How To Become A Real Estate Millionaire... The Slow Way

Real estate investment has transformed many people from mere renters, to homeowners, and then to millionaires. This lucrative industry is attracting so many people from different backgrounds and walks of life because it is such a powerful wealth-building tool.

But, building a real estate empire isn’t a walk in the park, and it doesn’t happen overnight. Being a real estate investor can be a painstakingly slow process that could take years. If it is not done right, real estate investment could empty your bank account, leaving you worse off than you started. To do it correctly, real estate investment takes a lot of planning, research, patience, hard work, and know-how to succeed and thrive in this business.

So then, how do you use real estate to your advantage to become a millionaire? And furthermore, what makes someone a real estate investor?

As an investor, you will need to buy properties, be able to convert them into profitable acquisitions, and turn these into a steady cash flow. However, a surface level knowledge of these things doesn’t make you thrive in the business. What sets a successful investor apart from the rest is equity.

To put it simply, equity is the total amount left over from the value of all the homes you own minus all the mortgages that you owe (i.e., Equity = Total Value – Mortgages Owed).

Now, if that total equity amount is over 1 million dollars, then that makes you a real estate millionaire. So, how do you make that happen? Here are my proven tactics:

Step 1: Find a mortgage broker. The mortgage broker will assess your income, debt, assets, and liabilities to determine how much you can afford as an investment.

Step 2: Get an experienced real estate agent and mentor. There are tons of real estate agents out there, but not all of them have experience in real estate investment. You want to work with realtors who are also investors themselves, or ones who have extensive experience working with other investor clients.

Why? Simply put, they will know exactly what kind of properties you are searching for. Plus, they can provide you with mentorship and share valuable knowledge that can come only from investor experience.

Step 3: Buy your first property. With your real estate agent, determine which locations you are willing to live in. Also, find out the cost of homes that fit your criteria, i.e., size, condition, location, and so forth.

You want to look for properties that are move-in ready or were previously rehabbed. Next, you will identify the total cost of holding it as a rental property. What are the monthly expenses? What about mortgage payment, taxes, insurance, property management, maintenance, etc.

Your cash flow will be the difference between the monthly market rent of the property and the monthly expenses.

With those considerations in mind, work together with your mentor and mortgage broker to find a house that is going to be a good investment for you.

Be on the lookout for off-market and on-market properties that are available in your area, and be ready to make an offer whenever you see something promising.

Eventually, one of these offers is going to stick. And once it does, you will then undergo the homebuying process, close on the property, and be the proud owner of your first investment property.

Step 4: Repeat Step 3 two more times. After you have moved into your first home and lived there for about 9 to 12 months, start the process again of searching for a house. You will then buy your second house, and close on it. After this, you move into this new second house and rent out your first one. You will repeat this process one more time with a third property.

Step 5: Buy your forever home. Your fourth loan is going to be your last easy loan to get, so use this loan to purchase your forever home. The reason being is there are Fannie Mae guidelines in place that restrict the number of loans you can obtain in your personal name.

In general, you can have a total of ten loans, but most big banks will only give you four loans. Your fifth to tenth loans are going to require a much larger down payment, and may need stricter requirements to be met before the loans are approved.

At this point, you are going to have three houses that you are renting, and one forever home that you are living in. You will also have tax benefits, cash flow, principal paydown, and appreciation as time goes on.

Notice that in just a few years, your real estate equity will go from a very modest amount, to a much larger amount, and then eventually to a million dollars, and maybe even beyond. Once you hit that point, you can officially call yourself a real estate millionaire!