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BlogArrowReal Estate Investing BasicsArrowThis One Factor Makes Growing Your Wealth Almost Guaranteed
Real Estate Investing Basics Dec 23, 2020

This One Factor Makes Growing Your Wealth Almost Guaranteed

Tamar Hermes
Expertise: Coronavirus Updates
19 Articles Written
patient-investor

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Being around new real estate investors every day gives me a glimpse into the trials of getting started. Is real estate too good to be true, and does it only work for the lucky few? Chances are, if you are learning from BiggerPockets, you have a sense the possibility is alive for you, too.

There is one factor that makes it work for anyone and evens the playing field. The factor is time. I won’t leave you hanging with the answer without an explanation. Hopefully, this will put some of the sleepless nights, frustrations, and worry to rest.

You Won’t Make $1 Million Overnight

Most experts agree that if you are looking for a quick way to get rich in real estate, you will likely need to take on many risks, and you will still need to work at it diligently. But if you don’t want the risk and the stress, growing wealth in real estate is doable, regardless of your circumstances. You just need to be patient.

In a recent BiggerPockets Blog post by Brandon Hall, he argues that 10 years is too long to wait to become a millionaire. He says you should be working at growing a profitable business to earn wealth more quickly. While I agree that creating a substantial income stream to invest is important, I disagree that 10 years is too long to grow a portfolio.

I also believe that it’s possible that single-family homes or passive investments can get you there over time. It depends how you define massive wealth for yourself. You may be able to live comfortably on the income from 10 paid off single-family homes.

Related: 7 Reasons You Should Consider Investing in Single-Family Homes

Surviving Times of Uncertainty

Even if a property goes down in value, you only lose money if you sell it. During COVID-19, I had a non-paying tenant. I chose not to get a mortgage forbearance because I did not need the funds to cover the rent, and I did not want it reflected on my credit report. Because I could cover the payment for a few months, I now have a new tenant paying rent at over 1% of the purchase price from one year ago. (I was lucky that I was able to get the tenant to move amidst the pandemic.)

My property manager is working on getting the lost rent returned, but even if I lose a few thousand dollars, my property is appreciating. My cash flow also happens to be excellent. In 10 years, the loan will be one-third paid down on a 30-year fixed rate of 4%, my tenant will be paying more rent, and the property will likely appreciate. These are just some of the many features I appreciate about owning single-family homes.

Buy Where It Makes Sense for You

We all want the crystal ball to tell us the best place to buy. If you do your due diligence, you will see there isn’t one answer. You can purchase properties in many places if you get a reasonable price. It is more important to buy in a state where you have a good property manager, where people are moving, and where there is job growth.

It’s most important to select a place and make the purchase. Remember, time is your best friend in real estate. Time will ultimately make your numbers grow. Global Property Guide boasts numbers of how hot the real estate market has been during the pandemic and reflects upon 25-50% price drops during the big crash of 2008. Through those hard times, the people who could afford to hold their real estate found their investments were worth a lot more in 2020 than their original purchase.

Rinse and repeat

The key to the time equation is to continue buying properties. Clients will often tell me they want to replace their income with $10,000 a month of passive earnings. They will ask me how many properties they will need and are shocked when I tell them 30-80! Yes, if you are making $100-300 per unit after subtracting all expenses from your rent, this is about how many doors you would need.

Related: How to Build Your Real Estate Portfolio Faster Using “The Stack”

The same is true if you are investing in syndication deals. You can count on exceptional returns over time, 8-17%. But you need to add to the amount you are investing consistently to keep growing your net worth. Many hold times for these types of deals are 3-10 years. Again, standing the test of time is what helps you grow your money.

Syndication offers apartment buildings, commercial properties, storage units, and mobile home parks to invest shares as an owner in the deal. A sponsor is responsible for purchasing and overseeing the management and will generally pay you a return monthly or quarterly between 6-9% until the property sells and you get the bulk of the profit. It is another excellent way to put money into real estate and watch it grow over time. When compared to the stock market, the decreased volatility in real estate and the returns win.

Invest for the Future

Buying and holding real estate investments doesn’t give you the quick surge of money like a flip. It does stand the test of time, though. This theory is correct for stocks and any other sort of investment, too.

It may not be that exciting to have to wait a long period to get to the millions, but if you are aggressive and continually follow the process and go about your life, you will be wealthy before you know it.

The long-term play has worked for me, as well as countless others. It isn’t overly aggressive but is hugely lucrative and doesn’t leave you feeling vulnerable to the market swings, COVID-19, or any other factor that can come into play as the world and economy continue to shift and swing.

You may be sitting on the sidelines waiting for a downturn in the market right now, but be sure to get yourself ready to make a move when you find property that meets your criteria. You have little to lose by diving in and so much more to gain—especially when you look forward 5-10 years.

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How does time factor into your real estate investing?

Share with a comment below!

By Tamar Hermes
Tamar Hermes is a full-time real estate investor and educator. After building successful businesses in the retail and entertainment industries, she turned her attention to real estate with a mission to get more women to become investors and continue to build her portfolio. Tamar has been investing for over 20 years with a focus on appreciation with buy and hold single-family homes and duplexes in Los Angeles. In the past few years, she has expanded her portfolio to include passive multi-family investments across multiple states, private lending, and Airbnb properties. She bought her first duplex when she was 28.
Read more
11 Replies
    John Murray from Portland, Oregon
    Replied 2 months ago
    I'm a multimillionaire and can tell you how to become one. Narrow your competition so that profit is maximized for hours worked. Gain skills that others do not have, this may include a bunch of hard work and study. Forget what you learned in school and begin to find your vocation that does not include a job that has earned income. Forget about your passion that will be a liability. You will have to put in about 100 hours per week and when the time is right jump off the middle class treadmill. Take care of your health, exercise and go after your expertise in wealth building. If you do this you will join about 11,000,000 households that have accomplished this.
    Ryan Carmona from Playa Del Rey, California
    Replied 2 months ago
    Probably some of the best advice I’ve ever heard. Thanks for this.

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    Michael Plante from Deland, FL
    Replied 2 months ago
    There is no secret I’m a multimillionaire Actually wrote a book about it I did follow my passion Didn’t work 100 hours a week. Was profitable the first week of my business Never learned anything that wasn’t already out there. Actually just followed what I had seen was successful by similar companies Just tired, failed and tried again Retired at 47
    Francine Haynes New to Real Estate from Texas
    Replied 2 months ago
    I am starting in my 30s hoping and praying I can retire before my 50s.

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    Michael Plante from Deland, FL
    Replied 2 months ago
    Wanted to add There are thousands of ways to me one a multimillionaire I Never had investments and never got a loan. Started with $150

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    John Morgan Rental Property Investor from Grand Prairie, TX
    Replied 2 months ago
    Great article! Having a W2 job at the same time definitely helped me acquire 10 single family properties worth 2 million in 5 years. But it’ll take my tenants 15 years to pay off all my loans for me to be a multi millionaire in real estate. The slow and steady will eventually win the race!

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    Donald Barre from Adelanto, CA
    Replied 2 months ago
    Time is your best friend. Thx, I need to definitely keep that in mind on a daily basis

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    Keji Ogunleye
    Replied 2 months ago
    Focus, consistency, patience this will get you there.I started investing in RE in my 30's ,made some mistakes, made lots of money in flips, now all the rentals we have is owned free and clear..Still plan to acquire more properties, slow down on flips. Now in my 50's I can say we are millionaire if I actually checked the equity in all the propeties, so time and focus.
    Tamar Hermes from Los Angeles, CA
    Replied 2 months ago
    @Keji Ogunleye thanks for sharing. You are living proof that real estate works!! Happy holidays😊

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    Michael Van Brunt Real Estate Agent from Cameron, MO
    Replied 2 months ago
    Thank you Tamar. Many people (myself included) find it difficult to be that patient. I am 50 and my "go big or go home" mentality has cost me a couple times. We just started in real estate 2 years ago and have 5 properties with a total of 8 doors, all on 20yr notes, that cash flow about $200/door. I love it because they are close by and have been inexpensive to get into. The problem is they are not in appreciating areas. I'm sure when or if we sell them we will only get back what have into them. We live in a small town (1800 people) in MO and have just bought properties near us. I would like to get into bigger markets that will appreciate as I want to be able to sell and capture appreciation by age 60. Slow and steady has not always been my mantra, but I certainly do see the wisdom in it.

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    Tamar Hermes from Los Angeles, CA
    Replied 2 months ago
    @Michael Van Brunt Congrats on getting to the 8 properties! Yes, $200.00 a door is great but without appreciation you don’t get that benefit. You do get the loan pay down though and you might be able to take advantage of some tax write offs if you qualify as a real estate professional. I know a great turn key provider out of Rochshester MN. Houses are likely more than what you are paying, maybe $200k but do appreciate. Let me know if you want to connect with her.

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