The very rich know the way to get richer is by buying and selling real estate, sometimes with a very quick turnover. Plan your conquests well, and maybe some day you'll trump Donald Trump at his own game.
1. Make sound decisions right from the start. Learn as much as you can before you approach your first deal. Take classes and seminars on investment analysis, real-estate finance and commerciallease analysis. Now is also the time to get your financial affairs in order.
2. Look for the right properties. Do your research to find what comparable properties are sold and rented for in the location you're considering. The right property attracts the right tenants or buyers, so spend time and effort up front on finding desirable properties. A good rule of thumb is to look for the worst house on the best block, since you can make many changes to a property but you can never change its location.
3. Work directly with a mortgage lender. If you work with a mortgage broker, you add an extra level between yourself and your money, and he or she naturally takes a piece of the financial pie.
4. Get comfortable with risk: Real-estate transactions deal in large sums of money, often borrowed. Become conversant in the language of numbers and focus on increasing property values.
5. Purchase your first investment property. Depending on the location, an existing apartment building or multifamily dwelling (such as a duplex or triplex) is a good choice. Look for properties that are fully leased.
6. Fix up your investment property. This may include everything from exterior paint and landscaping to structural repairs. Take advantage of economies of scale. For example, hire a general contractor to do work on all of your properties for less than he or she would charge for separate jobs. Rent the remodeled units for more.
7. Keep your personal expenses low. Reinvest any profits to increase your holdings.
8. Continue purchasing land and buildings, focusing on acquiring properties with more and more prestigious addresses where demand and price per square foot are always high.
9. Diversify your holdings. Branch out from residential properties to multitenant retail buildings. Rent to credit-worthy, established tenants, and sign longer term leases with rent escalations. Subdivide your properties to create new development and rental opportunities.
10. Gaze upon your empire from your penthouse suite and enjoy the good life. See 500 Die Rich.
When selecting a mortgage banker, find out if the support staff consists of permanent employees or contract underwriters. Work with permanent employees so you have a team of people who get to know you and your financial dealings over a period of time.
Turn over the running of your growing empire to a property manager. Yes, it will take a cut of your profits, but you no longer have to worry about doing a landlord's day-to-day chores. Better management practices often result in higher occupancy. Think entrepreneurial, not managerial.
Avoid books, videos and seminars that promise millions and require a large payment up front before giving you basic information. The real-estate industry is filled with "get rich quick" cons who want to sign you up for expensive courses that are little more than scams.
Beware of schemes that involve real-estate options. While options are a legitimate financial entity, they are also a common buzzword used by scammers.
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