Striving for the American dream in Hawaii can feel as elusive as chasing rainbows. The spacious home with a yard and white picket fence may seem like a mirage when the average cost of a single-family home in paradise is $890,000.
Many families find themselves scraping for a down payment or opt to simply build out grandma’s home to the property line in pursuit of their own version of the Hawaii-style American dream.
What’s not as elusive is how many are looking at real estate as a long-term wealth strategy, which can be a lot easier and accessible than you might think.
Far too many are discounting their own potential by throwing up their hands under the banner belief of “I can’t afford it” and are disheartened as the neighborhood that they grew up in is now out of their price reach.
I hear people saying year after year that they would love to buy real estate but they can’t afford it. What they really mean is, they don’t know how to buy it.
There’s a reason why many wealthy people own multiple real estate properties. And contrary to the popular belief, it’s not about how much money someone makes, but rather how that money is used.
Here are four ways real estate can be used as a financial income strategy.
1. Surf the wave of inflation. In Hawaii where most are struggling against inflation and the rising cost of living, acquiring real estate is a strategy that capitalizes on escalating inflation. Ride the wave. A tight rental market means that rents will continue to escalate so, as time goes on, you get to enjoy an income hike for doing little to nothing.
2. Money-making made easy. Think about how much time and energy you spend from the onset of your commute to the office every day to the time you’re headed home and all the energy expended in between. The hardest part of investment real estate is buying the right property and finding good renters who will pay your mortgage for you.
3. Think of the tax benefits. The benefits abound. You’ll be writing off your maintenance and community association fees, advertising expenses, as well as your mortgage interest and renovation expenses and repairs.
4. Net Worthy. There’s a peace of mind and empowerment that comes with knowing that when your tenants are done paying off your mortgage, your net worth will someday include the market value of the property. And the earlier you start, the better.
Most of all, there’s an emotional benefit that’s beyond measure. Knowing that you have taken control of your future and are defining your own value is priceless. That’s a satisfaction that you’ll never get with a paycheck from someone else.
Danielle Scherman is a real estate agent and entrepreneur from Kailua.