How to get rich in real estate in a 10-15 year time frame

Can you make good money in real estate?

A Real Estate agent in California may earn up to $73,450 on average per year, according to the Bureau of Labor Statistics. Agents of Real Estate in California earn some of the highest salaries in the nation. Hard work is an essential part of the success of any career, and it is especially true for real estate agents.

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Invest In Rental Properties

A prime rental property can bring in monthly income and appreciate in value over time. Before taking the plunge, though, buy-and-hold investors should consider a list of factors. These include rental rates, a property’s asking price, the state of the housing market, state and local taxes and appreciation potential, said Alex Villacorta, executive vice president of analytics at HouseCanary, a data analytics real estate platform for investors, realtors, brokers and lenders. “Most of these factors change from neighborhood to neighborhood and even from block to block,” Villacorta said. “There are still pockets of opportunity in most markets where home prices remain relatively low and price growth is very strong — a perfect combination for buy-and-hold investors who are seeking to increase their wealth through rental investment.” Avoid These:  Craziest Things That Kill Your Home’s Value

Get Your Foot in the Door Through Crowdfunding

Crowdfunding pools money from multiple investors — often through online platforms — to fund a project or real estate development.

"This strategy provides an unparalleled opportunity for first-time investors," said Ralph DiBugnara, president of the online real estate information guide Home Qualified and vice president of retail sales at the mortgage lending firm Residential Home Funding Corp. "Crowdfunding makes investing approachable and affordable by allowing investors to buy shares of a property rather than an entire residence."

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What of wealth comes from real estate?

Investing in real estate has enabled almost 90 percent of all millionaires to be created over the last two centuries. Real estate offers the most potential for significant wealth development for an average investor.

Research REITs

Real estate investment trusts, or REITs, are companies that own and often manage income-producing real estate or related assets such as office buildings, malls, apartment buildings, hotels, resorts, self-storage facilities, warehouses and mortgages or loans, according to the U.S. Securities and Exchange Commission. Many REITs offer attractive returns and are a good way to add depth to an investment portfolio, said Melinda Kibler, a certified financial planner and client service and portfolio manager with Palisades Hudson Financial Group in Fort Lauderdale, Fla. “REITs are not only valuable as a diversification tool, but also help with volatility and as a hedge against inflation,” she said. “As inflation increases, typically so do real estate pricing and lease rates, therefore boosting performance.” All these factors make REITs a relatively safe investment with high returns.

Other Ways to Invest in Real Estate

One option is an informal residential real estate option, which requires that you pay a fee, or premium, to have the right to buy a house for a specified period for an agreed-upon price. You then find investors who will pay more than your option price for the property. In this case, the premium you get is essentially a finder’s fee for matching a person looking for an investment with a person looking to sell—no different than a real estate agent’s commission, really. Although this is income, it doesn’t come from owning (i.e. holding the deed to) a piece of real estate.

Other options include:

  • Short sales—this involves purchasing a home from a lender when the mortgagee is behind on payments. Short sales can be a time-consuming and complicated proposition.
  • Lease options—these are what the name implies. When you lease with an option to buy in a bull real estate market, where prices are rising, you may be able to complete the purchase later at a lower, pre-set price, or make a profit by selling your purchase rights.
  • Contract flipping—instead of flipping houses, this type of flipping involves the transfer of the rights of a purchase contract to another buyer. If you can locate distressed sellers and motivated buyers and bring them together, you may be able to make a profit this way.

The Role of Inflation in Property Values

When considering appreciation, you have to factor in the economic impact of inflation. An annual inflation rate of 10% means that your dollar can only buy about 90% of the same goods the following year, and that includes property. If a piece of land was worth $100,000 in 1970 and it sat dormant and undeveloped for decades, it would still be worth many times more today. Because of runaway inflation throughout the 1970s and a steady pace since, it would likely take more than $700,000 to purchase that land in 2021, assuming $100,000 was fair market value at the time.

Thus, inflation alone can lead to appreciation in real estate, but it is a bit of a Pyrrhic victory. While you may get five times your money due to inflation when you sell, many other goods cost five times as much to buy too, so purchasing power in your current environment is still a factor.

Become a Home Wholesaler

Wholesaling is essentially a fast flip in which a wholesaler inks a contract with a home seller, then sells the home to another buyer at a higher price before the first contract closes. The wholesaler's contract with the homeowner typically includes a contingency clause that lets the wholesaler out of the deal if he or she isn't able to find another buyer, limiting risk for the wholesaler.

The deal offers advantages to the home seller and end buyer because the wholesaler takes over marketing a property, which might need repairs or have other issues that make it a hard sell. At the same time, end buyers who are willing to make repairs themselves could sell some homes at a hefty profit down the road or rehab the space for themselves in a neighborhood where move-in-ready properties are beyond their budgets.

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