Investment Property And The Wealth Of Nations

Why are rich people rich and how do they retain their wealth
through several generations? In this article we try to examine
how real estate as seen in investment property has played a
large role in generating large amounts of wealth, how it has
also been used to retain wealth to sustain several large clans
and what you can use in offshore investments.

Wealth Generation with Investment Property

Forbes magazine once commissioned a study and found that most
of the rich people today other than a few high tech
entrepreneurs like Bill Gates and the Google founders made their
money in real estate. But remains, why is there an allure of
Investment Property even today?

This is because traditionally, most people consider Investment
Property to be a secure investment and Investment Property
prices rarely fall and prices continue to rise. Since real
estate mimics economic cycles, rich people start building new
properties for others to stay and since the profit margins
associated with properties can be quite substantial so their
wealth increases with each new Investment Property that they
develop and subsequently resell. Thus we learn that at the
highest stage, investment property, real estate development and
finance all move together to make the rich richer then evern
before.

Why the Rich retain their wealth

Many people know of the Hilton empire and think about the taxes
that they save each year because of the legal trust structure
that holds this wealth together. Actually trusts which are legal
devices to shield offshore income from taxes help to protect
wealth and prevent an heir of a rich estate from squandering it.
One way is by having large trust companies to administer the
trust and then allow beneficiaries to get a fixed sum.

But what do most trusts invest in? It is no surprise to note
that cash flow investment properties like the famous Hilton
hotel chain provide a constant source of cash flow into such
structures and as mentioned prevent a few heirs from squandering
the proceeds of the trust. Rental Income and Hotel Income from
investment properties kept in trusts therefore help rich
families retain their wealth from generation to generation. Thus
we note that rental income and cash streams from investment
properties held by trusts can allow for wealth to be transferred
from one generation to the next.

Wealth of Nations and Investment Property

Since property represents a large portion of a nation's wealth
and both the rich and poor people are so enamoured with it, many
countries codes and laws have specific legislations protecting
and regulating Investment Property. The rich have teams of
lawyers working for them when they look for investment property
since some of the property codes and statutes in both local and
offshore jurisdictions can be potentially fraught with legal
loopholes. So if you want to be a wealthy property investor, you
need to have good professional advisors since every rich
businessman today is as good as the team of advisors that he has
working for him.

Copyright © 2006 Joel Teo. All rights reserved.

About The Author: Joel Teo writes on various financial topics
relating to Ahwatukee Real Estate Investment. Signup for his
free online Real Estate Investing newsletter today and gain
access to the "Six Day Real Estate Investment Profits Course"
now at http://www.realestateinvestment101.info/Ahwatukee.html

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