Is your bank account running a little low? Philip Michael’s story will make you feel a tad more hopeful for the future. He moved to New York City with $79, not even in a bank account. He started making $500 a week because he was on a student visa and in the process of getting a green card. But he decided to save up. Once he hit $10,000, he and a partner bought a property for $780,000, and the rest is history. Here’s how he struck gold in real estate investment and his advice for all young people who dream of growing their bank account.
Real estate investing is best for just starting out
Figuring out how to handle money can be stressful and intimidating. Many young people see money as a tool to buy things, and Michael says that’s not the right perspective. That’s why he believes real estate is the perfect starting point. This type of investment gives you an investor mindset, where money isn’t something to spend but something you can grow. If you get a $5,000 tax return, your first thought shouldn’t be to throw $3,000 toward a trip or car. You should think that if you put that money to work, it could turn into $10,000.
3 reasons real estate investment is the move
- You can own a piece of property that will appreciate in value. Michael’s first property appreciated from $780,000 to $1.2 million.
- You get cash flow from the rental income. Many people find that the biggest chunk of their budget goes to rent. What if you owned and lived on a property but rented out some of it?
- It gives you a lot of tax benefits. For example, if you buy a property for $1 million and hold it for more than a year, you may sell it for $1.5 million. You would have to pay taxes on that $500,000, but there’s something called a 1031 exchange. If you put all of that profit toward a property, you can defer the taxes.
Investments with low barriers to entry
To hear more details of Michael’s story, check out the video. And head over to Facebook to ask him questions for our next Bold Business show!