Looking for a job where you can build wealth continuously and obtain financial freedom? You might want to consider investing in real estate. As a matter of fact, most of today world’s millionaires are from the real estate industry. This is not a new thing since most people before and today have created their wealth by investing in real estate. However, here’s the truth: purchasing a piece of real estate won’t actually make your rich. A lot of people would invest in real estate and end up with empty pockets or little properties in their portfolio. The reason behind this is that only a few people have a true understanding of how to make millions in real estate.
If you don’t want to fail in investing in real estate and you aim to make millions in this industry, we’ve compiled a list of tips you need in order to build wealth in real estate.
1. Don’t drown yourself in too much debt.
If you’re riding a merry-go-round debt, it’s time that you get off. Even the greatest real estate agents will tell you this. Getting into debt to buy expensive cars, boats, cell phones, and electronics will only make you poorer. Aside from that, increasing your charges on your credit cards will lower your credit score. For you to get better loan rates, you need a credit score above 700. If you get a credit score below 700, you will only spend more money throughout your lifetime.
If you really need a new car, your best choice is the one that’s two or three years old. This is better since the first fool pays the largest sum of the depreciation. Plus, the person you’re dating who jokes on your 2004 Honda Accord is not the right person you should be wasting your time on.
2. Every paycheck, save 15-20%, then pay yourself first.
Young people today spend a huge percentage of their paycheck on weekend getaways and fun, pay their bills with what’s left, and have nothing left to save or invest for the next years to come. You don’t want to end up doing the same thing for ten or 15 years later and you have nothing, not a single penny for all of those years of working. You must pay yourself first, your bills are second, and then use what’s leftover for other stuff or fun. If you really have nothing left over, you may cut your bills or a look for a way to earn more money.
3. Have One Investment Game Plan at a Time
When it comes to real estate, you should focus on one strategy at a time. You may be aware that there are plenty of ways to make money in real estate. You may invest in flip houses, rental properties, or in REITs. It may be enticing to try all these strategies. But if you’re just beginning, this is wrong! It might feel overwhelming but we suggest that you choose one strategy and learn it until you master it before you proceed to other strategies. After gaining more experience in the field, it will easier for you to differentiate.
However, you might be confused with which real estate investment strategy you start with. Commonly, the most ideal investment strategy you should try as a starter is buying rental properties. This is a simple strategy and if you are doing it right, you’ll be able to produce consistent cash flow every month that will help you grow your real estate portfolio. It can be an awesome starting point for making millions in real estate.
4. Begin in Small Ways
Although it’s crucial for you to set high goals, you will not be a millionaire overnight. There is no secret short cut in real estate investing. You must break down your large goals into smaller and achievable goals. Along the way, you’ll be able to get to a higher goal as you experience in real estate and your confidence grows. Never use all of your money with your first investment. Low are the chances that your first real estate will be the best. You want to learn the ropes first by taking small steps.
You may consider investing in simpler and more affordable properties such as single-family homes to avoid risky consequences in case things don’t go in your way. It’s better to build your knowledge in real estate first, as well as your experience and connection with other specialists, then you’ll be able to make larger investments with smaller risk.
5. Establish an Emergency Fund
As you invest in real estate, you want to set a budget for your emergency fund. You need some cash reserves that can help you arrange unforeseen future expenses. Your cash reserves should cover at least 6 months of operating bills. You will never determine when your investment property will sit empty or require immediate repairs. If you have an emergency fund, you’ll have lesser worries for unexpected costs.
Ivandrea Ollero is a content writer who researches and writes custom content about home improvements, travel, fashion, and beauty. She graduated from St. Scholastica’s College, Manila, with a Bachelor’s Degree in Broadcast Journalism in 2016. Ivandrea provides helpful tips and hacks on various topics for her readers.