How Real Estate Investing Can Give You Roots and Wings

“If I had two wishes, I know what they would be. I’d wish for roots to cling to and wings to set me free.” ~Denis Waitley

Amanda Steinberg, founder of The Daily Worth, a daily money blog and email list for women, recently wrote:

I’ve thought about Roots & Wings a lot over the years, especially as it pertains to your money. Roots are your long-term investments. They’re your real estate, retirement and investment accounts, and in some cases, a business that you own. Roots grow slowly over time. They require regular watering, fertilizing, and weeding. Strong, long-term Roots are key to your net worth. They grow in value over time. When handled wisely, they provide security, like roots holding down a tree. Wings are made up of income, cash savings and credit. How high you fly depends on how much you earn and save, and how you manage credit. When used wisely, your wings not only fund your daily living, but also grow your Roots.

The wonderful thing about real estate investing is that it can give you both financial roots and wings.

Just to be clear, when I talk about real estate investing, I’m not talking about buying a home to live in. That sort of investment takes money out of your pocket every month. That might be a root, but it doesn’t provide wings.

When I talk about real estate investing, I am talking about buying cash-flowing rental property that puts more money into your pocket. This type of investment provides income (i.e., wings) and is a stable long term environment that grows in value over time (roots).

The nice thing about this type of income is that, for the most part, you don’t have to trade your time for this income. Tenants pay rent. After expenses, what you have is monthly, recurring mostly passive cash flow. While you sleep, vacation, spend time with your loved ones, work on other things, you real estate is providing you income.

There are few other things that can provide you with such stable financial roots and wings.

I didn’t grow up knowing this. I fell into real estate investment almost by accident.

I didn’t know anything about real estate investing.I didn’t know why someone would want to do it, or that it was even an option for me.

I was taught that you work hard in school, go to the best college (and in my case law school) you can, and then get the best job you can.

I was taught to trade time for money, but get the best job you can so that you’re making the most amount of money per hour. It’s not bad advice if you’re money paradigm is that to make money, you need to get a job. The only thing I was taught about real estate was to buy your own home.

So that’s what I did. I worked hard in school; I went to Columbia Law School, and then I got a job working in a big law firm in Los Angeles. I was young, single, and making a good 6-figure salary. I was miserable in my job, but that’s a different story for a different article.

After a few years of working and saving, I decided it was time to buy a house.It was Los Angeles in 2005, and we were getting toward the top of the bubble. Even though I had a 6-figure salary, it was hard to get a house I could afford in a neighborhood I wanted to live in.

A good friend of mine who also wanted to buy a house but was stymied by the high prices suggested that we buy something together.He suggested we buy a duplex and each live in one side of it.

I readily agreed. We’d been roommates together in law school and in Argentina. He was and still is one of my best friends. I knew I could live with him and that we would be successful business partners as well.

We ended up finding a beautiful home that we both fell in love with. Unlike our original vision of one property with two equal spaces that each one of us would inhabit, our dream house had one unit that was substantially larger and more attractive to live in than the other.

Instead of one of us living in the less desirable unit, we decided that we would each take a bedroom in the bigger unit and rent out the top unit.There was also a converted garage in the back that we were able to rent out (providing another rental unit).We moved in, got tenants for the converted garage and the upstairs unit.All of a sudden, we were landlords.

And I realized something — being a landlord had some definite benefits! These tenants were paying the mortgage!I still owed a little bit at the end of every month, but I owed a whole heck of a lot less than I otherwise would have if I owned the place by myself or if I had continued renting.

On top of that I got to take mortgage and other tax deductions that resulted in even better savings. I was in the highest tax bracket so owning this property made a BIG DIFFERENCE in my final tax bill. I got to keep a lot more from Uncle Sam.

That was my first experience with real estate, and I was hooked. It was a great start to getting financial roots and wings, and I haven’t stopped since.

Please share in the comments if you have any investment property. If so, what do you love about it or are challenged with? If not, why not?

This post was published on the now-closed HuffPost Contributor platform. Contributors control their own work and posted freely to our site. If you need to flag this entry as abusive, send us an email.
CONVERSATIONS