There are many ways to build wealth, one of the best ways that I know how is through real estate, where I can most likely get a property at a lower price than what the market is commanding. I look for a property that needs a little bit of work, for example, needing a fresh coat of paint or maybe changing the awnings or some windows. When you purchase that property, you’re buying it with some equity in it, and once you fix the property, the equity gets realized. You’re able to refinance some money out; you can get that money then afterward buy another property to continue multiplying that action.
Many people talk about the power of compound interest; it is indeed compelling. I equate that in real estate to compounding appreciation. When you buy a property, the property will most likely go up in value because The land is a fixed asset, and what we can do is put properties on that land, so the land goes up in value. The property on the land is valuable, so the more you build as time goes by, it should show an appreciation, and you build wealth that way. You can refinance some money out of there and invest it somewhere else, whether commercial, industrial, or residential. It really truly doesn’t matter as long as you know the area and you know what you’re doing there, because the economy may have a downturn, and that downturn doesn’t necessarily mean there’s a downturn in general across the board, you can see that downturn in certain pockets of the economy. Different variables affect the economy and the value of the real estate market. You have to take a chance because everything you do has a certain inherent risk to it, and when you are trying to build wealth through real estate, inactivity is by far riskier than actually taking a chance. Building wealth through real estate is a very secure venture if you know what you’re doing. Many people think that you need money to get into real estate, and while money does help, the truth is that you don’t need money. All you need to get into real estate is number one, that fact you want to do it, and number two, get creative.
Let me give you an example. If you find a property that you like and if you talk to the owner and build rapport, you can then go to the owner and ask, “Hey, since you’re selling, I’d like to buy it, but can you help me buy it?” And how are they going help you buy it? If they can carry the paper and act as the bank, all you have to do is make a payment to them to show them your goodwill, and that person can carry the paper, and you just got your first property. Is it that easy? Sometimes yes, sometimes no. The first time I bought my first property, I didn’t qualify for the bank; I had less than $300 in my bank account, but the owner carried the paper, and he trusted me and carried the paper, and that’s how I got my first property. After some time passed and I improved the property, I started making a little bit more money, I then re-financed it, and after doing so, there was more money, so I actually gave some of that back to the owner. So how can anybody get into real estate? The most important thing is your mindset. The second thing is that you want to do it. And if you want to create wealth, you can talk to owners. Many owners want to sell, who are willing to carry the note and act as the bank because if they take the money right up front, all of it, they’re going to get taxed heavily. There’s a lot of people out there like that. It’s an excellent way to get into real estate with no money down.
Another way is you can find a property, put it under contract, and then everybody wins, and that’s the idea that everybody wins the buyer, the seller, the intermediary. So you put it under contract, and then you go find an investor; it’s not difficult to find an investor, and that investor will ask, “How much do you want for the ability to get into that contract?… Okay, give me 5,000-7,000” depending on the equity that that particular contract has with regards to that one property. Then you may make some money there right away, and then you start saving it and then, later on, you can buy your own, and that’s how you build wealth through real estate, it doesn’t happen overnight, but it doesn’t have to take 30, 40 years, and you don’t need money to get into real estate. Get creative.
Contributor: Pablo Pomes @PabloFPomes
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