How to Work toward Becoming a Real Estate Mogul in 8 Steps
August 6, 2022
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Becoming a real estate mogul doesn't happen overnight, but with the right strategies, it's possible to become a millionaire investing in real estate. The key is knowing what you're investing in, researching, and diversifying your portfolio.
What Is a Real Estate Mogul
Real estate moguls are the wealthiest real estate investors in the country. They've built an empire for themselves using active and passive real estate investments. They may own residential or commercial real estate, often a combination of the two.
What Is an Investment Property
An investment property is the opposite of your owner-occupied home. It's a property you purchase to rent to tenants. For example, you can buy residential properties to rent to families or commercial properties to rent to businesses. The common denominator is that you charge rent to your tenants monthly and act as the landlord.
You might wonder what the best property for investment is, but there's no right or wrong answer. It depends on what you can handle, afford, and want to manage.
Best Places to Buy Real Estate in 2022
The best places to buy real estate fluctuate with the market. Avoid areas experiencing a real estate bubble. The increased values and profits are temporary and not a good choice for real estate investing.
Instead, focus on areas with equal supply and demand for rental properties, a strong economy, and a growing population and economy. You'll have your highest chance of earning regular cash flow and the best results from the real estate market.
Knowing how to start in real estate is the key to becoming a real estate mogul. Of course, once you buy your first investment property, the rest will become more accessible, but taking those first steps is important.
How to Find Investment Properties
Finding the right investment properties for sale takes some time and patience. After that, you can work on your own, perusing sites like Zillow and Redfin with a real estate agent or with a local wholesaler who has leads on the top rental properties in the area.
How to Find Real Estate Deals
Finding real estate deals is the key to becoming a real estate tycoon. The less you pay for investment properties, the more room there is for profit. However, be careful; areas with prices that seem too good to be true usually don't result in a profit.
To get the best deals, you might consider working with sellers directly, eliminating the middle man, or finding real estate auctions and foreclosures to buy at a discount, fix up and then make a profit.
Making the first investment property purchase is the step to becoming a successful real estate investor. Work with the real estate team you assembled to find the perfect property to buy and rent or buy, fix up and sell.
If you're looking for undervalued properties, you may need time to renovate the home to attract the best tenants or to renovate it enough to sell it for a profit.
If you need financing to leverage your investment, arrange it with a mortgage lender. This can take a little time since investment property loans are more challenging to get than owner-occupied financing.
With your first real estate investment purchase under your belt, it's time to add to your portfolio. But, before you do, assess how your first purchase went. Is there anything you would do differently this time around?
Are you earning the monthly cash flow you anticipated, or did you achieve the profits you hoped you'd make by fixing and flipping? What did you enjoy and not enjoy about the process?
Take what you've learned from the process and improve it for your subsequent purchases. Whether you're buying your second investment property or you're ready to add to your real estate portfolio, keep building your real estate portfolio to increase your earnings.
Becoming a Millionaire: How to Start a Real Estate Business
8 Steps to Becoming a Real Estate Mogul
Create a Business Plan
Treating your real estate investments like a business is the key to success, and all successful companies start with a business plan.
Your business plan should state your mission, goals, budget, and short and long-term objectives. Make it as detailed as possible, so you have a way to track your progress, make changes when necessary, and reach your goals of becoming a real estate mogul.
Research is key when you're learning how to buy an investment property. You should be able to research the market, the homes available in your target area, and the rent you can charge if you buy and hold properties.
It's also essential to research the area's laws and regulations for investment properties. For example, does the city allow rentals? Can you host short-term rentals or only long-term? Are there any other regulations that affect your earnings?
Select Sustainable Real Estate Markets
Avoid real estate markets with recent success but no solid history of positive returns. When you buy income-producing real estate, you want steady income, not bursts of income and then nothing.
Working with reputable real estate agents and other real estate professionals can help you find the most sustainable areas. Unless you're in the market to fix and flip fast, you want areas that hold their values to achieve your goal of becoming rich.
Limit Your Scope
It's not enough to choose an area to buy a real estate investment; you must also narrow down your options. Focus on specific neighborhoods or sections of the city that you'll purchase real estate properties to rent or fix and flip.
Narrowing your niche helps you become the expert real estate investor in the area, allowing you to maximize your earnings potential. However, if you want to become a real estate mogul, you don't want to spread yourself so thin that you can't maximize the earning potential of each real estate investment.
Acquire Down Payment
Building a real estate empire starts with your first investment property. You'll need a down payment that should come from your own funds (savings, investments, etc.) or the equity in your owner-occupied home.
If you have to borrow from your home's equity, allow enough time to process the refinance so you have the money available for real estate investing. Your first investment property will likely need a down payment between 20% - 30% of the purchase price.
Build Your Real Estate Team
Creating a strong real estate network is the best way to become a millionaire. Work with other real estate professionals who specialize in areas you don't. Together, you can make the most profitable decisions to help you build your real estate portfolio.
Your real estate team may include a real estate agent, home inspector, appraiser, and contractors to help you renovate the home.
Acquire Your First Investment Real Estate
Once you've checked all the boxes, it's time to buy your first investment property. This property will be the stepping stone to becoming a millionaire with real estate.
Your first property will provide the equity and cash flow required to invest in more investment properties. After that, you can continue tapping into each property's equity and cash flow to buy more properties, furthering your real estate investing goals.
Diversifying Your Portfolio
It's a good idea to diversify your portfolio to reduce the risk of a total loss. If we were to experience another housing crisis as we did in 2007 - 2008, you want a diversified portfolio to keep you afloat.
You can diversify by investing in different real estate markets or various real estate investments. For example, you might buy residential properties but then invest in crowdfunding or real estate investment trusts to invest some of your money in commercial properties without the burden of owning the properties yourself.
It's always good to look back and your investment's performance. Did your investment strategy work out how you planned or were there hiccups? Then, take what you learned from the situation and use it to improve your subsequent investments in the real estate market.
Residential Real Estate Investments
Look at the property's appreciation, cash flow, and occupancy rates. Is the home occupied as often as you planned? Next, evaluate the rents earned, expenses incurred, and your bottom line to decide if renting in the area you chose is the best or if you should diversify and buy a rental property in other areas.
If you fixed and flipped properties, did you make the profits you hoped? The real estate industry can be finicky so if you didn't meet your financial goals, consider looking in other areas to see if the profits are better.
Commercial Real Estate Investments
Commercial real estate can be tricky. You're at the mercy of how well the business succeeds. If the company fails, you lose too because they can't afford their rent. But, if you invested indirectly in commercial real estate, consider how the investments performed, if you want to continue contributing to the REIT or crowdfunding, or if you should look elsewhere.
How to Make Money in Real Estate: FAQ
What Kind of Real Estate Makes the Most Money?
Commercial real estate makes the most money, which can help you as you learn how to become a millionaire. It's a good idea to diversify your portfolio, including commercial and residential properties in your real estate investing portfolio.
Can You Become a Millionaire Flipping Houses?
With the right real estate investing strategy, you can become a millionaire. Of course, it won't happen overnight, and it might take some trial and error, but with the right strategy, you can make more than the average real estate investor and become a millionaire real estate investor.
How to Get Rich From Real Estate: The Bottom Line
One of the ways to become a millionaire is to invest in real estate. Becoming a real estate mogul takes time, patience, and support. With the proper steps, though, you can join the list of reputable real estate moguls who earned millions of dollars investing in real estate. Learn more by signing up and visiting our blog.
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