When I first started off in real estate and was flipping houses, my goal was to make
$100,000. I realized I needed a new goal when I hit that $100,000 in 30 days.
I definitely didn’t want to become a landlord, and have to deal with all the problems that
come along with tenants and managing properties, especially when I found out that I
could hire a property management company. I wasn’t sure what the right niche in real
estate was for me.
But then I looked at my friends who were successful investors, the ones who owned a
ton of property – like 30 or 40 houses each. They were just getting rich, rich, rich. I
started looking at what they were doing, and I realized they owned all these $60,000 or
$70,000 properties that added up to 2 – 3m in real estate. And when the market
appreciated, which it did at 10% that year, they just raked in the cash.
That’s when I realized I was missing the boat. Because the REAL money in real estate
investing? It’s made by holding property.
Why One House a Year Won’t Work
Most people approach owning property by buying one house and renting it out. And they
make, let’s say, $200 a month in cash flow, or $2,400 a year. Then, a few years later,
they have saved enough to buy another house, so they have $400 a month in cash flow,
or $4,800 a year. Then a few years later they buy a third property. So in about 10 years’
time, they buy three houses. Even if they buy a house a year, which is considered
aggressive, they still only own about a million dollars worth of property.
To give you a sense of how I invest, I’ve purchased more than a million dollars worth of
property this YEAR. Because the more real estate you own and have appreciating, the
more money you make.
So, for example, if your million dollar portfolio goes up 5%, which is a reasonable amount, you make $50,000.
And you can then take that equity out and buy another house, or an apartment complex, or another property. Then your
investments become a triple income stream – you’ve got the appreciation, you’ve got the
equities from the debt being paid down, and you’ve got the cash flow.
Again, the more you own, the more you make. And while 10 houses in 10 years isn’t
wrong, per se, it’s just too slow. It really comes down to mindset and how you want to set
up your financial future.
So, for example, let’s say you want to send your kid to college. You can just refinance
one of your houses and BOOM – give them $100,000. If you buy it when they’re young
enough, there’s enough equity that when you refinance, you can just pull that money out
or sell the house completely, and send your kid to college without saving a dime.
The Key Is to Think Big
The key to hitting your investment goals is to think BIG. Now, if you’re just a casual
investor looking to own a property or two on the side, there’s nothing wrong with that.
But if you really want to play in the big leagues, you’re selling yourself short by not
Instead of buying a house a year, if you moved that up to four or five houses per year,
you could have an investment portfolio of 5 million in 10 years. And that’s the kind of
portfolio you can retire off of. My friends with portfolios that size are kicking back on the
beach in Mexico with $300,000 to $400,000 coming in every year.
The bigger you think, and the bigger and faster you build your portfolio, the bigger the
rewards and the faster you can enjoy them.
Where to Invest
The country as a whole is doing incredibly well right now, so if you want to get into
investing, there’s no excuse – now is the time. Nashville is doing really great right now,
as we’re a little higher than average. But other areas, like Dallas, are killing it too. Do
your research and find the market that makes the most sense for you.
It all comes down to making the choice to take action and be more aggressive with
buying properties. For me, it was seeing my buddy who, at 34, got addicted to buying
properties, built a portfolio of 5 million, and started pulling in hundreds of thousands of
dollars per year while he was sitting around in his underwear.
My hope for you is that this post is the push you need to make the choice and start
aggressively building your portfolio, so you can start seeing those kinds of returns, too.