We all know that being a real estate agent is no easy feat, most especially when you are selling condominiums in Tagaytay and dealing with clients that has
How can I build a real estate empire? I’m 24 years old and have $300,000 to start it off. I will be working a job until I’m 40 so from now until I’m 40 (16 years), I can also invest another $150,000 each year.
Buying and selling homes started out as a hobby for me, now I and my affiliates manage thousands of homes and have created a huge amount of wealth in the real estate market.
There are several ways of growing a real estate empire but starting it requires good financial skills, rationalization of financial commitments and sacrifice especially for low and middle-income earners. Learning how and where to buy is half the obstacle, then learning how to leverage money is the last step. I love this industry because it is not difficult, anyone can do it. But discipline is an important building block to real estate success.
I’ll share with you the most important lessons I’ve learned and that you should follow to build your real estate empire:
RATIONALIZE YOUR FINANCIAL COMMITMENTS AND SPENDING
One of the most important ways of starting a real estate business is to do away with frivolous spending. For you to be able to have the financial ability to make an inroad into the real estate empire, you will need to rationalize your spending and redirect the savings into the purchase of properties that can earn you good income in the long run.
You will have to do away with so many things that are not important in the scheme of things. Stop or reduce your spending on things like cars, watches, clubbing, costly holidays or anything else that is not an investment. Personally, I had to stop traveling for a while to put some money aside and let it start to work for itself. It was not easy, but today I can say that it was worth it.
Remember that life is a series of trade-offs. You can’t have everything. Time and (in most cases) money is a limited resource. If you want to save money to invest in real estate, then you will have to abdicate from something else.
My suggestion is to draw out a budget with at least 20% of your income being dedicated to your real estate investment.
THE TIME TO START IS NOW
So many people have wasted years studying the real estate market which has lead them to miss out on several good deals. Procrastination in real estate investment will only increase the cost of building your real estate empire as homes and properties appreciate every year.
A home listed for $10,000 this month can appreciate to $15,000 in the next few months. You don’t need to have millions of dollars before starting a real estate empire, with your modest earnings; you can start small from a single property purchase.
Don’t allow your funds to stay idle for too long. Therefore, if you have some extra money you can use for real estate investment, don’t waste too much time studying the property market. Good deals are difficult to come by, so if you locate a good one, don’t procrastinate.
TAKE ADVANTAGE OF MORTGAGES
With the average price of a home at $50,000, you will probably have to look for some financing options to get started in the property market. The best way of getting the required funds is to approach lenders and banks to finance your property purchases. A mortgage is probably the fastest way of owning a property.
If you see a good property, do a thorough analysis of how much you will spend on it in the long run and how much you stand to gain from it. Factor issues like maintenance and taxes.
Also with mortgages, you can buy several properties at a time with just down payments while returns from the properties will finance the monthly repayments. This means that if you have $200,000, you can purchase ten properties that need just 20% downpayment instead of you using the whole $200,000 to buy a single property.
UNDERSTAND HOW TO BUY CHEAP PROPERTIES
If you want to start very well in real estate, consider cheap houses you can buy and flip.
There are several ways through which you can buy cheap homes and this include;
- Foreclosures: This is when lenders take hold of properties when borrowers cannot meet their mortgage commitments and list such properties for sale. Foreclosures are usually very cheap, but there might be some renovations to be done because most foreclosures are listed for sale “as it is.” This means that the seller wouldn’t be doing any renovations before handing over the property. If you want to buy foreclosures for flipping, do a thorough investigation on all possible renovations you may need to do after purchase. You can probably engage the services of professional home evaluators to ensure you do not end up spending more on renovations than you would make on the property.
- Expired Listings: This is another way of getting cheap properties to add to your real estate empire. Most expired listing sellers are usually frustrated, and you can just bargain your way out and get cheap properties.
- FSBO: This indicates that a property is listed for sale by the owner. Properties listed for sale by owners can be cheaper sometimes, and you don’t have to pay the estate agent fee of around 5-10%.
BUY PROPERTIES IN GOOD LOCATIONS
If you are thinking of buying properties, think of areas with high economic activities where homes, office and other types of properties command good values. Properties in areas like New York City, Houston, Texas, California are known to appreciate at faster rate than areas with little economic activities. You can buy properties in choice locations and place them for short term and long term rent to guests.
HOLD ON TO APPRECIATING PROPERTIES IN CHOICE LOCATIONS
So many people have been tempted to sell their properties in choice locations just because it appreciated beyond their expectations. If you want to accelerate the growth of your property empire, then you have to hold on to properties appreciating in value in choice locations.
All the big boys in the industry, including hedge funds do not care if they pay retail for a house, they just look at rental cap rates and the money that is going to flow into the area from the government or private sector. Understanding the economic indicators is vital. I would recommend buying the book “The Clipper Ship Strategy” by Richard J. Maybury to learn more about this.
RE-INVEST RETURNS FROM CURRENT PROPERTIES INTO NEW ONES
Lastly, if you want to grow your real estate empire very fast, the best thing to do is re-invest a sizeable portion of the returns from your current properties in purchasing new properties. This is leveraging, and it has worked flawlessly for me and many successful real estate gurus.