Is it all really possible??

General Real Estate Investing
1

Here’s a question for the REI’s who have made enough money doing REI to secure their present and future finacial needs. Is it TRULY possible to become a net worth millionare within 5 - 10 yrs.? I’m learning a ton here. I’m studying multi’s first and hope to take off from there. This site seems to talk straight without a lot of :bs. I’m 39 yrs. old with no retirement savings. I’d like to leave my full time job and have a secure future. It looks very doable to me. Any thoughts? thanx

                         Mike
2

I am in that position, not from REI, but from my businesses. REI is starting to accelerate my growth as I get bigger.

Is it possible? Yes

Easy? no

I think you are just getting going on this idea if I remember from other posts. If that is the case, realize that this is not as easy as it looks. There are a lot of nitty gritty, sometimes nasty details to deal with. You have to be willing to work your tail off and deal with both a lot of stress and a lot of risk. In my experience nothing has ever gone completely like the plan. Something always comes up and you have to deal with it.

My head was in the clouds about REI until I started to actually get involved. Then I learned a lot of things that weren’t as simple and easy as they at first appeared.

My 2 cents,

DB

3

Mike,

Yes, it is possible, but it IS a LOT OF HARD WORK, especially the first couple of years. It can also be quite stressful, especially in the beginning as you deal with all the tenant nonsense. You need to understand the basics of the BUSINESS and have a REAL WORLD PLAN (as opposed to all the guru nonsense).

Good Luck,

Mike

4

Yes it is. The beauty of real estate is that it is not like stocks where you have millions in worth but you can buy a hamburger with a stock. In real estate you control income producing property. If you have 3 houses that yield $100/month net in rents sure you can’t live on $300/month, but think about how much nicer car you ca buy if you were going to buy a car for $300/month now you can afford one for $500/month.

But real estate makes you money 5 ways, #1 When you buy it you buy at a discount so you have unrealized capital gain, #2, you pay the lowest income taxes of any for profit industry, #3 as you pay the mortgage (using your tenant’s rent money) it adds to your net worth #4 you can go in and recapture equity if you would like (which you can actually buy a hamburger with and #5 cash flow which will allow you to buy a hamburger every month. When you retire you don’t need new worth you need cash every month. Real estate does that in spades.

Right now my houses average about $300/month cash flow. You need to figure out how much money it takes for you to live every month. Say every month you spend $3000. That covers everything from mortgage to dry cleaning. Then once I have 10 houses I have retired myself. If you bought 2 houses a year you would have 10 houses and your $3,000/month in 5 years.

I buy each of my houses with at least a $30k discount to the market. My houses are highly leveraged, but I am still buying. After I get 20 I can start selling them off, use the cash from the ones I sell to deleverage the remaining houses and then the cash flow will start looking really nice.

5

Its a lot of work and very hard but it can be done. I 100% fin all my deals and have a nice net worth. But to me net worth is a number on paper not money in your hands. I look for cash flow.

6

I’d sure hope so.

A million is no longer much money.

A millionaire is barely making it into middle class.

A million is only 3 houses where I live and about 1.4 houses in parts of California.

If you can’t put together a million in equity in real estate in 10 years, you aren’t working very hard.

7

The great thing about real estate is there are a number of ways to achieve your goal.

I HATE renting residential homes…HATE IT!! I’ve done it. made money doing it, just lost all patience dealing with MORONS. I completely respect the guy’s who do it. It’s not easy, and as Propertymanager correctly points out in his book…It’s not for everyone.

Having said that, you can still achieve your million dollar goal… If your willing to sacrific for it. Here’s how…

Buying and selling homes can be VERY profitable. Even when housing is falling like now, you can still make incredible money doing this.
Ask yourself how long it would take with your current job to save $40,000???

Depending on your market (in mine the median home price is $225,000)
That’s the average. I buy between 4 and 8 homes a year. I buy houses that need cosmetics, 3 bed, 1 bath minimum, in good neighborhoods, basically starter homes. The beauty of the starter home in this kind of market??? It’s low priced, And…NO ONE HAS TO sell ANOTHER HOME TO BUY MINE!!! In this economic enviroment that is HUGE.

I will not buy a home that I can’t make at least $40,000 on net.
Finding them involves telling EVERYONE you can…I BUY HOUSES!!!
I also include BIG finders fee’s for people who bring me deals. I have absolutely no problem giving someone a check for $5000 for a deal that nets me $40K. By doing this you just hired a RABBID house hunter for your business. I tell these guy’s all the time…" My goal is to see you get enough of those $5000 checks that you no longer need me!" They LOVE it!!! If they bring me 5 deals they end up with $25K and at that point they start doing it themselves…BUT…I’ve made $200K on the deals they found.

Now let’s assume you start out buying and selling. The first house you buy should be a grand slam, out of the park, into the streets, HOME RUN. Your learning, by being patient, leave enough money on the table to make a few mistakes. The NEXT house you do will be MUCH EASIER. Back to the plan…

Let’s say you make $25K per home. You get your marketing machine up and running and your steadily buying 4 houses per year. At $25K net per you are putting $100K a year away. The money should be realtively liquid, because in this business when it rains, it pours. I NEVER get one house at a time. For some reason known only to the gods, these things ALWAYS appear in mulitiples. You buy one, GUARANTEED your getting another home that week! Having CASH on hand is a beautiful thing!

The pitfall for most new investors is…
THEY QUIT THEIR DAY JOBS!!! DO NOT DO THIS. By keeping your job, ALL that profit goes into the pot. As the pot grows it BRINGS in MORE MONEY!
You quit your job when your job COSTS YOU MONEY TO KEEP!!!
I tell people this and they don’t get it. “But I HATE my job, that’s why I’m getting into real estate.” My answer is always the same…

Does your job suck so bad that you can’t USE IT to make yourself a millionaire??? Think about THAT!!! Your nit wit boss is actually PAYING you to become RICH!! Your living on HIS money while you put YOURS to work for YOU!!! That usually puts things in a completely different light for most people. Going into work everyday with $500,000 in the bank is TOTALLY different than the guy next to you who has NO WAY out and $500 in the bank. You’re a SHORT TIMER. USE IT TO YOUR ADVANTAGE!!

With this simple strategy you don’t deal with tenants, the selling is left to a well chosen realtor (who better be bringing you some of these deals) and you just fine tune it year after year. As the pot grows, it gets easier, and easier, and easier and…

At $25K minimum per home, doing 3 or 4 per year, within 8+ years your GOING to be a millionaire. You’ll learn a TON getting there, but THAT is the fun part.

Another GIGANTIC benefit???

Think of what you’ll be teaching your CHILDREN while you do this. You think my kid is going to have to work some crappy job for a pay check every week??? HE WILL NEVER HAVE TO…If…IF he’s willing to just copying his old man.

Go for it…you’ll never regret it!

8

I also think that living below your means and continually expanding your means is the way financial wealth. Oh, and having investments like RE that pay you money whether you get out of bed or not. I think that is the most important point. If I were to become disabled, I’d be screwed! I can’t wait to get to the point where I can work at a job when I WANT TO. Not because I HAVE TO.