate has a way of curing what ills you?

I noticed one day after buying a house for $150,000 which appraised at $159,000 -- that on the day of the closing my net worth increased by $9,000. It occurred to me on that day….”I should do this more often.”

Net worth is a simple equation: Everything you own …. Minus everything you owe. This is how banks determine your net worth. They add your assets and subtract your liabilities.

Every single time you buy some real estate and it appraises for more than what you paid for it – you just increased your net worth.

This is all very simple stuff but also very profound. It is so simple that most people can’t see it or don’t believe it. But it is true.