Using Your Most Valuable Asset To Maximize Your Wealth

Services for Real Estate Pros with Serving Upland, Covina, LA & Inland Empire

Home on moneyFor most Americans, their most valuable asset is their home. It is the American dream to own a home, and so many see their home purchase as the apex of their investment goals. However, when closely scrutinized, a home in itself does not stand the test of a wise and prudent wealth building investment.

Why do we say this? Consider. How would you rate the following “investment”:

  • The financial company sets the amount of your monthly “contribution.
  • You can put in more than the minimum monthly, but you cannot put in less. 
  • Making less than the minimum contribution puts your entire investment at risk.
  • Every contribution you make increases your income tax burden.
  • The only way to access the value of your investment is to either sell the entire investment at a profit (if the market is up), or borrow against it from the financial institution, paying interest and most likely fees for the privilege of borrowing. (No liquidity)

If this “investment” was anything else other than your home, you’d turn it down in a heartbeat! When it comes to Real Property however, we become much more sentimental and forgiving. However, we can turn this paradigm on it’s head by using the “traditional” mortgage to our advantage.hear vs money

How so? Consider- while the equity in your home sits in it’s place, it earns no interest. Yes, your home does gain and lose value, but this is not a function of the equity earning interest, it is a function of the effects of inflation. But what if the equity within your mortgage program could earn a competitive interest rate, between a 6-8% compounding rate on average? All of a sudden that home of yours becomes a much more profitable investment vehicle!

No, I am not recommending that you refinance with cash out to invest in mutual finds, stocks, or any other at-risk position. The golden rule with equity is- Never take a SECURE asset and relocate it to an INSECURE position. However, not all investment vehicles are create equal.

There are alternative mortgage programs available that do allow your idle equity to earn interest, a competitive 6-8% on average. At the same time these programs protect your equity against market loss.

Assuming you have $200,000 of idle equity in your home, you could conservatively be earning $12-$16,000 per year in interest within an alternative mortgage program, thereby building your retirement while securing the equity within your home against market loss. 

To read more in depth on this topic I recommend getting one of the 2 following books from Amazon:

Missed Fortune 101“Missed Fortune 101” by Douglas Andrew

“The Home Equity Retirement Handbook” by Roccy Defrancesco

In the New Economy we must be willing to think differently, and apply what we know to be true, even if it goes against the grain. Although this plan may not be appropriate for everyone, it is certainly something to consider when deciding your retirement plan for the future.

Have any questions about what you read today? Email or call Josiah today to find out if this program would fit your circumstances- (626) 765-PLAN.


Comments (3)

Pat Champion
John Roberts Realty - Eustis, FL
Call the "CHAMPION" for all your real estate needs

Great topic and one individuals  should be considering more these days we want to be able to retire with enough funds.

Apr 09, 2012 06:12 AM
Legacy Property Group
Legacy Property Group - Mountain View, CA
South Bay Property Manager- 650-241-3888

This sounds very interesting. I need to look more into this. Thank you!

Apr 09, 2012 06:24 AM
Josiah Salser
Serving Upland, Covina, LA & Inland Empire - Covina, CA
Financial Consultant in Southern California

Pat & Derrick- Absolutely! The biggest complaint from most is that they just dont seem enough to be able to save to meet their retirement objectives. In this way, they can leverage much more than they would have been able to contribute on their own. If you know of anyone in the mortgage industry that could benefit from offering an opportunity like this to grow their current client base, I can show them how. 

Apr 09, 2012 09:10 AM