Close
Real Estate Investment News & Blog

3 Ways to Build Wealth by Investing in Real Estate Now

24

Investing in real estate is your best bet for building wealth.

According to the Federal Reserve, families’ median net worth fell almost 40% between 2007 and 2010, down to levels last seen in 1992.

There has never been a better day than today to prepare for your future. What can you do to achieve your financial goals and build wealth this year?

Here are three ways to build wealth by investing in real estate, and you can take action on them right now.

#1 – Roll into a Self-directed IRA and Add Rocket Fuel to Your Retirement

skyrocket your real estate investing success

Skyrocket your success with a self-directed IRA…

Are you ready to take control of your own retirement future?  Are you ready to begin to diversify your investments beyond the traditional stocks, bonds, and mutual funds? How about real estate investments?

If you answered “yes” to these questions, then you are a prime candidate to add rocket fuel to your retirement by using a self-directed IRA. Now is the perfect time to diversify.

The self-directed IRA is the best kept retirement secret in America. And it’s perfect for real estate investors because you can use your IRA funds to invest in real estate, notes, deeds of trust and mortgages, and other investments such as tax lien certificates.

#2 – Invest in Rental Property

investing in rentals

“If I had a way of buying a couple hundred thousand single-family homes…I would load up on them.” Warren Buffet

Prices of houses have dropped about one-third over the past five years and the overall rental market has strengthened.

There are a variety of real estate investment possibilities when buying rentals including commercial, multi-family, and single-family homes.

Warren Buffett recently made the following statement on Squawk Box on CNBC, “If I had a way of buying a couple hundred thousand single-family homes…I would load up on them.”

He went on to make more remarks concerning low interest rates, low prices and valid points regarding why he likes single-family homes. I applaud Mr. Buffett. He has an accurate picture of the housing market as an overall investment platform. He also remarked that, “single-family homes are cheap now.”

I agree. Today’s real estate market is the best market opportunity of our generation. More real estate wealth will be made now than any time in recent history.

What is holding you back from investing in rental property? If you said tenants, then this next wealth-building opportunity is perfect for you.

# 3 – Build Wealth Without Tenants, Toilets or Time

passive real estate investing

Wealth building without tenants, toilets or time…

If you are a true “passive” investor and have the funds to invest and allow your money to work for you, then you are the perfect candidate for joint venture real estate investing.

Your investment funds can joint venture with an experienced real estate investor and you can create great returns and cash flow.

Discounted Real Estate
In today’s real estate market, a good real estate investor should be able to find and acquire houses at a 40% discount price. That means the purchase price plus all the necessary repairs will not exceed sixty percent of the value of the house.

Here’s an example:

Purchase price of house: $50,000
Necessary repairs to house: $10,000
Value of house after repairs: $100,000

The total investment is $60,000 and the house is worth $100,000 which equates to a 40 percent discount on the overall value. Looking at it the other way, the $60,000 investment has $40,000 of built in equity upon purchase of this property.

Monthly Income Stream
In my market here in Richmond, VA, a house like this one will be a typical 3-bedroom, 2-bath house in a county suburb working class neighborhood. This house in Richmond will rent for $900 per month and create a nice monthly income stream for the joint venture investment.

The primary on-going expenses associated with holding real estate are taxes and insurance. In Richmond, the taxes and insurance combined will be about $150 per month for the house in this example, which leaves $750 net for the on-going monthly income stream for the joint venture.

The $60,000 investment has now been used to pick up $40,000 of gross equity and a $750 monthly income stream.

For the sake of simplicity, let’s assume that the two joint venture members agree to a 50/50 split in this venture. With a 50/50 split, the $750 monthly income stream is split so that both members receive $375 each month. Both members will also share the upside equity at some point in the future.

Overall Earnings
Let’s make one last assumption to show how the ultimate return can be easily calculated for both members of this joint venture.

Let’s assume that both members hold onto this investment property for five years and then sell it for $100,000, which is today’s value of the house. What are the earnings on this joint venture?

Investor Earnings
$375 per month for 60 months: $22,500
Upside equity split of the total $40,000: $20,000
Total return over the five years: $42,500
Total investment made: $60,000
Annualized return on investment: 14.16%

This is an example of a win-win transaction for a passive investor who can joint venture with a sharp real estate investor. The passive investor invested $60,000 and received earnings of $42,500, which is an annualized return of 14.16%.

The key is to joint venture with the right experienced real estate investor who can do all of the work and keep your investment safe. The returns are high and the passive investor does not have to deal with tenants or toilets or commit any of his personal time.

What is holding you back from creating your wealth using these three real estate investment strategies? Leave comments or questions, and I will be happy to respond.

Sign Up for the CRE Online Newsletter Today ... It's FREE!
Get our best real estate investing information delivered to your inbox.
look!
24
About the Author...

Jim Ingersoll is a real estate entrepreneur who has bought and sold hundreds of homes. He is the author of Investing Now and Cash Flow Now (both available at Amazon.com), and enjoys speaking and coaching others on how to obtain their financial freedom.

Jim is Head Real Estate Coach and Trainer at: Coaching.CREonline.com

His website is InvestingNowNetwork.com

You can find Jim on Facebook and Twitter.

Comments

  1. Lloyd says:

    Now, I agree with the content of the article. I myself have been interested in real estate investing since the beginning of the year. I have heard so many claims of, “how to invest in real estate with no money down, no credit” and I am asking, how do I realistically do that? I am real eager to get started. I literally have ve no money to my name and have taken real estate home study courses, but have not yet made or encountered any deals. My credit, forget it. In addition, I have just finished real estate school, got licensed as an agent and haven’t effected deals yet. What are your suggestions? I seek clear solutions. I want to invest in real estate for transactional and passive income flow.

    • David Griffin says:

      Offers, make offers! Lots of offers. Jim wholesaled 200+ houses in 2007. I figure he made about 3 offer per day!

    • Dee Dee Tate says:

      David is right about making a lot of offers. You also need to do a lot of research on transactional funding and possibly find a partner to work with on your first real estate deals. Particularly, a partner who knows the ins and outs of investing to help you learn.

      There are so many avenues for investing and making money, you need to look into the one that is right for you – purchasing a rental, buying a house and rehabbing and selling, buying and selling a short sale in a quick time period and a vast array of other options. I will be looking at all of these as they apply to the Sarasota-Bradenton-Venice, FL market. It is a constant learning experience.

    • Terrell says:

      Do not let anybody fool you. Having money and good credit means everything. I live in Baltimore, Md and currently own 5 houses with 14 units. It’s money to be made, but it’s not going to be all smooth. My propertis is a mixture, 2 rooming houses, 1 condo, 1 single family, 1 two unit apt blg. All purchased with my own money and excellent credit. You can use OPM, but you will miss out on a lot of good deals. I was also a license realtor in Maryland for 12 years until summer of last year. I also work a fulltime government job. You can do it, but you need MONEY.

  2. Mathiey Joseph says:

    Great article Jim! Times are so critical that it calls for investing knowledge. Just like you poimt out Jim, there is no better time than now to acquire low priced real estate.

    Mathieu Joseph

  3. Lotus Flower says:

    I am in similar situation. My credit is OK, but “thin”, Not much extra money after basic expenses and since I’m only employed PT I can’t get a mortgage (OK, I’d rather do something with creative financing anyhow . . . being in debt to a bank scares me). I’d like to do some quick deals for enough cash to make a down payment + team up with some cash-laden individuals on my first cash flow property, but am not really decided yet on the best approach to get started. I’m hesitant on wholesaling because I don’t want to be the “noob” that gets taken for a ride by the seasoned pros looking for a cheap deal.

  4. From your article;
    Warren Buffet recently stated, “If I had a way of
    buying a couple hundred thousand single-family homes…I would load up on them.” Really ? and then do what with them Warren ? Truth is Warren has the capitol to do it but the big question is Why isn’t he If Real Estate is such a great opportunity ?
    Why aren’t there more investors flooding the local REI clubs making and bragging about the sweet deals they’ve made ? (Its just human nature to do so) . Most of the folks I’ve met at my local club live paycheck to paycheck and are no where near where they would like to be.
    What about the shadow inventory I’ve heard about that the Banks are sitting on ? I see plenty of vacant houses most of which have been that way for years why aren’t those houses that I’ve been told are the ones to be looking for being snapped up ?
    There are no guarantees this housing market will ever recover to the levels they were once at. Property values continue to fall and what may have been a good deal today might be your financial nightmare tomorrow.
    It leads me to wonder if we’re all just playing the greater fool game.

    • Marion N. says:

      The reason Warren said he hasn’t bought a couple of hundred thousand of single family
      is due to the management and acquisition team to find each one according to his criteria. Just imagine if he bought a house a day how long it would take to buy a few hundred thousand
      As far as the housing market prices coming back. It don’t matter because you should invest for cash flow not appreciation.

  5. Jim Ingersoll says:

    Thanks for all the great comments and questions, keep them coming!

    Lloyd and Lotus – The good news is you can capitalize in real estate in your situations. You need to invest in yourself and be prepared so that you can joint venture with someone who has the funding. Lots of people are tired of the stock market and earning less than the inflation rate in a CD right now. I encourage you to read through the forums on this site, ask questions here on the blogs and in the forums to help you get started and gain confidence to move forward. Wholesaling is a good place to consider starting, but long-term you will want to invest in assets that provide you cash flow.

    Mathieu – You are point on! Market is best of our generation for buying real estate assets for cash flow

    Todd – I think the constraint Warren Buffett has is he does not know how to fix them all up and manage them. He has all the funding possible, but without experience on managing the tenants and property he can not do it. That is the beauty of a joint venture – One person puts up all the money (like Buffett) and the other person does 100% of all the work (finding property, negotiating, fixing and managing). They can then split up the monthly income and future equity. The funding partner should be able to get a 15% return and it can be a win-win for everyone involved when done correctly.

    Thanks Everyone for the comments and questions
    Jim

    • Josh Kvidt says:

      Great idea on the joint venture. Keep up on the postings, they are much appreciated. I guess I would also like to seeing to key to connecting with a true savy real estate investor.

      • Jim Ingersoll says:

        John

        Thanks. I believe joint ventures are the best way to go on investing in today’s market.

        Jim

    • I’m looking at a joint venture, the guy that I’m looking at partnering with has poor credit. I’m the money man, what is the standard percentage on something like that? Are there contracts out there for joint venture real estate partnerships?

  6. David says:

    There are too many problems with renting out single family homes. Renters skipping out, letting the property run down, that unexpected pipe bursting that needs expensive repair. No thanks!!

    • Lotus Flower says:

      @David you do have to pick your tenants carefully— I’ve learned some interesting tidbits about that from listening to some Jack Miller seminars. They can be hard to find but worth the trouble to weed out and keep longterm without giving you problems. He also recommends putting in the lease that the tenant is responsible for a set amount of repairs (say, the first $100 of any service call), which helps cut down on frivolous calls and makes them less likely to do something stupid. OR you can hire a property manager to deal with all of that entirely— of course it would cut into your bottom line, but the tradeoff may be worth it to you? There’s also master lease arrangements in which you’re not responsible for any repairs at all because you don’t actually own the property, you’re sub-leasing it.

  7. Jim Ingersoll says:

    Lotus Flower – Right on, I have seen Jack Miller a lot of times and miss him since he passed. Master leasing is an excellent way to get started without needing cash or credit as well.

    As you being to collect real estate assets it is critical to become a great manager. That is one major piece that Warren Buffett does not have in place.

  8. Michelle says:

    Great article I am most interested in setting up the IRA how to I get started with them. I recently borrowed against my 401K how does that affect moving my 401k over to a IRA account or has my door closed as a result. Thank you

    Michelle

  9. Jim Ingersoll says:

    Hi Michelle

    The self-directed IRA is the best kept financial secret that I know. It is a tremendous tool that can be used for investing in alternatives to stocks, bonds, mutual funds and CDs. There are some excellent SDIRA custodians you should double check with regarding the specific question on the loan from your 401k.

    I am happy to share them with you if you need a referral.

    Thanks
    Jim

    • Jim,

      i would love some contacts if you would email them my way in the sdira space that allow for real estate holdings. I have a portion of my retirement in a self directed plan already but thry dont allow any re holdings outside of reits

      Thanks, Tom

      • Jim Ingersoll says:

        Hi Tom

        I recommend you contact Quest IRA and speak with Ryan Kimura, 281-492-3434

        You can hold real estate assets in your SDIRA, no problem.

        Congrats on moving forward.

  10. Jim
    I would like to use my IRA to get started in investing in Tax Liens. I have tried looking into converting it to a self-directed IRA but was told that setting it up would be very expensive – $1,500 or more. I’m not willing to lose that much. What are my options? How would you recommend I get started? Thanks for your imput.

  11. Jim Ingersoll says:

    Hi Barb

    Rolling it over into a SDIRA should not be that expensive. If you email me, I will send you some contacts for reputable custodians who you can contact and confirm their fee structures.

    It is not hard to roll into a self-directed IRA and worth your efforts so you can invest the way you want.

    Jim

  12. leonard zwane says:

    Thank you very much . it is an honor for me that you are sharing this information. I am learning a lot. I also have few rental properties in my country Swaziland. The problems seems the same. Please do consider that in my country we have no organizations doing seminars on investing. So getting these literature from you web is very crucial for my survival in the game of real estate investing .Please keep it up.

  13. Jim Ingersoll says:

    This is the site to be on for all your real estate investing information. Glad you can connect from Swaziland!

    Jim

    • how does an investor find a property at a deep discount of 40%?? Maybe on
      a rare occasion you find some kind of deal but to make a regular living trying to find the needle in the haystack seems like an unrealistic way to build wealth.

      Are you one such partner that can find such great deals? How do I find others? I have the cash, but not the know how of landing huge 40% discounts deals

      • Jim Ingersoll says:

        Hi John

        Good point on the value of a strong real estate investor, catalyst, that can find these kinds of deals. They are available, but not always with a broker, sometimes they come seller direct.

        It is not hard to find them with a 40% discount level, but the challenge is to find the best ones available at this discount level and in the better locations.

        If we can buy at prices from 10 + years ago and rent for prices of 2012 we have a winning formula.

        You can email me and I will send you my report on keys to finding and working with the right real estate investor.

        Thanks
        Jim

  14. Blue Fern Real Estate says:

    Great post Jim! Now is one of the best times to start building your wealth with where the market is today and where it is predicted to go in the next few years!

  15. Tianna says:

    What a great article! One of he problems that I am running across is funding. I recently purchased a home a few months back that needs some work. I have fixed up what I could but now i am at a stand still because of funds. What would be a great way to handle this? Currently I am working P/T so I don’t have a lot of extra to put into it. Once it is complete, i will have some cash flow to purchase my second rental property.

  16. Jim Ingersoll says:

    Tianna

    Congrats on getting started. The answer depends on a number of factors, mostly relating to the way you purchased the house you are working on. Did you pay cash, get a bank mortgage, seller financing, etc?

    You could find a private lender to fund the rest of your repairs, You could structure the additional capital with either traditional debt financing or offer equity financing. That would provide you with the funds to finish the house.

    best of luck
    Jim

  17. jerlie says:

    Hi Jim, I have invested almost 30k of learning how to invest in Real Estate. And i am still learning. And i do not know where to start???? I have attended a Summit. I also wanted to buy my first investment, as i understood,, that they are going to provide 3 sales in the event. But due to lack of funding, I did not able to.
    also you have to buy the asset protection package. So i was lost.
    My question is, Is there any establishment, where you can borrow to buy and hold???? I think, it is easy for me. I was thinking, holding it for a year and sell after. Please need your advice.

  18. Building Certifiers Brisbane says:

    Thank you so much for new thinks of real estate . It’s very helpful to me and the team.
    Thanks a lot.

  19. david petri says:

    I am on SSDI need To know if a self directed IRA will let me invest in county tax sales without loosing my SSDI How does that work

  20. Hello this Lorna, I am a newbie and trying so hard to make my first deal, I study so many books , and techniques and so overwhelm , I see that cre online have great cutting edge. I strongly want to flip and rehab, I hope I say it correct. On single family homes I am wondering if that’s a good way to start? The no money down is it really for real that you can buy homes with no money down, I am kinda confuse can anyone help I need to come out of my situation .
    Thank You
    Lorna

  21. Rubina says:

    Thank you so much for this informative blog.

What do you think? We would love to hear your opinion.

*

Hide me
Let Us Help You Achieve Better Results. (IT's FREE!)
Name Email
Show me