From the word go, real estate investing sounds like a very expensive and complex endeavor costing hundreds or thousands of pounds in initial investment. Well, in the past, it used to – now, the dynamics have changed. Today, you don’t need to have a six-figure balance in the bank to be a real estate investor – it only starts with a solid financial plan, and making the right baby steps.
Many people who have reached the stage of financial independence did so by investing in real estate – and through the process, ended up becoming millionaires. Though it might sound impossible to make it in real estate from the word go, the key to success lies in making simple steps and making continued forward progress. It’s just a matter of time before you are called a real estate mogul.
Let us look at ways of getting started in real estate millionaire path, without breaking a bank.
The single biggest reasons you should take real estate investing high in your investments list is due to the higher returns [potential when compared to other investment asset classes, such as investing in money markets and stock. Real estate investing has a leverage over assets, a full control over assets and a substantially high profit.
Make the First Purchase
The first real estate purchase will without a doubt be the most difficult. Getting the first piece of real estate can be very tricky. To get started, look for a single family modestly-priced home and make it your home while paying down the mortgage aggressively. Once you take ownership of the home, work round the clock to pay it and make it yours. The goal is to pay at least 70 percent of the mortgage value, to enter the next stage of qualifying to cash out and refinance.
Second and Third Purchase
Once you have refinanced the first home, you can put it up for purchase by another buyer, who will end up paying more than the initial price you acquired it at. You will mostly make some profit, say $20,000. You can replicate step 1, move to another house, pay the mortgage and eventually own it. Else, you can continue to live in the existing home and purchase another house and set it up for rental. These two houses will be an investment for you. The beauty of following this specific model is that you can rent the two homes and get a modest monthly income. You will want to pay any existing mortgage and save the balance to continue with your real estate investing path.
The Mogul Path
You can see and reflect on the steps you will have made up to this level. Now that you have two houses producing a positive cash flow, you only need to wait to build a positive cash flow before moving to your next down payment of another home. With an additional house under your name, you will save up the down payment required for your fifth home. If you manage to have ten rental homes each bringing at least $1000 per month cash flow, you can save up to $20,000 for a down payment every two months. This allows you to have a reasonable purchase of at least five homes every year. If you get to this point, the sky is without a doubt, the limit. You need to start building a team to help you grow your empire.