Your most important wealth building tool

I?m writing this from Terminal D of Houston?s Intercontinental airport so I?ll be brief. Brevity notwithstanding, the concept I want to talk about today will deeply affect your success with real estate investing.

Most aspiring real estate investors think that success in this business looks like a series of home runs. You know, you buy a house, flip it, double your money ? then rinse and repeat till you get to your desired number of millions. Or the other popular choice: Buy five dozen homes, leveraged to the neck, rent them and walk to your mailbox to collect your wheelbarrows of money.

What I want to share with you today is this: Real estate is where you come to put your capital to work not where you create your capital. You see, you already possess the most important wealth building tool. It?s your income. Think about that for a second. When put to work properly, your income provides the savings that become the capital you invest. In addition your income provides the support that allows you to leverage that capital and acquire a higher asset value than you would paying cash. And most importantly, your income helps you pay off your properties faster so you can retire sooner.

Knowing that your income is your most important wealth building tool is one thing. But realizing that how you choose to spend that income can make a difference between retiring a millionaire and working till you?re 90 is the very heart of my point. When you increase your overhead by taking on debt payments ? credit cards, cars, furniture etc ? you are impairing your ability to build wealth.

Look, I have a ?live and let live? kind of mentality. I won?t sit here and tell you how to live your life and how to spend your money. However, it?s important to understand that there?s a huge opportunity cost to debt payments. When you take on that $800 car payment, you aren?t just agreeing to pay that amount every month for 5 years. You are also forfeiting the wealth that that chunk of your income could build for you.

Success in real estate investing isn?t a series of home runs. It?s a well planned long series of hits. And the ?bat? you need to get those hits you already possess. It?s up to you how you use it.

Source: http://signaturehouston.com/investing/your-most-important-wealth-building-tool/

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