Last year, I wrote a detailed report showing how to preserve wealth. I had studied who wealthy European families kept wealth for several generations.
(This report was included as a special bonus for my Cashflownaire Members. If you’d like to study this report, become a Member here and I”ll send it to you.)
I have been intrigued by families who can maintain wealth for long periods of time. One family I studied for that report had maintained their wealth for over 300 years. How awesome is that?
This is extremely unusual considering that wealth typically only lasts one generation. The children end up spending the money accumulated by their parents.
Imagine your grandchildren, or great grandchildren still owning real estate you purchased this year?
As I was working on that special report, I happened to walk through this four unit apartment building that was listed for sale here in Ohio:
There isn’t anything special about this particular property, and it wasn’t a great deal based upon the asking price. The rents the seller collected were below market value rental rates. The rents for each unit should have been $200 to $300 higher for each unit.
The reason why I ended up paying attention to this property is because of a comment I found in the remarks section in the listing:
“Excellent 4 Suite Apartment Building! Only $259,900.
Same Owner Since 1968. All Appliances Stay. Separate
The same person has owned this little apartment building since 1968. At the time, the same person had owned this property for 49 years.
Think about that for a minute…
I will be turning 49 next month. The owner had been collecting rent every month since before I was born. 🙂
This investor has collected rent through…
- The high inflation in the U.S. during the 1970s.
- The 1987 stock market crash.
- The 2000 tech stock bubble bust.
- The 2001 terrorist attacks and Iraq war.
- The 2008 real estate market crash.
- September 11th.
- Ten different U.S. presidents from Johnson to Trump.
And this property has continued to pump out income to his family each and every month.
I dug through the tax records and couldn’t find what he paid for the property back in 1968. According to government census data, the average price of a home in 1968 was around $25,000. Let’s say he purchased this little apartment building for $50,000 in 1968.
This $50,000 investment has given him monthly income for 588 months. It may have helped put his kids through college. It may have supplemented his retirement income. It may have paid for a few family vacations.
Regardless of what the income paid for, it has been very profitable.
Today, the property is listed for $259,900. The investor has captured $209,900 of appreciation since the purchase back in 1968. If I’ve done my math correctly, this works out to around 8% a year just in appreciation. And more than likely, this investor didn’t pay cash for the property back in 1968. He may have only invested $10,000 as the down payment. This would obviously escalate his return from appreciation even further.
Not too bad, right?
We have no way of knowing what the actually monthly net positive cashflow is on this property. So let’s just estimate this investor has collected an average monthly positive cashflow of $500 since purchasing the property. This would be after paying all the various expenses of the property.
More than likely, they had lower cashflow during the first 30 years as the tenants were paying off the mortgage. The cashflow for the last 19 years has been a lot higher as the property was debt-free. They have also probably had many bad months and lots of tenant turnover. And they’ve certainly had to reinvest some of the cashflow into the repairs, maintenance and capital improvements.
Lets punch these numbers into our handy-dandy calculator: $500 multiplied by 588 months. My answer is…. $294,000.
This $10,000 investment may have provided his family with $294,000 of income and another $209,900 in appreciation for a total financial gain of around $503,900.
This property is a great example of how you build long-term wealth.
He could pass this wealth machine on to his kids or grand kids, and it would continue to provide income and equity for another 49 years.
Today is your 1968.
Today, you can buy a wealth machine that makes you richer each and every year. Today, you can buy an asset that will provide income for our families for 50 to 100 years.