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How to Get Rich Through Real Estate Investing

By Miriatu

We all regardless our different background like to be rich and this is quite good a thing to desire. The opposite of rich is lack and a life of lack is quite deplorable from every extreme of it. A life of lack has far reaching consequences to living and deprives one from living a fulfilled life. Therefore to avoid the repercussions that come from wallowing in lack, every one of us irrespective of our social status must sit and map out strategies to use what we have to invest for the future. It is often said by international legalists that, ‘though the road to global justice appears to be a long one, we ought not to forget that the longest journeys begins with a step.’ This statement is very powerful especially when it comes to getting rich. The pathway of becoming rich is not attained by mere wishing. If it is, then it means ardent wishers who are already in their fifties, sixties and seventies would have been cruising in enormous riches simply because they held strongly on the wishes that someday they will just wake up and find themselves swimming in riches. Unfortunately, the pathway of becoming rich doesn’t work like that. By this it means that, anyone who wants to avoid a life of lack and misery has to sit and plan with what is available at his/her disposal. It does not matter how meager your wage is, with a good plan you can break away from the trap of lack into a life of abundance which is what we describe as riches. To be rich simply means to have abundant provision and to think about become rich is a wonderful quality.

            It was Henry Ford who says, ‘the best time to plant a tree was twenty five years ago, and the next second time to plan a tree is now.’ This assertion is very important most especially to those who did not plant a tree twenty five years ago. If you fall in such category, don’t blame yourself or stay in regrets for not planting a tree twenty five years ago. A tree in this context implies saving and investing. What is much more significant in what Henry Ford says was the fact that he asserted that the next second time to plant a tree is now. The principles of getting rich will still work for you no matter the time you discover them. This in other words means that you seize the opportunity of the moment to correct the errors you have lived and made in the past by disciplining yourself to invest and become rich. This article is therefore aimed at explaining a very vital sector where you can subscribe in investing in becoming rich. Real estate is most strategic in investing and therefore it is very important to know where to invest in real estate. This article projects key areas where you can take advantage of in investing in real estate and once you follow this carefully, you will starts experiencing a progression towards riches. Some of these areas in real estate investing that should be taken into consideration include; real estate funds, real estate finance, investors real estate trust, and re invest dividends.

 

A). What is real estate Investing?

          Each time you think about buying in the area of real estate, the very first thing that most probably comes to thought is your residence. However, physical assets can play a part in a portfolio too, especially as a barrier against the stock market. As such, while real estate has become a known investment vehicle over the last 50 years, procuring and owning mortar and brickis a lot more complex than investing in bonds and equities. Real estate investing involves the buying, ownership, management, rental and/or sale of the real estate for return.Enhancement of realty asset as part of a real estate investment strategy is generally considered to be a sub-specialty of real estate investing called real estate growth. Real estate is an property form with limited liquidity relative to other investments, it is equally capital intensive (even though capital could be gained through mortgage leverage) and is highly cash flow dependent. If these forces are not well understood and control by the investor, real estate tends to be a risky investment. The basic cause of investment setback for real estate is that the investor goes into negative cash flow for a period of time that is not sustainable, often forcing them to resell the asset at a loss or go into bankruptcy. A similar practice referred to as flipping is another reason for failure as the nature of the investment is often linked with short term return with less effort.Real estate improves the risk and return profile of an investor's portfolio, providing competitive risk-alternative returns. And although factoring in the sub-prime mortgage crisis, private market transacting in real estate returned an average of 8.4% over the 10-year period from 2000 to 2010, based on information from the National Council of Real Estate Investment Fiduciaries (NCREIF). And often, the real estate market is one of low volatility especially compared to bonds and equities. Real estate is also attractive when compared with more traditional sources of income return. This property class typically trades at a yield premium to America's Treasuries and is essentially incline in a milieu where Treasury rates are low.

 

B). Tips to consider before embarking in real estate investing

          Real estate investing is quite lucrative but takes a deeper understanding on how to go about it as an investor. Sometimes real estate investing could be most recommendable for dummies even though  dummies can seem a bit intimidated as it is very easy to get lost in the lights and sounds of all the books, blogs, and television buff with their slick hair. To assist cut through the crap that is out there, I wanted to create a short list of tips you can use as you step out on your journey to find financial liberty through real estate.

i). Be resolved

            Real estate is not something to do on a propensity. Investing in real estate is a persistent lifelong pursuit to take charge of your financial future and not a get-rich quick show. As an investor you will have to strive. You will make errors. You will stumble.The successful investors are those who can confront those experiences and convert them into lessons to enhance their skills.

ii). You don’t need to be a specialist in real estate investing

            Too many individuals talk about investing in real estate but instead just get held down with the excessive amount of information out there. For instance going through the article for BiggerPockets titled ‘The Top 100 Ways to Make Money in Real Estate’that expressed careers, multipleniches, and methods that investors operate today to create wealth. You just have to be meticulous when approaching real estate investing knowing it is beneficial before you can subscribe. Where to invest in real estate is therefore very important.

iii). You doneed to do your homework

            On the opposite end of the spectrum are investors who heard about real estate being a great investment and dive in with both feet unsure of where they are going to land. Moreover, sometimes these investors get lucky and make it big (and usually go on to be the next big guru) but the majority of the time these investors fall and fall hard. Don’t be like them. Do your homework thoroughly. Study the niche you want to invest in and learn every detail you can about that subject before you subscribe. Doing this will enable you access real estate funds and consequently paving your path to riches.

 

iv). Learn to love reading

            You are normally reading this article which implies you definitely know how to read. Do more of this. Check out the list of the ‘Seven Must Read Books for Real Estate Investors,’ and also my follow-up release. ‘Seven Must Read Books for Real Estate Investors.’ If you don’t like reading then you should at least make it a good habit to at least learn to listen to audio versions. There is so much transformative information in books and it is a shame that so many individuals are losing their love of books. The fact that the world is becoming much more sophisticated technologically does not mean the habit of reading be deserted but rather be reinforced. To access opportunities on real estate investing, you have to be a committed reader. This exposes you to lucrative real estate investing. This tip will enable you grasp real estate funds as well as real estate finance.

v). As a Beginner, connect with local investors

            This does not mean to spam them it does simply means to reach out. Begin holding on where they hang out. Request them to show you some of their assets. Most investors liketo show off their achievements, so allow them to and pick up on every tidbit of information they could give you.  Local investors will have greater grasp at what works in your locality than I or better still any other online investor will know.

vi). Learn the lingo

            If you don’t know what a lingo is, you are going to look like a moron. Plain and direct. Don’t begin discussing to an investor about how you think his cap ratesare the wrong signal. You will just look stupid and exhibit your ignorance. Be frank if you don’t know something and don’t try to be something you are not. In the optic of investing, trial by error is not allowed. You never attempt what you don’t know and trying to attempt what you don’t know is considered an act of cowardice. Be vigilant. This will enable you explore real estate finance and accessing this increasing your possibility of getting rich.

vii). Get creative

            One of my favorite lines in one of my prided books, Rich Dad Poor Dad, goes “The poor expresses, ‘I cannot meet that up,’ whereas the expresses, ‘How can I meet that up?”  This is great.Long term riches are established through creativity. Practice changing your thought patterns from the negative, ‘I cannot.’ to ‘how can I get it in every day’s life. This simple practice will alter the manner in which you view crisis in all areas, including your real estate enterprise. I know you are conversant with the popular saying, ‘whatever the mind can conceive and enthusiastic believe in can be achieved.’ No matter how big any project you confronts seems, desist from uttering the statement I cannot. The phrase I can’t is the worse force of negation. Instead of you saying I can’t, you should rather say how can I achieve it. This statement creates room for possibilities. To be creative, the secret is outstanding searching for inspired and positive books. And through this, you will access investors real estate trust which leads to increase of profit.

v). Learn to sacrifice

            How bad do you want financial liberty? If you want to use real estate to start living the life you’ve always dreamed you are going to have to sacrifice. You may need to forgo a holiday trip and use the money toward a down payment instead. You may need to advance several times in order to build up excess capital to start investing. You may need to learn how to use a paint brush and do your own job.  Investing in real estate is the most rewarding thing you could do to grow rich but it is not always been easy. There were years of sacrificing (money, time, and opportunities) to get financially liberated. If you are looking for a get-rich quicker stuff then I will advise you search elsewhere. When you understand the mastery of sacrifice then you will be able to learn how to re invest dividends. That is re invest or put money that you receive from an investment back into that investment, or better still another investment.

vi). Learn and trust basic math

            The math involved in a real estate investment is not college calculus. We are talking fifth grade math and it is not difficult to learn. Income minus expenses equals cash flow. A gallon of paint costs $30 but a painter is going to cost $250. That is the kind of math you need to become good at. Don’t imagine anything but apply your math to make sure a deal is concrete. Use a basic spreadsheet to analyze a deal or (shameless plug) spend $19 and download the very investment asset calculator i used to analyze every single deal I do.  Once you understand the math don’t digress from it. Trust it. Don’t let your feelings get involved. Real estate is a number’s game and the swiftest way to fail is to forget that. This will help you take advantage in real estate fund.

vii). Make a Written Plan

            You wouldn’t take a road trip across the country without observing a map, so why start your trip through financial freedom without a roadmap? When I first started investing, I indeed sat down and drafted a plan to get from where I was to where I wanted to be. You could read Jack Canfield books on plan. Every manufacturer has got a plan; therefore, every investor who wants to get rich must draft out a concise plan of action to flow in wealth. A plan of action is very important because it gives you a track to run on. It is only with a plan that you can know when to re-invest the dividend at every given investing deal.

viii). It is okay to start small

            You don’t need to buy a 24 unit apartment complex right out the gate. Most probably, your first investment will be your first home. Perhaps you will start with just a 50/50 partnership on a small flip. This is okay. It is easy to get over impressed by the big deals that the internet gurus talk about but even they had to start somewhere.

ix). Treat Your Business as a Business

            Real estate is a business, so deal with it that way. Keep it organized, build systems to control your life, and seek to enhance your efficiency. The reason so many landlords get worned out and detest the role is because they treat it as either ajob or a hobby. Unfortunately, it is not any either. You are a business owner and as such it is your responsibility to manage the business to the dimension which befits you best. This is an express road to real estate funds for getting you rich.

x). Don’t quit your day job

            Investing has two dimensions: the investment side and the career side.  It doesn’t need to be both. I use real estate as both currently, but I frankly believe that if there were a career I liked better I would do that in just focus on the investing side. Let me explain-flipping houses is a segment of the “career angle,” as it is “wholesaling” and managing. However, by purchasing cash flowing properties, reinvesting that cash flow into bigger and better real estate, and establishing systems to control that enterprise, you are building investments for your long term investing.  There is a principle I believe strongly in that is called “The Minimum Wage Millionaire” which precises that anyone, irrespective of their salary, can become financially liberated if they invest prudently and plan. If your ideal job is the “career angle” of real estate then set that your job and your investment. On the contrary, if your ideal job is teaching gym at a local high school do that and invest on the side. Find out whatever job that makes you come and do that but use real estate as your investment vehicle to gain financial liberty. When a job is maintained, then you will discern where to invest in real estate for profit maximization.

 

C).Why Invest in real estate?

            The following reasons account why you have to invest in real estate as a lucrative means of investing and becoming rich: diversification and protection, inflation hedging, and the power of leverage.

i). Diversification and protection

            Another benefit of investing in real estate is its diversification potential. Real estate has a low, and in certain cases, negative, correlation with other major property classes signifies, when stocks are dwindling, real estate is rather going up (seeDiversification beyond stocks). In fact, In 14 of the 15 preceding bear markets, reflecting back to 1956, residential real estate prices rose, according to sources from Yale University’s Robert Shiller, the co-founder of the Case-Shiller Home-Price Index. Of course, there exist exceptions: real estate tanked along with equities during the Great Recession (even though this was an abnormal, Schiller argues, contemplating the responsibility of sub-prime mortgages in kicking off the conflict. Diversification and protection will expose you to real estate finance and equally broadens your scope on how to re invest dividends to maximize profit and consequently riches. Further it will drill you on how to operate investors real estate trust to the best of your advantage.

ii). Inflation hedging

            The inflation-hedging capability of real estate emanates from the positive relationship between gross domestic product growth and demand for real estate. As economies of nations grow, the solicitation for real estate drives rents higher and this in return, transpose into higher capital worth. Therefore, real estate tends to maintain the purcasing power of capital, by passing some of the inflationary exertion on to tenants and by incorporating some of the inflationary pressure, in the form of capital increment. As such this carves out strategically where to invest in real estate.

iii). The power of leverage

            With the exception of investors real estate trust, investing in real estate gives an investor one tool that is not disposed to stock market investors: leverage. If you want to procure a stock, you have to pay the complete worth of the stock at the time you place the buy order except you are buying on margin. And even then, the proportion you can lend is still much less than with real estate, thanks to that strategic financing method, the mortgage. The power of leverage also guide in re invest dividends extensively. Most conventional mortgage require a 20% down payment. By and large, in relations to where you live, you might find a mortgage that demands as little as 5%. This means that you can manage the whole asset and the equity it holds by only paying a portion of the total value. However, the size of your mortgage determines the amount of ownership you actually have in the asset, but you control it the minute the papers are signed.This is what emboldens real estate flippers and landlords constitute. They can take out a second mortgage on their homes and put down payments on two or three other assets. Whether they rent these out so that tenants pay the mortgage or they wait for an opportunity to sell for a profit, they control these properties, despite having only paid for a small portion of the total value.

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