Five Ways To Build Wealth Through Real Estate
- Brainz Magazine
- Nov 22, 2022
- 5 min read
Updated: Sep 15, 2023
Written by: Stephanie J Ford, Executive Contributor
Executive Contributors at Brainz Magazine are handpicked and invited to contribute because of their knowledge and valuable insight within their area of expertise.
Investing in real estate has always been a lucrative and wise investment decision. If you look at some of the wealthiest people in the world, Donald Trump, Bill Gates, & Oprah Winfrey, real estate investing has been a big part of their wealth. It’s no wonder that the masses are starting to fall into this direction.
For the past nineteen years, I have invested in real estate in all different forms. I have acquired wealth through selling real estate to others as a Realtor as well as investing in my own properties. This is one of the only careers that I know gives you so much freedom to make your own schedule and that you can make your own rules. One valuable thing to know that this is not only a career but it is a business. It’s a business that can become a family business. There are countless real estate investors that have purchased properties and have brought their children and other family members in the business.
Real estate investments can help to diversify your income. It can be a great retirement fund or a main source of income. You can work this business part-time or full time or you can use it as a great income supplement. The good thing is that you can use your real estate investments however you see fit and it can be used to cater to your lifestyle. Wealth building through real estate includes becoming a landlord, selling real estate, managing a rental portfolio for others or investing in a real estate investment trust.
Five ways to build wealth through real estate
1. Build a Rental Portfolio
One of the oldest ways to acquire wealth through real estate is by building a real estate rental portfolio. This can be done by paying cash or obtaining a mortgage for the properties. Whether the transaction will be cash or financing the cap rate has to make sense. The cap rate is defined as the net operating income divided by the market value. A cap rate of 1o% or better is considered a good investment in real estate. Remember that even if the cap rate is good, there are other determining factors in the property being a good asset. You will have to look at the overall picture such as the appreciation potential, mortgage payment (if financed), potential repairs, insurance cost, etc. A cash purchase does not exclude these factors. If the property is financed, make sure the potential rent will cover the mortgage payment and occasional repairs. When acquiring a new real estate property, always make sure that the risks outweigh the rewards.
2. Wholesale Real Estate Properties
Wholesaling properties has become increasing popular among real estate investors in recent years. The act of wholesaling real estate is when a property is purchased for one price and then is sold to another investor quickly for a profit without renovating the property. Typically the acquisition investor puts an asset under contract then finds an end buyer to complete the purchase. The best way to wholesale any property is to have your own funding to purchase the asset then to attempt the sale later. The latter has a lot less headache involved. This wholesaling method works for residential as well as commercial properties. When wholesaling commercial properties there is a lot more paperwork involved however the return is greater. Savvy business people buy assets in order to sale them later because they know a good deal when they see it. A big percentage of my real estate wealth has been through wholesaling as detailed in my book, She-Vestor: Building My Real Estate Empire. If you're looking to learn more about Wholesale Real Estate, I encourage you to explore the strategies outlined in my book.
3. Invest in a Real Estate Investment Trust (REIT)
Real estate investment trusts (REIT) are not new to the real estate investment world however they have become popular with real estate investors. When you invest in a REIT, you are diversifying your risks. A REIT owns and, in some cases, operates many income producing commercial assets such as apartments, office buildings, retail centers, etc. Some REITs even operate in real estate financing. A REIT is a way for you to diversify your assets and not rely on one asset to build wealth. Typically, there is a minimum investment required when you join a REIT. You can also start your own. A REIT is a way for an investor to not take on the risk of an investment solely.
4. Fix and Flip Real Estate Properties
Typically, when people hear about the term real estate investor, a fix and flip investor comes to mind. The term fix and flip means that an investor buys a property at a discount, renovates it and resells it for a profit. Next to wholesaling real estate properties, this is the quickest way to build wealth through real estate. Often a real estate investor can make $25,000 plus on a residential property sale that they resell after renovation. Normally when this happens an investor purchases a property and reinvests their profits to buy the next property. Driven and successful investors, repeat this cycle time and time again. This type of real estate investing works for both residential and commercial properties.
5. Manage a Rental Portfolio
An indirect way to build wealth through real estate is by managing a property management portfolio. Typically, this portfolio is a combination of investments owned by others. A property manager makes money from monthly management fees, late fees, and application fees. A property manager can also make money from rental repairs. The money made from managing a property management portfolio is residual. This type of business can be willed to your children and can create generational wealth. This is a great alternative if you don’t have the money to invest in real estate for yourself.
Real estate investments create long-term wealth and income. However, if you don’t have the right investments, it can be a nightmare. Before you start in any investment strategy, please do your research. A bad investment can cause havoc on your finances. Great investments can make things better in the long run for you and your family. So please choose wisely.
A real estate investment coach or mentor can help guide you in making wise investment decisions. Schedule a free consultation today to learn more about our real estate coaching program and how we can help you get started. You may also join our free Facebook group for real estate investors to gain valuable insight about whether or not this is the right career/business for you.
To learn more about She-Vestor Coaching and real estate strategies, visit our website.
Stephanie J Ford aka She-Vestor
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Stephanie J Ford, Executive Contributor Brainz Magazine
Stephanie Ford, a real estate veteran has mastered the art of real estate through real estate investing, coaching and construction. A college marriage left her in $60,000 in debt. Her only way to rebuild herself was through a career as a realtor. Years later she obtained her Real Estate Brokers license, homebuilders license and started a career as a real estate investor. Stephanie talks about her experiences in her book, “She-Vestor: Building My Real Estate Empire.” Stephanie never lets anything hinder her from obtaining what she wants and she excels in whatever she puts her mind to. Her motto is “There are not any failures in life, just opportunities to improve yourself before the next journey.”
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