I was recently contacted by a well-known real estate guru whose name you would instantly recognize. I’d never spoken with him before but apparently he got my phone number from a mutual friend.
This guru told me he had a big project in development and wanted me to be part of it. But first, he wanted to know how I was making money these days and what I was personally doing. I told him that today I was doing a lot of subject-to’s and that I was trying to acquire a lot of rental properties to hold onto for the long term.
After all, the real estate market is still in the tank in many places and you can pick up bargain rental properties and just sit on them until the day you die. In fact, that’s the dirty little secret that nobody wants you to know.
The “Not-So-Secret” Formula to Wealth: Build Your Rental Portfolio
If you really want to become wealthy as a real estate investor you need to own multiple (quality) rental properties and you need to pay them off over time until you own them free and clear. That way, when you retire you’ll have a nice “pension” of $10,000 or more coming in every single month thanks to your properties.
Anyway, when I told the guru this is what I was personally doing these days he said “ohh” and there was a long silence. I was then informed it wasn’t “sexy” enough and that he didn’t think I’d be a good fit for his project. I told him I understood, but that’s what I was doing.
Don’t Forget: Gurus are Marketers
I realize he makes his living selling courses and boot camps and to tell you the truth, I have no problem with it. If people are willing to pay up for his material, then good for him.
However, I do not make my living selling products, therefore I can tell you the truth of what works in real estate without the worry of losing sales or not appearing “sexy” or even without the worry of offending people, because I don’t really care.
Because I know that if you accumulate a “buy and hold” portfolio of just 10 properties… and if you pay them down over the years with money from your other deals, then you’ll have enough income coming in to live a very comfortable life.
It may not be sexy, but at least it’s true, and at least if you follow it you won’t be broke in retirement like far too many Americans.
Photo: dantwohundred
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Article Author: Jason HansonJason has written 186 articles for us.
Visit Jason's Website: http://www.PrimoCoach.com
Jason R. Hanson is the founder of National Real Estate Investor Month and the author of “How to Build a Real Estate Empire”. Jason specializes in purchasing properties “subject-to” and has purchased millions of dollars worth of property using none of his own cash or credit.
Joshua Dorkin
{ 9 comments… read them below or add one }
Isn’t it crazy how simple it is to some degree. Watch your money, buy and maintain rental properties, learn some stuff on managing your tenants and you have a pretty great retirement set up for yourself. Still people say it can’t work because its not sexy enough and you don’t need a hyped up seminar. The other side is the people that see it for what it is and don’t want to put in the work of being a landlord. These folks have clung to a pension that afer 40 years gives maybe $2,000 a month at best when they don’t realize that they could easily cut 10-15 years of work off and get that $10,000 you were speaking of. That just leaves the opportunity for the rest of us I guess. That makes it easy to share all this simple knowledge with as many people that want it. All goodwill for me.
The “Gurus” sure have their marketing game on these days! My investor buyers in Vancouver are picking up houses in the neighborhoods they want, and at the price-points that fits their long term strategy. Nice and simple!
Hey Jason — You just raced to the top of my Christmas ‘A-List’. It really isn’t rocket science, is it?
Lord, I hate the word guru.
Love it! Great post and great to hear what is actually working out there. Love the pic too
I have been to a few REI seminars locally and to see what type of ROI your getting from rentals (15-25%). It’s ridiculous and with the Phoenix Rental Market being strong there is no shortage of high paying tenants. If more people were educated on this topic I bet that we would have alot less inventory causing a stabilization in values. 20-25% down and up to 10 financed properties, We have no shortgage of available financing either. Knowledge = Wealth?
-Electric Loan Officer
Justin, is your 15-25% ROI based on a buy&hold or a fix&flip? If it is buy&hold how long is the hold period to get that number? If you go to Revestor’s ‘Exit Strategy Calculator’ you can see a lot of higher ROIs in Phoenix than that. The calculator is defaulted to ‘buy&hold’ based on 5yrs with a 4% annual appreciation rate. You can adjust the appreciation to 0% or whatever you feel is conservative. I like to adjust it to 0% so you can see what the ROI is without appreciation being a factor. Investors today should never buy based on the potential for appreciation alone and should understand that it is a bonus (or some would say a gift for living in America and not Afghanistan). Let me know what you come up with. I’d like to hear what zip codes and specific properties you find. Feel free to send me the unique URLs of the detail pages and what adjustments you made to each one.
Bill, I don’t have a specific property in mind or even a specific zip code and the numbers this RE team presented were based on buy and hold and they were not considering any asset appreciation. They were just using net rental incomes after expenses and property managers. I see people losing money in their 401k’s and people who actually claim to have decent returns are getting 5-9%. Real estate makes much more sense to me and with low rates and a ridiculously inflated rental market there is not reason not too.
Justin, I have a couple to show you but I don’t want to post the links and violate the comment policies. Do a search in ’85251′ (old town Scottsdale) and let me know what you think or email me for the links. Bill
This is not surprising since many gurus make money selling their guru products instead of actually investing in real estate. I can’t blame them either since it’s way easier to sell info products rather than investing.
IMHO, building an actual real estate portfolio is the best way to accumulate real estate wealth.