Becoming a real estate mogul: Get rich slowly!
I know, it is an unconventional take on getting rich, who wants to get rich slowly anyway? Actually, many people with realistic expectations want to. People who want to amass wealth and keep it. For a few lucky people who are in the right place at the right time they may luck their way into wealth. Very rarely is this wealth sustainable, however.
Have you ever watched the programs that show how lottery winners who won millions in the lottery wound of broke within a short period of time? Why is this? Simple! Wealth is a mindset. You have to understand money, what it takes to get their and what it takes to keep it. It has often been said. “It takes a smart man to make a million dollars, it takes a man 10 times smarter to keep a million dollars.” I wish I knew who to quote for these words of wisdom.
So getting rich quick without the learning lessons and mindset conditioning along the way is rarely the path to sustained wealth.
Everyone knows the expression. “If it is too good to be true, it probably is”. "Getting Rich" in real estate is no different. In fact, it takes hard work, determination, due diligence and the ability to take action. It takes understanding that you may have hiccups along the way and perhaps fall hard a time or two but be willing to learn along the way and be determined to see your aspirations through.
SO HOW LONG BEFORE I CAN CREATE WEALTH IN REAL ESTATE?
I love this question much better. The answer is of course is the one that everyone hates, “It depends!”
· It depends on how much investment capital you have to start with
· It depends on how much diligence you are prepared to do
· It depends on how bad you really want it to happen
· It depends on how much action you are ready to take
· It depends on your risk tolerance
· It depends on your short and long term objectives
· It depends on how purposeful your plans are (You do have clearly defined plans right)?
The common denominator here of course is it all depends on you
Getting rich quickly is often perceived as (very little time and very little effort and voila, you are rich)
You are only limited by your own desires. The more purposeful and focused you are the more expeditiously you will find sustained wealth. After all your wealth is more an attribute of your network than your net worth! The more you network and know and interact with people in the real estate arena the quicker you gain knowledge and resources to grow your investment portfolio.
Real Estate investing is like golf
It is sort of like golf, which is a simple concept. Use a club to hit the little ball into the hole. It is simple, but not necessarily easy. Investing is simple too. You put a little money in, leverage it with borrowed money, buy a property and rent it or buy a property and flip it and make a profit. Yes, it is simple but not necessarily easy and therefore it is not a way to get rich quick with little time or effort. Getting and maintaining riches requires purpose, hard work and determination.
7 STEPS TO CREATING WEALTH WITH REAL ESTATE
The rate at which you accrue and sustain wealth depends a lot on you, here are some things to help you get there. You will notice this is all about building up your network
1. Focus: interestingly enough the most important attribute to making it in real estate is the most overlooked one. Most people simply declare they want to make a lot of money and start looking at cheap properties. Again, this is not a get rich quick scheme so you want to get focused. Make a plan and stick to the plan.
2. Establish funds: How will you purchase the property? Cash, financing, self-directed IRA, seller financing. The best deals come and go very quickly being ready to execute a purchase is paramount to buying the best deals so get these funds established-up front.
3. Entity structure set up: Whether it be an LLC, a trust or another entity you want to begin as you plan to succeed. Liability protection as well as taxation planning should be addressed with your attorney or tax preparer in advance. I prefer my attorney and tax preparer talk together to maximize both liability protection as well as taxation protection.
4. Due diligence on location: Not all locations are created equal. There are 382 statistical Markets in the U.S. to create sustainable returns you want to invest in the best locations.
5. Power team formation: another commonly overlooked attribute to making it in real estate. Identifying who you want on your team in advance is always an advantage, attorneys, accountants, realtors, trades people. You want all these people working for you and also helping you find the best investments. As they know what you are looking for you will rapidly see that interacting with these professionals is much more of an investment than they are an expense. (This is building your network.)
6. Property due diligence: Okay, here is where most people typically start and all too often end right away as well. It is easy to quickly feel lost if you have not done the above steps to create the clarity. You do not want to be one of those who get lost and simply give up. With all the above in place you can look for the best property and analyze it against other properties to establish the best investments.
7. Purchase then duplicate: As you purchase great property you simply want to duplicate the process until you perfect the niche you are investing in.
THE INVESTOR'S’ BIGGEST HURDLE
The internet we use so often today is largely a double edged sword. It helps us to do the diligence we need but it also prompts the deadening (chasing the shiny object syndrome). Once you have picked your investing niche stick with it until you master it. All too often people get side tracked looking at what they perceive may be a better deal. While they spend time looking into this new opportunity, they get sidetracked with yet another best opportunity. I have seen people do this for a 3 year period and never make an actual investment. Then they get frustrated as prices rise until it no longer makes sense to take action. They essentially miss the buyers markets.
Take action
Find your niche and take action. The more action and diligence you take toward that action the faster the pace of your wealth creation. Getting focused, building your Networks and taking serious action will win you the day.
Happy investing!
The author’s opinion cannot be construed as tax or legal advice, and may not represent the views of HTBUSA or its stakeholders. HTBUSA is not a legal service or professional tax service. As with any investment, there is an inherent risk in investing in real estate.