Three Simple Steps to Real Estate Wealth
If you’re like most people, you’ve probably dreamt of owning a nice piece of real estate. And if you’re really like most people, you probably don’t think it’s possible because you don’t have the money.
But what if we told you that there are steps you could take to create real estate wealth for yourself – even if you’re starting with nothing?
Keep reading to find out how!
The Three Steps to Real Estate Wealth
Before we get started, we have first to debunk certain myths that most people have about real estate wealth. One of which is the famous saying, “Real estate is only for the rich.” While the opinion is widespread, the statement is far from accurate and lacks veracity, as you will see later on. Here are three simple steps to help you on your journey to real estate wealth.
The most important thing in real estate is to start somewhere. As a beginner with limited capital, rather than looking at luxury homes and expensive houses that cost more than your yearly income. You can begin your journey by starting small with inexpensive properties.
The key is to build a positive cash flow first to get yourself in the game. One way to achieve that is by buying rental properties. Buying inexpensive properties and renting them out can give you the cash flow you need to survive and grow in the future.
When renting properties, consider the cost of the property and the cost of repairs and maintenance before you fix the rent. Trust us; you don’t want to charge rent at a price that would eventually lead to a cash deficit on your end.
Moreover, with rental properties, you don’t need to monitor the property market trend because your property maintains its value regardless of the trend in the market. Plus, you get to escape the weeks of tedious research and market analysis that comes with buying and flipping properties in the long term.
Long Term Capital Growth
This step involves a more detailed and research-based process. The key here is no longer to get immediate cash flow but to grow your capital steadily in the long run.
One way to achieve that is by buying properties in up-and-coming neighborhoods. If you’re wondering how to figure out up-and-coming neighborhoods, look for a few youngsters that are new to town and ask them where they’re staying (and no, we don’t mean trust fund kids). The answer you’ll get will mostly be a new neighborhood that you’ve probably never heard of.
Get the names of a few of those neighborhoods; head to those areas, and check out what the living situation looks like. Do your research to learn more about the community before buying properties there. As more and more people move there, their earning power will increase over time, and the neighborhood will develop slowly.
With the development of the neighborhood comes an increase in property value. But don’t make the mistake of selling your property just because the value has increased by some percentage. The value is rising, but it’s always best to wait and grow your capital.
In the meantime, while you wait, you could develop the property by renting it out to give you some liquidity before you finally sell it at your designated time.
Another strategy for long-term capital growth is the use of leverage. Most investors seldom have the money to buy the property they want. So they turn to leverage. Leverage involves using borrowed funds to invest or secure a property.
This can include taking out a mortgage on a property or getting a hard money loan. Regardless of the method you opt for, leverage will enable you to multiply your investment power and increase your returns on investment.
Furthermore, you can also apply the Kaizen principle to your monthly income. This principle involves actively increasing your monthly income by 3% each month. While this might seem like a long shot, there are simple ways to achieve it.
This includes getting contracts to build websites or apps for new businesses and then outsourcing it to tech guys or even using a property you own for Airbnb. Irrespective of the strategy you opt for, the Kaizen principle can help you ensure long-term capital growth in the long run.
Diversify Your Portfolio
Now you have a few properties across different cities, congratulations! Unfortunately, you still need cash flow to get through the day, and having properties tied up for years won’t feed the hungry mouths at home or pay the bills.
You need an active stream of income that can take care of the day-to-day running expenses without affecting your long-term investments. That’s where a diversified portfolio comes in. Having a mix of residential rental properties and longer-term properties can give you the liquidity to survive the tough times.
Plus, with the sinusoidal trend of the property market, it can be difficult to withstand the temptation of the bull run, especially if you don’t have enough liquidity to keep your eyes off your property. Oh, and don’t forget to time the market properly when buying properties.
As we said earlier, the market goes through a bull and bear run cycle. So it’s always advisable to buy properties during the bear run when prices are at their lowest. That way, you can make your profit from the buy and then sell during the bull run.
This doesn’t mean you should sell your long-term properties at every bull run. Instead, it’s a strategy that can help you maximize your profits because the key to creating wealth from real estate is in the buying phase. The selling stage allows you to build on your already made gains.
Managing Your Real Estate Wealth
When it comes to real estate wealth, it’s one thing to create the wealth, and it’s another thing to manage it. A mismanaged real estate empire can turn into chaos in a matter of years. That’s why it’s essential to work with an experienced real estate management firm like GUIÓN PARTNERS.
At GUIÓN PARTNERS, we are committed to helping you manage and grow your real estate properties. We have a team of experts and professionals who are experienced in real estate wealth management and will assist you in making sound decisions that will help you increase your real estate wealth.
So whether you’re just starting or a seasoned investor, look no further than GUIÓN PARTNERS for proper real estate wealth management.
Download the GUIÓN PARTNERS White Paper on Privacy & Data Security