If you ask the majority of people, they will tell you that real estate is one of the best places to build wealth available today. Everyone wants to own property, and with all the benefits – hard asset, equitable appreciation, demand – it will continue to be a great place to make money.
So if real estate is so great, then why do so many people struggle to succeed with it? Well the answer is multi-faceted.
First, let’s take look at one of the major trends of the investing market. In today’s market, the trend is towards the “Flip This House” type investing. People are being inundated with fix and flip, and wholesaling type investing information which is geared towards the quick cash, “make money now” mentality. It’s all about, get it, move it, make money, celebrate. You find a property, then turn it quickly for a profit.
The challenge with this type of investing, is that you work, make money, then you have to go find your next deal to get paid again. Meantime, in between deals, you are not making any money as you pay bills, buy food, buy stuff, and support your lifestyle. If you don’t make money again soon, you will run out of money. You are constantly chasing the Golden ring to get paid again. YOU are working for your money. This type of wealth-building, is “attainable”. You are making money, but you are in a constant state of getting large peak influxes of money, then it is always going down while you hunt for your next deal.
The majority of investors strive to “get rich” and build up their wealth so they can retire and live the life they always dreamed of – traveling, possessions, freedom. Buying and selling can build you large reserves of cash when done correctly and consistently, but unless you have a sufficient plan of what to do with the money, you will just be working, working, working to keep ahead. Large cash reserves dwindle over time (just ask any of the 85% of lottery winners who get large sums of cash, only to blow through it and be left with absolutely nothing).
To build real wealth, that accumulates, grows, and allows you to have freedom and live the life of your dreams, it must be sustainable wealth.
Sustainable wealth is the type that grows over time, while at the same time pays you dividends at regular intervals (monthly, quarterly, etc).
YOU don’t work for your money, your money works FOR you. This can be accomplished in a variety of ways, one of which being holding properties. Buy-and-hold deals such as rental properties in which you can buy and fix the property – like the fix and flip – but instead of just selling the property, you refinance it to pull out your purchase and fix up capital (plus a little profit), then hold the property for monthly cash-flow (as long as it will produce a positive cash-flow). This will get your investment capital moving again, plus put profit in your pocket AND give you a monthly income that grows with each property you buy. You will also experience equity growth over time, and an increase in your income from rental increases.
This model is more sustainable as it sets you up to generate a monthly income that pays you forever. When I first started investing back in 1990, I bought rentals and built up a 5-figure net monthly cash-flow in just my first 18-months in the business.
Flipping houses and wholesaling is a great way to make money, but to set yourself up for long-term financial wealth, you need to incorporate both a mix of flipping houses, and holding houses. This will give you influxes of large cash payouts from the flips you do, as well as creating long-term stable sustainable wealth from the deals you hold.
The Trump’s, Rockefeller’s, Carnegie’s, Hilton’s and countless other Billionaires of the World don’t just “flip” properties, they buy and hold businesses for cash-flow and sustainable wealth.
That’s the real secret to creating a life of your Dreams!