Anyone interested in making investments has likely heard about the potential wealth that can derive from investing in real estate. People tell stories about successful property ventures that can be encouraging to the investor who’s just starting out.
Such accounts are great for feeding your passion for real estate investing, but what’s more important is being realistic about your prospects. Is building wealth a viable result from real estate investing?
Expert Investors Put Money in Real Estate
To answer this question, it’s worth taking look at the experts and seeing how they use real estate in their investment strategies. In 2014, the majority of millionaires said they believed real estate was a very smart investment, and that statement still holds true.
About 77 percent of investors with at least $1 million in assets currently own real property. The other 23 percent of investors said that they planned on buying real estate in the next few years, primarily in real estate investment trusts.
“Wealthy investors are turning to a rebounding real estate market as fixed-income yields remain historically low and equities surge,” according to an article from Bloomberg, which also discussed how commercial property values had risen 8 percent in just 12 months, the fastest it had changed since the recession.
Gary Kaminsky of Morgan Stanley Wealth Management in New York identifies the faith in real estate as connected to a desire for a more liquid alternative to traditional long-term strategies. “After a year where the Standard & Poor’s Index rose 30 percent, some millionaires are moving money out of traditional, long-only strategies to find outperformance, and turning toward alternatives such as real estate and private equity,” Kaminsky told Bloomberg.
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It’s a lot easier to sell real property and reduce concern over losses in a booming market, which is one of the things that makes it a more secure investment.
The Experts Can Build Wealth … Can You?
According to the experts, putting your money into real estate is a wise move, and it can definitely build wealth. But does that mean anyone can do it?
These millionaires have spent years investing in the market; they understand the ins and outs and know how to maximize their revenue to build more in real estate. Is it possible for a beginner to do the same?
It’s true that many who have millions also possess sufficient experience and knowledge to work the real estate market, but you have more in common with them than you think. You’re both individuals in a free country, and if you set your mind to building wealth in real estate, you can make it happen.
Ultimately, accumulating wealth through real estate investing is possible for anyone who’s willing to push himself (or herself!) and find the right path. Sam Ovens, a New Zealand entrepreneur who built a multi-million dollar company in the U.S. by the time he was 25 says that when you want to become an entrepreneur in any field, it’s not just a pipe dream.
You can make it happen by determination, learning from your mistakes, and persevering through the rough spots. Oven notes that his biggest lesson came from making a mistake. After quitting college, he poured everything he owned into a business that failed.
“The big lesson is that you have to sell something that the market actually wants,” he told The Epoch Times. “It was painful. But I am glad that it did happen because it really laid the foundation for my success today.”
The same principle applies to building wealth through real estate. You may well fail initially, but you can learn from your mistakes. If you treat mistakes with reverence and respect, you’ll learn more valuable lessons and continue on your path to building real wealth.
How Can You Build Wealth?
This article is meant to encourage you to find your real estate niche, but it’s not intended to deceive you. To be honest, you’ll probably encounter your share of hurdles and difficulties, and you may not succeed at first.
If that’s what happens to you, just pick yourself up, and apply some of these tried-and-true solutions for building a profitable real estate empire.
- Invest in Education: Spend some time learning the market. You’ll be glad you devoted a couple of hours each day to understanding trends that drive the real estate market. This won’t make the market totally predictable, but it could save you from making some rookie mistakes.
- Use Cash Flow Wisely: Cash flow is the extra income that you keep after all your debts and bills are paid. It can fluctuate quite a lot in real estate, so it’s tempting to keep the big checks when they come. However, it’s smarter to put at least some of that money back into improving the property. It will raise the value and increase your ultimate earnings.
- Wait for Appreciation: In most cases (the market crash of 2009 excepted), you can pretty much guarantee that a property will appreciate over time. It’s the natural flow of the real estate market, and you can make a small fortune by being patient a few years before you sell a property.
- Mine the Market: Good deals are out there if you’re willing to invest the time and resources necessary to find them. The market is loaded with potential revenue. If you’ve learned what you can and watch carefully, you can find some diamonds in the rough.