Real estate investing is one of the most reliable ways to build long-term wealth. But if you’re new to the game, you might be wondering: Is it safe? What do my returns look like? How does it work?
At The Finn Group, we break it down into what we call the Four Pillars of Real Estate Investing—the foundation for a smart, sustainable investment strategy.
1. Cash Flow – The Least Important, But Still Valuable
Cash flow is the money you earn each month after paying expenses like your mortgage, property taxes, and maintenance. On a typical $300,000 investment property, you might expect $200–$300 per month in positive cash flow. While this may not seem like a huge return, it’s still money in your pocket, helping to offset costs and build equity over time.
2. Capital Appreciation – The Real Growth Factor
Unlike stocks that can have wild fluctuations, real estate appreciates at an average rate of 4% per year. While some years (like 2021) saw appreciation as high as 14-21%, the long-term trend is steady, predictable growth. Over time, this appreciation can translate to $800+ per month in value increase, making it a key factor in wealth-building.
3. Principal Reduction – Your Tenants Pay Down Your Investment
Each month, your tenant is essentially paying your mortgage for you. This is called principal reduction—as you make mortgage payments, your loan balance decreases, adding to your net worth. On average, this accounts for another $200–$300 per month in wealth accumulation.
4. Tax Reduction – A Hidden Advantage
As a real estate investor, you can take advantage of tax benefits, including deductions for mortgage interest, property depreciation, and maintenance expenses. These deductions can reduce your taxable income, effectively saving you $300–$400 per month in taxes.
Adding It All Up: A Path to Financial Growth
When you combine all four pillars, the average return on a $300,000 investment property could total $1,700 per month—or nearly $20,000 per year. Now, imagine scaling this strategy with multiple properties—that’s where real estate investing becomes a powerful wealth-building tool.
Real Estate Investing: A Long-Term Play
Unlike stocks or quick-flip investments, real estate is a slow and steady way to grow wealth. But it’s also one of the most consistent. With the right strategy, you can create a sustainable, long-term investment plan that builds generational wealth.
Are you ready to start your real estate investment journey? Let’s talk! Contact The Finn Group today and learn how you can put these four pillars to work for you.
