More millionaires have been made in real estate than in all industrial investments combined. Investing in real estate has several financial benefits, including positive cash flow, tax benefits, leverage, and property appreciation. Therefore, building a real estate empire is an ideal way to become wealthy and fund your retirement. However, many people who attempt to invest in real estate get stuck on income property number one. Building a real estate empire doesn’t have to take a lifetime. Even with little or no money, you can still become a millionaire in real estate and reach your financial goals. You just need to take the right approach and be committed. This blog is about how to build a real estate empire over time so that you become financially free through cash flow.
Here are the fundamental steps you will need to follow:
1. Get Yourself Educated
Start strong by researching and learning about real estate investing ahead of time. Even before you think of buying your first investment property, commit to expanding your skillset. Many real estate investors fail to grow their real estate investment portfolios because they lack the appropriate education. Soak up information from real estate books, blogs, webinars, podcasts, seminars, magazines, etc.
It is not possible to know entirely everything with regard to real estate investing. However, only take the first step towards buying an income property once you are confident that you understand the ins and outs of real estate investing. This way, you will be able to avoid costly mistakes that can hinder you from successfully building your real estate empire. Having a good mentor can also help to quicken your learning process and give you a solid foundation. You can learn a lot by simply working closely with an experienced real estate investor.
Related: How Much and What Real Estate Education Do You Need to Become a Real Estate Investor?
2. Set Clear Goals
Having concrete investment goals is essential before you start building a real estate empire. What do you want to get out of your real estate investments? This is what you will use to formulate your course of action, keep you focused, and help you monitor your success. Having clear goals in mind will help you decide the right type of property for you, the number of properties to invest in, and the real estate market that will best help you achieve your investment goals. Remember that the more specific your goals are, the easier it will be to achieve them.
3. Explore Financing Options
Finding investment property financing is one of the most challenging parts of real estate investing. Before you start hunting for your first deal, you will want to have a good idea of how much you can afford and how you will get financing. Investment property financing could be through cash financing, private money lenders, home equity loans, real estate partnerships, seller financing, conventional mortgages, etc.
Choosing the wrong investment property financing option could adversely affect your investment goals. Compare different financing options to find one that is best for your current situation. The right financing for you will depend on the loan type, your eligibility, loan term, interest rate, costs, and loan amount. Ensure you have enough money for a down payment and know your credit score. Also, talk to different lenders to see what loan you qualify for.
4. Choose an Investment Strategy
To build a real estate empire and reach your investment goals, you will need to have a strategy. How are you going to turn your investment property into profits? There are many real estate investment strategies that you can use to make money in real estate. Picking the best strategy for you will help you design your path, maintain your focus, and move past your first income property to build your real estate empire relatively smoothly. Some of the strategies to consider include the fix-and-flip strategy, house wholesaling, the buy-and-hold strategy, etc.
Related: How to Choose the Best Real Estate Investment Strategy
5. Acquire Your First Investment Property
You have everything in place. Now you need to take action to realize your dream of building a real estate empire. A journey of a thousand miles starts with a single step. Building wealth with real estate is not going to take a day. The key is starting out small and building up from there. It all starts with buying your first investment property.
The idea of buying an investment property can be daunting for first-time real estate investors. So, how do you go about it? Well, the first thing you should know is that the performance of your first investment property will greatly influence your success as a real estate investor. This is because it will influence your ability to buy a second property. There are many investment properties for sale in the real estate market. However, not all properties are the same. You should aim for positive cash flow properties with a good return on investment. With the right knowledge and tools, you will be able to find a profitable investment property.
Be sure to use Mashvisor’s real estate investment tools to easily and quickly find the best-performing investment properties in the US housing market. You will be able to run the concrete numbers to see how well an income property will perform financially. Some of the metrics you can calculate with our tools include rental income, cash flow, cash on cash return, cap rate, and Airbnb occupancy rate.
6. Build a Team of Real Estate Professionals
Another key aspect of how to build a real estate empire is hiring a team of professionals to help you with the day-to-day work involved with rental properties. Outsourcing will save you from many of the headaches of managing rentals. Some of the professionals to include on your team include property managers, accountants, attorneys, mortgage brokers, home inspectors, etc. Hiring professional property management will be very crucial as you add to the number of investment properties in your portfolio. It will free you up so that you to continue expanding your portfolio and even invest out of state. It would be wise to build up a team that you can trust and work with for the long-term
7. Buy More Investment Properties
The secret to building a real estate empire is knowing how to buy multiple rental properties. Ask any real estate mogul for advice on how to build a real estate empire and they will probably mention to you that they did it by gradually adding to their real estate investment portfolio. Buying the first investment property is usually the hardest part. If you successfully completed that hurdle, there are a number of routes you can take to acquire more investment properties and build a real estate empire.
Saving up to buy a second investment property may take you many years. To speed up the growth of your real estate empire, you can leverage your home equity to access funds to buy another investment property. You can also use positive cash flow from your existing property to fund your next investment. Just repeat the process and acquire multiple rental properties. However, remember to always use Mashvisor to find, compare, and analyze the best income properties for your real estate investment.
With multiple income properties each generating positive cash flow, you will be having a great cash machine. You can keep on growing your real estate empire over time and invest in even bigger projects with higher profits. However, keep in mind that bigger projects will have bigger risks. So, make sure you do your homework and use our tools before investing.
Related: How to Finance Multiple Rental Properties (Yes, It’s Possible)
8. Diversify Your Portfolio
It can be tempting to acquire the same type of investment properties on the same street. In any case, they may be generating the same amount of rental income and bring in positive cash flows. However, the real estate market is usually dynamic and your suburb may have a bad year. If this happens, you may find it hard to find tenants for all your rentals and it’ll slow down your financial growth. The solution to this is diversifying your real estate portfolio by investing in different locations and in different property types.
For example, you may start out with single-family homes, but diversifying and building a multi-family real estate empire could work best for you. You may live in the Ohio real estate market, but as you grow, you may find investment properties in the Phoenix real estate market or the Pittsburgh real estate market to be stable and profitable. Keep exploring different opportunities as you build your empire.
The Bottom Line
Making money in real estate involves more than just buying a single investment property and waiting to earn monthly income from it. For someone learning how to build a real estate empire, you will realize that it takes good planning, relevant knowledge, a lot of effort, and consistency. There is no secret to being a successful real estate investor. You just have to do the work and follow the right steps.
To start looking for and analyzing the best investment properties in your city and neighborhood of choice, click here.