If you haven’t already begun investing in real estate, I’d like you to consider doing so today. If you are a budding real-estate tycoon, resolve to add to your empire this year. I love real estate. In the 10 or 12 years I’ve been actively investing in it, it has given me much-better-than-the-stock-market ROIs, the comfort of knowing my investments can’t disappear, and a lot of fun fixing up old buildings.
Because of the mortgaging you typically use in real estate, the appreciation you get on a property’s value is leveraged. A typical 5% yearly inflation in real property values will give you a 25% ROI if you borrow 80%. At 25%, a $10,000 investment becomes $1.2 million in about 21 years. Normally, leveraging your investing is risky. But when you invest in local real estate — residential and commercial properties in a community you know — your risk is greatly reduced by your knowledge. You can’t make the same argument for stocks.
On my credenza in front of me, there are 22 little red binders. Each represents a separate real-estate investment. One might be something very substantial — half a million dollars put into a project my friend and partner EP got me into. Another might be something much smaller — a $65,000 condo I bought in an apartment complex near my office. In some cases, I have 100% ownership — a house I own that DF lives in. In other cases, I own a measly 7% — a new housing development in Boca Raton. Some are rental plays. Some are build-and-sells. I began slowly, but as I became familiar with the numbers and saw some good returns, I cranked up my investing.
This year, I’ll probably make at least four and maybe as many as six separate new investments. Some of these investments have been stronger than others. But they have all been positive. My most recent investment was the $70,000 I spent buying and fixing up the house for DF that I mentioned above. If I sold it right now, I could get about $55,000 or $60,000 more than I have in it. Plus, I created a beautiful little house that DF is enjoying and I am proud of. That’s the kind of investing I’d like to do all year long.
Here’s a promise: If you haven’t ever invested in rental real estate but start this year, you’ll be glad you did. If you keep investing — buying at least one new property a year (which will be easy once you get going) — you will be a real-estate multimillionaire (not counting your other assets) when you retire. When you look back on all the wealth you acquired, you’ll see that real estate was the easiest and — next to your personal business — the most lucrative. Spend some time today thinking about your financial picture this year and set a goal for yourself in terms of real-estate investing. Go back and reread Message #592 (“MMF’s Seven Rules for Buying Investment Properties”). Give yourself some time to find a good piece of property or a good deal. And promise yourself, too, that you’ll learn more about real estate.
To help you learn more about real estate, here’s what I can recommend:
1. The following books (all of which you can get from your local bookstore or at Amazon.com):
* “Home Buying for Dummies,” by Eric Tyson and Ray Brown
* “Home Selling for Dummies,” by Eric Tyson and Ray Brown
* “Investing in Real Estate,” by Andrew McLean, et al
* “Your First Year in Real Estate: Making the Transition From Total Novice to Successful Professional,” by Dirk Zeller
2. Russ Whitney’s “Building Wealth Live” real-estate investing program
3. The ETR Real Estate Investment Success Advisor. This is a twice-monthly ETR electronic newsletter for those of you who are ready to take this next, important step in wealth creation.
ETR’s Real Estate Success Advisor will show you how to:
* Immediately size up the profit potential of any neighborhood;
* Find the best deals in your town before they hit the paper;
* Control a quarter-million dollars in property with just $10,000 in savings;
* Make sure your first real estate investment is profitable from day one;
* Put up to $500,000 in profits in your pocket tax-free every three years.
* Build a rental income of $5,000+ a month within your first year;
* And much more With interest rates so low, there has never been a better time to make money in property investments.
So, every two weeks, we’ll make sure you’re up to date on the absolutely best strategies for making huge capital gains and rental income. And that means you’ll hear from some of the most accomplished experts in the business. For more information about this new service send an email to firstname.lastname@example.org. I’ll tell you more about this special service in upcoming ETR messages. Tomorrow, we’ll talk about one more way for you to build your wealth: by creating a second income.
[Ed. Note. Mark Morgan Ford was the creator of Early To Rise. In 2011, Mark retired from ETR and now writes the Palm Beach Letter. His advice, in our opinion, continues to get better and better with every essay, particularly in the controversial ones we have shared today. We encourage you to read everything you can that has been written by Mark.]