How to Create Wealth in Real Estate
According to billionaire Andrew Carnegie, 90% of all millionaires created their wealth through investing in real estate. However, no matter what you hear otherwise, being successful in this industry requires a lot of work. Luckily, if you choose the right strategy, plan ahead, are patient and persistent, your efforts will most likely result in your much-desired wealth.
To start creating wealth by investing in real estate, follow these tips:
Learn the fundamentals
This is a crucial step. It’s important to know that there are no shortcuts to being successful in real estate. There are no tools or products that are going to do all the work for you, either. You must learn the fundamentals and then apply them and take action.
If you spend time learning the fundamentals, you’ll be able to create wealth faster than you’ve ever thought. Listen to podcasts, read books, attend local RE meetups, talk with other investors, analyze deals, don’t give up and you will become wealthy quicker than most.
Employ the rental debt snowball method
You might have heard about the debt snowball, which is a strategy people use to pay off their personal debt. Good news: it can be used in real estate investing as well.
Let’s say you buy three rental properties and secure low-interest mortgages for each. Employing the snowball debt method means that you will use all the cash flow generated by these properties and all the money you have saved to pay off one of those debts as quickly as possible. Since you’re still generating an income off of three properties, but only have to make mortgage payments for two, your cash flow will increase considerably. Afterward, you use the freed-up cash flow, along with other income you can save to pay down the third mortgage. The snowball strategy remains in effect until each property is paid off, and you’ll notice that it becomes easier each time.
This is a strategy that gives you control and flexibility over the wealth-building process and allows you to see the progress you make over time.
Buy real estate in up-and-coming areas
You can turn a loan into a wealth-generating property by investing in budding real estate markets. These up-and-coming neighborhoods are where young people and starter families are flocking to, due to their short distance to work and affordable rental options. As these residents earning power will increase, the neighborhoods become more sought after and the property values rise.
Apply the BRRRR strategy
BRRRR stands for buy, remodel, rent, refinance, repeat. This is a strategy of recycling the original down-payment to buy more and more properties that can build your wealth.
For example, you can start with a $30,000 down-payment and buy a fixer-upper property. You get that property fixed up, rented, stabilized, and increase its value. Let’s say that you purchased the property for $150,000 and you put $50,000 into it; if the property is worth $270,000 after you’ve improved it, you have a good deal. At that point, it’s very possible to refinance the property and get a long-term mortgage, perhaps enough to pull out all the cash you invested in the first place. You can then use that cash to go buy the next property and now you have a rental property that has some equity and you can move on to the next property to continue building your wealth with the same money.
Real estate investing is not a get-rich-quick scheme, but it can get you wealth fast as long as you’re willing to work toward it. Plan on creating a business through real estate that will grow every year to enable you to be wealthy and meet your financial goals.
Choose a private lender who offers a streamlined and efficient process. This way, you’ll save precious time and the loan can be funded quicker. There are real estate investment lenders like Apollo Square Capital, who designate experts to assist and make sure you have the best terms and service, which is very helpful.