The average person can take themselves from rags to riches by leveraging real estate. Real estate has probably made more millionaires than the stock market and business combined. Of course, that is just a guess, but leverage is a powerful bedfellow—and nowhere is leverage as accessible as real estate.
Where else can you go and put $100,000 down and walk away with a $1 million loan? Real estate is so powerful because the asset is also the prize. The bank understands that if you default, they get to take control of your home.
But if you keep the home, you’ll pay the bank 3% to borrow their money. That’s not an alarming rate for the bank because they aren’t taking much of a risk. You, however, can earn a 10-15% return on your cash if you make good decisions.
All these reasons combined ensure that I will always have something new to talk about with real estate. Every few days, I write an article about real estate. Every few months, I combine these articles to form the Financial Independence through Real Estate series.
This article is part two of the series, and you can find part one right here. Over the last six months, I have written over 36 articles, specifically on real estate. I love real estate, as I own three properties. Owning three houses has challenged my wife and me, but it has also allowed us to accumulate $200,000 in our dividend portfolio.
Steady cash flow, appreciation, tax benefits, and leverage are powerful tools that anyone with education can wield. As such, I present to you another giant book on real estate. Keep in mind that this is just the start of your education. You could spend a year reading only real estate books and still just scratch the surface. But you don’t need much to get started. Let’s begin our journey.
REAL ESTATE MINDSET
Real estate is a mindset, not a physical address. If you have the correct perspective, you can build an empire of homes, apartments, and commercial properties. In the Real Estate is a Mindset series (beginner, intermediate, advanced), I start preparing your mind for the world of real estate. You’ll need to envision things others don’t see to become a successful real estate investor.
There are many types of passive income, but what makes rental income the best of them all? The magic of rental income is that it is the most consistent income stream versus the others. Every month you’ll be pulling in rents to help you accumulate wealth. And if you have the stomach, you can manage your own rental properties to save money on property management fees. This attitude will put more money in your pocket versus using a property manager.
Real estate is a mindset because you don’t need to own any property to make a rental income. Sure enough, you can rent a room in your primary residence to make a sweet rental income. We call this house hacking. By using house hacking, we can achieve Mortgage Positive—earning enough money from your primary residence to pay your entire mortgage.
REAL ESTATE BASICS
Part of the challenge of real estate investing is determining the best time to buy a home. Nobody wants to buy at the top of the market, so you need to purchase homes that make sense long-term. You may not make much money the first few years, but your houses will allow you to beat inflation over time.
Today, the real estate market is at all-time highs. It is hard to find a starter home to start building our rental empire. If you want to buy homes today, you will need to leverage the support of your family to purchase a home. Waiting on the sidelines will not help you as prices keep going up and your salary remains flat.
Two fundamental techniques in real estate that you must understand are the one percent rule and cash-on-cash return. You may not hit the dream numbers that the real estate book discusses, but at least you can compare the numbers versus other homes. Don’t buy homes on emotion alone, as that is a recipe for long-term wealth destruction.
An excellent way to make great investment choices when buying a home is to mentally become a real estate investor BEFORE buying your first home. I offer ten real estate books that can assist you on your journey from real estate novice to professional. Why not use someone else’s experiences to help guide you through the real estate lifestyle?
CREATIVE FINANCING IN REAL ESTATE
Over the last few months, I completed the Creative Financing in Real Estate series (104, 105, 106). I started the series to assist young real estate investors who don’t know how to access tons of money available to them.
Of course, you will need to dig much deeper than my series to learn the language of real estate financing, but hopefully, I can give investors a solid direction to travel.
REAL ESTATE LIFESTYLES
I created a brand new series called Real Estate Lifestyles, where I compared different areas of real estate versus each other. In part one, I compared owning physical real estate versus shares of real estate investment trusts.
Part two pitted real estate investors versus lenders. Investors buy the properties, and lenders create debt and collect interest on loans. In part three, I asked about renovating a home and renting it or flipping it—finally, part four asks which is better for you, investing in single-family homes or multi-family properties.
REAL ESTATE IDEAS
When you start focusing on real estate, you begin to formulate creative ways to make money. One such idea is to start and run a property management business. It is a good business to run if you stay home with the kids full-time. You can manage most of the work from home, only needing to show houses or check properties.
Recreational vehicles, or RVs, are a vast business currently. They will become even more prominent as less and less affordable housing comes on the market. You can turn RV life into a business. You can buy and rent RVs or buy land to rent to RV drivers. There are many ways to turn a profit in this huge niche.
If you don’t have the cash to invest in real estate, you can start purchasing shares of real estate investment trusts. REITs are an excellent way to profit from the real estate market before you own physical properties. I buy REITs on the stock market but also purchase through Fundrise. Fundrise does not trade on the stock market, so it’s not subject to day trading volatility.
PAY FOR COLLEGE WITH REAL ESTATE
I read an amazing article about using real estate to pay for college, so I wrote an entire series on the topic. The Pay for College with Real Estate series (101, 102, 103, 104, 105) focuses on various ways to use real estate to pay future college expenses.
There are many ways to leverage real estate to pay for college, including buying a home and selling it, using a home equity loan, a cash-out refinance or renting the property for the duration. Flexibility is a critical component of any future college discussion, and real estate provides multiple options to assist.
REAL ESTATE BOOK TAKEAWAYS
I was able to complete four books over the last few months. “The Book on Managing Rental Properties” is a massive book on everything you need to run your own property management business.
“40 Ways to Increase the Net Income of Your Rental Property” gives you ideas on how to make more passive income from your property. Some ways include adding ATMs, arcade machines, and special VIP parking.
“Buy, Rehab, Rent, Refinance, Repeat” is the best book on real estate I have read. It covers the four most important people you will need as a real estate investor; real estate agent, general contractor, property manager, and lender. Read this book first!
“Starting Your Career as a Contactor” gives us the inside scoop on life as a general contractor running your own construction business. I learned about creating estimates, structuring contracts, and hiring subcontractors. It is a fantastic look into the construction world and something you will need to understand as a real estate investor.
CONCLUSION
Wow, I do love writing and seeing all my articles coming together in harmony. Nothing is more challenging than waking up and writing 1000+ words on a given topic. Over the months, my pieces accumulate to form books that I am very proud to share with you.
Hopefully, this book helps change your life as much as it did my life. Real estate is a powerful tool that only the strong can yield. Reading and understanding the language and flow of real estate is the first step to becoming a successful real estate investor. You can be a great real estate investor and only own your primary residence. Remember, real estate is a mindset.
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