The book Cashflow Quadrant triggered my interest in real estate investments again. A few months ago I already thought about it and requested detailed information about real estate that was for sale. It was easy to see, that this piece of real estate wasn’t a good investment, most of the rent had to be spent on monthly expenses. At first I decided to stay focused on stock and ETFs.
But, as described in the book, real estate has its opportunities, too. The main advantage is that buildings are commonly accepted as a credit security. With this mortgage, you can use other people’s money as a leverage for your earnings – you borrow money, the mortgage improve the conditions (lower interest payments!). Then you buy a house with this borrowed money and receive rent. A fraction of the rent is used for paying back the loan and interest. The remaining part is cashflow and can help you to get a financial cushion.