The Forbes 400 annual list ranks the wealthiest Americans. This list is filled with well-recognized names like Bill Gates, Warren Buffett, Jeff Bezos, and Alice Walton. What you may not know is that a majority of the names on the list have made the cut in part through real estate investing.
Ninety percent of the world’s millionaires are involved in real estate investing, according to The CNBC. Diversifying your source of income is a unique way to create monetary success and freedom. Real estate investing can set you up for an enjoyable and secure future. If you had financial freedom, what would you do with it? Building wealth through real estate can give you the opportunity to live out your dreams.
“Buying real estate has made me rich – mostly through necessity, not by design. I bought my first itty-bitty studio after scraping together a few bucks because I needed somewhere anyway… Buying that tiny studio was the most important decision I made because it got me in the [real estate] game.”
– Barbara Corcoran, founder of the Corcoran Group, podcast host of “Business Unusual,” and judge on “Shark Tank.“
There are plenty of tips and tricks to reaching financial goals that you’ve probably seen before. But none seem to describe how to succeed in real estate investments.
The Six Benefits of Real Estate Investing
There are many benefits to real estate investing. We want to share with you six reasons why our clients go down this path:
- Anyone can do it. You don’t have to own a house to start your portfolio. There are different ways to get started, like buying a duplex, living on one side and renting out the other. It’s feasible if you’re willing to put in the time and effort.
- You can change your strategy. With traditional investments there are really only two options: To buy and sell. When it comes to real estate investing, there’s plenty of flexibility. You can raise or lower your rental price, create short-term and long-term leases, and more. You can have more of a say with your investment and ultimately financial freedom.
- Real estate investing is a stable source of income, even after retirement. Your cash flow can overtake your primary source of income. More importantly, you can guarantee a monthly income when your investment property is occupied, unlike the stock market.
- There are tax breaks specific to real estate. You can claim deductions, depreciation, and access tax-deferred retirement accounts.
- People need somewhere to live. And if they aren’t buying, they’re renting. If housing prices fall, that doesn’t necessarily mean rental prices will too. Rental rates are based on supply and demand, not housing prices.
- It’s a tangible asset. It’s an investment where you can utilize the five senses, as opposed to the stock market. There’s value in having a say where your money goes and what it does.
Three Common Misconceptions About Real Estate Investing
When deciding which investment path to take, it’s common for investors to have certain doubts or questions. We often hear the same misconceptions about investing in real estate when we meet with new clients.
We’re here to tell you it doesn’t have to be intimidating. Below you will find three concerns we frequently hear, and how we’ve helped our clients overcome them:
- Do I need a lot of money to get started? There are certain requirements you’ll have to meet, but having a lot of money isn’t one of them. If you’ve got a good credit score and can get improved for a home loan, you can start your investment portfolio. We will go over some strategies that don’t require a large sum of money upfront.
- Don’t I have to be an expert? You’ll want to do your own research to ensure that this is the right path for you, but you don’t need to be an industry expert. You can consult with a Real Estate Investment Advisor (REIA), a tax expert, or a property management company. As long as you understand your financial boundaries and you know what a good investment deal looks like, you can do this.
- Won’t I constantly be dealing with problems? Won’t this take up a lot of my time? There is some due diligence necessary to get your portfolio up and running, and it will take time to set yourself up for success. However, you don’t have to be a landlord in order to be an investor. You can hire a property management company to take care of the day-to-day and handle your tenants’ needs.
Ready to get started? Read about four easy ways to kick off your portfolio.
These four tactics are attainable to anyone looking to invest in real estate. We will dive into the advantages, challenges, financial implications, the local market, and more. Then we will cover the steps necessary to buying a property and how to get ready for your first tenants.
We will cover: How to leverage a duplex, why selling your first home might not be the best option, everything you need to know about fixer-uppers, and how to invest in college town rentals.
There’s quite a bit to learn before you pursue real estate investments. You do not have to do it alone. Don’t sweat it, we’re here to share a few easy tricks we’ve learned along the way.
Interested in learning more? You can find the links to each part of the series here: