Maclennan Investment Group

925.385.8798

  • Home
  • Services
    • Commercial Property Management
    • Commercial and Industrial Leasing and Sales
      • Commercial & Industrial Properties for Sale
      • Office, Retail, & Industrial Properties for Lease
    • Individual Investors
    • Note Purchases
  • About
    • Peter Maclennan
  • Blog
  • Investments
    • Contra Costa County Duplexes, Triplexes, and Fourplexes
    • Commercial & Industrial Properties for Sale
    • Investment Properties in Central Contra Costa
    • Alameda County Duplex, Triplex, and Fourplex Invesment Properties
    • Office, Retail, & Industrial Properties for Lease
  • Articles
    • Interest Rates and Investment Property Values
    • 5 Mistakes Instant Millionaires Make
  • Contact
    • eNewsletter
  • Note Purchases
You are here: Home / Benefits of Real Estate Investing / Generational Wealth

June 3, 2014 by Peter Maclennan Leave a Comment

Generational Wealth

Generational wealth - child running in a park

Bank of America just released the results of their latest Merrill Edge Report. In it they surveyed the “mass affluent”, those with between $50,000 and $250,000 of investable household assets. According to the survey, the Mass Affluent were more afraid of not having enough money throughout their retirement, than they were of losing their job, public speaking, or of going to the dentist.

These families are fearful that they will not have enough assets to last their lifetime. They are not able to even consider the lifetime of their children.

Wealth that Lasts

A good man leaves an inheritance to his children’s children, but the sinner’s wealth is laid up for the righteous. – Proverbs 13:22

Can you imagine creating an inheritance that will endure past your lifetime, past the lifetime of your children, and onto that of your grandchildren? How do we create something of lasting value that will transfer from our children along to our grandchildren?

Leverage Helps

While perusing the list of billionaires over at Forbes.com I noticed that 9 out of the 10 wealthiest individuals had started or grown companies. The lone exception was Christy Walton whose father-in-law Sam Walton founded Wal-Mart.

Unfortunately, for most of us “working stiffs” we are trading our labor or time for money. The problem with this model is that we only have a limited amount of time and labor. I have not figured out how to be in two places at once. I cannot simultaneously sit at my office computer and show property to clients across town. I am limited in my abilities, my time, and in my knowledge.

In one of his books, Robert Kioysaki expresses the idea of leverage. Leverage is using the efforts, time, or money of someone else to advance your cause. A non-profit can leverage connections in the community to advance their cause. An entrepreneur can leverage the time of his employees to solve people’s problems. A real estate investor can leverage a bank’s money to buy a bigger property.

Entrepreneurs and business owners leverage the skills, knowledge, and time of their employees to create a product or service that benefits more customers than the entrepreneur could benefit on his or her own. Collectively the entrepreneur’s business is better able to bless more people than they would if they were a disjointed entity.

Real Estate Leverage

One of the tools at the disposal of a real estate investor is leverage through the prudent use of debt. Many banks and individuals will lend money to an investor if the loan is adequately secured by real estate. A real estate investor can take a much smaller investment of say $100,000 and leverage that into the purchase of a property of $400,000. This can benefit an investor if the property appreciates. A 5% growth in value on a $400,000 property is $20,000. This means that the investor’s equity just grew by 20% ($20,000/$100,000 = 20%).

Warning: Leverage is a two-edged sword and can multiply losses as well. Be careful.

Principal reduction on the mortgage is a benefit received by the investor when the tenant’s rent helps to pay the monthly mortgage payment. Each month a small portion of the mortgage balance is paid down building up the investor’s equity regardless of what the market value of the property does.

Passive Income

Because rent is earned regardless of whether the landlord/investor is at the property, it allows an investor to generate “passive” income. (Real estate is rarely truly passive income. Work needs to be done to maintain a property.) As long as the tenant occupies the property or is bound by the lease, the investor is entitled to rental income.

Creation of Generational Wealth

Leverage and passive income allow an investor to build wealth that is exponentially greater than their individual earning capacity. Real estate assets purchased with debt, build equity as the mortgage is repaid with tenant rents. Rental income allows the investor to have multiple streams of income without cloning himself. Whether the income comes from a business or from real estate rents, it allows the investor to build wealth that can be passed along to their heirs.

To start building wealth with real estate that can outlast you and be passed along to your children, please give me a call at (925) 385-8798.

Share the love:

  • Click to share on Facebook (Opens in new window)
  • Click to share on Twitter (Opens in new window)
  • More
  • Click to share on LinkedIn (Opens in new window)
  • Click to share on Pinterest (Opens in new window)
  • Click to email this to a friend (Opens in new window)
  • Click to print (Opens in new window)

Filed Under: Benefits of Real Estate Investing, Real Estate Investing, Retirement Freedom Tagged With: Investment Property, Real Estate Investing

About Peter Maclennan

Peter Maclennan is Sr. Real Estate Broker at Maclennan Investment Group, Inc. a real estate brokerage and advisory firm. From novice investors to institutional property owners Peter provides tailored service to his client's needs. Call him today to discuss your real estate need at (925) 385-8798 or visit him on the web at http://www.maclennaninvestments.com. CA BRE#01801793

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Commercial Real Estate Search

Commercial Real Estate

Top Posts & Pages

  • Contra Costa County Duplexes, Triplexes, and Fourplexes
  • Contact

Listings

Alamo Hay & Grain front3196 Danville BlvdAlamo, CA 94507View Listing
3105 Lone Tree Way AerialSOLD!Price Reduced3105 Lone Tree WayAntioch, CA 94509View Listing

Peter Maclennan

Sr. Real Estate Investment Broker
CA BRE #01801793
Twitter: @MaclennanInvest
Facebook: Maclennan Investment Group
[More …]

Email Newsletter

Topics

  • Bay Area Real Estate News
  • Benefits of Real Estate Investing
  • CA Real Estate
  • Commercial Leasing
  • Contra Costa Real Estate
  • Industrial Real Estate
  • Investment Property
  • Listing
  • Mrs.' Questions
  • Real Estate Investing
  • Retirement Freedom
  • Walnut Creek

Recent Posts

  • New Price on 3105 Lone Tree Way
  • How Real Estate Technology Is Changing the Game
  • Commercial Real Estate Market Trends & Forecast
  • Adaptive Reuse: Maximizing Property Value
  • The Opportunity Zone

Company Profile

Welcome to Maclennan Investment Group, Inc., your East Bay Area real estate investment advisors. Maclennan Investment Group assists buyers and sellers of real estate maximize the investment potential of their real estate assets. Learn More about us.
Disclaimer: Information deemed reliable but not guaranteed. This site is not meant to offer legal or tax advice.

Equal Housing Opportunity

Contact Us:

  • Facebook
  • Google+
  • LinkedIn
  • Twitter

925.385.8798

Maclennan Investment Group, Inc.
PO Box 2564
Walnut Creek, CA 94595
p. (925) 385-8798
CA BRE#01871809
Equal Housing Opportunity
Find us on Google+
Find us on Yelp!
Check out Maclennan Investment Group, Inc. on Yelp

Copyright © 2019 · Maclennan Investment Group, Inc.

Copyright © 2019 · Executive Pro Theme on Genesis Framework · WordPress · Log in

loading Cancel
Post was not sent - check your email addresses!
Email check failed, please try again
Sorry, your blog cannot share posts by email.