Real estate investing is an indomitable wealth-building tool that has been molding millionaires for years.
It’s a tried, tested, and proven investment that should be explored by anyone who wants to join the next millionaires club.
If you are like most current or future investors in real estate, you might have wondered how you could turn a few thousand dollars into millions over the next coming years.
Well, it sounds like a long shot – and it is – but it is very doable.
The beautiful thing about real estate investment is that it is accessible to anybody willing to put in the time and effort to grow their money over time.
Moreover, it is possible to use other people’s money to fund your investments and increase your wealth since real estate is a tradable asset that will always be in demand.
As well, investing in real estate has several tax advantages, allowing you to keep more of your earnings.
Considering these and other benefits, investing in real estate is among the fastest ways to become a millionaire.
So, how do you become a millionaire through real estate investing?
Below are a few tips you should consider if your heart is aspiring to rub shoulders with the affluent in society.
1. Real Estate Investing and Knowing the Market
Real estate investing can be an overwhelming and complicated field to dive into. However, for the few who have dared and persevered, they have ripped big.
To become a real estate millionaire, you need to start with the basics of understanding the market. Keep yourself updated with the latest trends in the real market.
Understand the laws and regulations governing the investment in your geographical region of interest. A successful investor digs deeper to gain some understanding of their choice of market.
2. Have a Great Investment Plan
Failing to plan equates to planning to fail.
When it comes to real estate investment, you don’t want to work in a vacuum.
A good business plan is crucial if you want to join the wealthy in real estate.
Ensure you craft a plan with all the financial goals and choose a model lined up with your long-term objectives.
The business plan will guide you in your renovations, buying, selling without draining or compromising on the quality of your properties.
Later, you can upgrade your investment level. If you started with a commercial property, move up the ladder to high-end residential properties.
Especially now that the Canadian home prices rose sharply in 2021, this can be an excellent opportunity to flex your muscle but keep watching the trends.
Look for properties with the potential of appreciating.
Wealth Generators In Real Estate Investing
There are four major wealth generators in real estate, and your understanding of each of them can go a long way in making you a millionaire.
- Cash flow
- Savings on taxes
Understanding how they work can help you maximize returns from your real estate endeavours.
3. Plan Your Finances
Who works without a budget in this day and century?
Creating a budget is one of the essential steps which will help you streamline your spending and savings.
You need money to make money.
Saving a dollar a day is one of the easiest ways of drawing you closer to becoming the next rich guy or gal in town.
Establishing a budget today will keep you from overspending and help you save as you keep track of your spending behaviours.
Careful planning will give you good savings.
If you start saving today, you will have more than enough money to invest in small real estate properties when you click your retirement age.
Without enough savings to start investing or grab opportunities in the market, you could always approach a bank or credit union for a loan.
If carefully picked and utilized, “a loan can be a great way to fund your investments,” said Jared Stern, CEO of Uplift Legal Funding, a lawsuit loan funding company.
Nonetheless, financial planning will be critical throughout your investment journey if you’re looking to grow massive wealth in real estate.
4. Referrals To Build Your Portfolio
Making money in the circles of real estate requires the proper counsel.
Referrals from friends and colleagues on where and how to invest in real estate have built wealth granaries for many millionaires in society today.
However, it’s always wise to be careful since most referrals have turned up to be just another scam.
If you want to make it in business, always lend a listening ear to the people.
Listen to your business partners, associates, renters, local property agents, and other people in your business field.
Wise investors are keen listeners. Don’t give a deaf ear to anyone willing to raise a complaint, concern, or comment in your line of business.
It might save you from investing in a bad deal or give you a gold-harvesting mine.
5. Professional Advice
You can’t be a know-it-all if you want to land in the circles of millionaires.
That’s why it will be prudent to hire a qualified professional advisor in real estate to hold your hand and guide you on the path of investing using safer routes.
Professionals are always well-grounded in their line of specialization.
They have rich information to help you walk safely in your investment journey.
They can also help you:
- Maximize your returns
- Save time
- Save money
- Avoid loses
6. Research Millionaire Real Estate Investing
Becoming a millionaire in real estate is not something you can achieve overnight. It can take you decades, but your efforts will not go unrewarded.
Before you pour your hard-earned money into a sinking boat, ensure you conduct thorough research on your location of investment.
It will alleviate any unforeseen risks, which might crop out after investing and enhance your returns.
For instance, you want to invest in those suburbs without some high-end rentals if they are scarce in the region.
You can also buy, rent, or flip, depending on what is missing in the market.
Compute the housing economic index before making major investment decisions.
If most citizens cannot afford to buy homes, there is a good market for investing in rentals.
] Don’t forget to research the laws regarding property, rental license, rent control, and so forth.
7. Understand the Risks Of Real Estate Investing
Real estate moguls are some of the wealthiest folks in the world today.
Becoming one requires an intelligent mind. As a prudent investor, you know that there are always two sides to a coin.
Real estate investment has its shares of intrinsic risks that can cause tremendous loss if you invest blindly.
As a wise investor, try as much as possible to dig into these risks. Don’t just rely on advertisements in the media or word of mouth from a friend.
8. Grow Your Portfolio
Waking up to riches is a dream of every human. Expanding your portfolio is one way in which you can become wealthy.
It will increase your earnings and alleviate risks. Putting your eggs in one basket is never a wise idea. Invest in different prime locations with varied rentals.
This is a sure bet of earning high returns. Investing in several properties is prudent. Buy properties with numerous units.
Don’t just settle for single-family homes. Residential properties make a kill most of the time.
9. Create Cash Flow
Following the payment of expenditures and debt service, your properties should generate a profit.
It will be possible to pay down the debt and develop equity while receiving a monthly income using rental revenue.
Your income increases in direct proportion to the size of your investment portfolio.
You’ll go one step closer to real estate millionairedom each month if you follow these steps.
Except by increasing the property’s cash flow, appreciation is highly uncertain.
The only way to know for sure that your real estate deal will be profitable is to generate monthly revenue.
10. Real Estate Investing Flipping Houses
One of the stepping stones to joining the millionaire’s field in real estate is using the flip strategy.
Although there are myriad risks involved, it’s one of the easiest ways to climb the ladder.
All you need to do is hunt down for undervalued properties, overhaul and sell them at a higher profit margin.
11. Upsize to Better, More Expensive Residences
Commercial real estate and multifamily properties are popular choices for the wealthiest real estate investors.
A 5 percent rise in the value of a $1 million property will make you far more money than a 5 percent increase in the value of a residential property.
These sorts of assets will create more significant revenue.
When you sell a home aiming to buy a new one, you can put off paying capital gains tax until you buy a new one. A 1031 exchange is what we’re doing here.
While a 1031 exchange comes with a slew of requirements to follow, the substantial tax savings will free up cash you may use to invest in higher-yielding properties.
Once you have established equity in your homes, you may refinance them and utilize the money you save on interest as a down payment on a new property.
In the long run, as your portfolio expands, you may repeat this technique and time.
Everyone wants to sprint before they crawl.
If you desire to become a real estate investing millionaire, forget about shortcuts.
Focus on the above fundamentals and grow gradually towards building your next vast estate with a six-figure income margin.
Jared Stern is the founder and CEO of Uplift Legal Funding, who prides himself in helping plaintiffs obtain lawsuit financing when facing accident-related financial hardships. Check out Jared’s LinkedIn profile for more.