{"id":187784,"date":"2026-05-05T08:24:53","date_gmt":"2026-05-05T14:24:53","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=187784"},"modified":"2026-05-05T08:24:57","modified_gmt":"2026-05-05T14:24:57","slug":"why-some-real-estate-investors-build-wealth-faster-than-others","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/why-some-real-estate-investors-build-wealth-faster-than-others","title":{"rendered":"Why Some Real Estate Investors Build Wealth Faster Than Others"},"content":{"rendered":"

Imagine two investors, Grinding Gretchen and Relaxed Rachel, who both start with $50,000 to invest.\u00a0<\/span><\/p>\n

Most people\u2014including Gretchen\u2014think they\u2019ll spr<\/span>int o<\/span>r trip based on market timing, hustle, luck, or choosing the perfect market.\u00a0<\/span><\/p>\n

Rachel takes a different approach. Here\u2019s why investors like her will not only come out ahead in the long run, but also have more fun and get better sleep along the way.\u00a0<\/span><\/p>\n

Good Investors Don\u2019t Time the Market<\/span><\/h2>\n

It\u2019s so tempting to try to time the market, because it feels like you should be able to spot the bottom and the top\u2014they always look so obvious in hindsight.\u00a0<\/span><\/p>\n

You\u2019ve heard it before, but it bears repeating: <\/span>Time in<\/span><\/em> the market always beats <\/span>timing<\/span><\/em> the market. You don\u2019t have to be perfectly right twice (buying and selling); you don\u2019t skip years-long periods trying to wait for the perfect moment to invest. Remember, the next market low could still be priced higher than today\u2019s pricing, given all the <\/span>appreciation<\/span><\/a> between now and then.<\/span><\/p>\n

Trying to time the market also encourages bad behaviors like trend chasing and panic selling. You see one asset class overperforming and say, \u201cThat must be the next big thing! I\u2019ll put a bunch of money in that.\u201d Meanwhile, that asset class has already done most of its booming and <\/span>is poised<\/span> for a crash.\u00a0<\/span><\/p>\n

Or you look at an asset class that has recently crashed and say, \u201cI won\u2019t touch that with a 10-foot pole.\u201d That asset class <\/span>is actually poised<\/span> for recovery. \u201cBuy when there\u2019s blood in the streets\u201d and all that.\u00a0<\/span><\/p>\n

Consistent Investing<\/span><\/h2>\n

Instead, investors who win in the long term keep investing slowly and steadily, month in and month out. There\u2019s a term for this in finance: <\/span>dollar-cost averaging<\/span><\/a>. <\/span>I practice it with my stock <\/span>investments<\/span> and <\/span>my<\/span> real estate investments.<\/span>\u00a0<\/span><\/p>\n

Every month, I invest around $5,000 in a new passive investment through my co-investing club. <\/span>Collectively, we invest $400,000 to $800,000, but I personally <\/span>just<\/span> invest $2,500 to $10,000.<\/span>\u00a0<\/span><\/p>\n

I can hear the skeptical voice in your head now: <\/span>\u201cI don\u2019t have that much to invest every month.\u201d<\/span><\/em> There are two solutions to that problem: Either invest at a slower cadence (like bimonthly or quarterly) or boost your <\/span>savings rate<\/span><\/a>. Start by freezing your lifestyle inflation.\u00a0<\/span><\/p>\n

Because that\u2019s part of Grinding Gretchen\u2019s problem: She keeps spending more as she earns more, so she never has as much left over to invest as she wants, and she keeps moving the goalposts on how much nest egg she needs.\u00a0<\/span><\/p>\n

As old investments pay off, reinvest the returns. You earn compound returns from consistent investing over <\/span>years, <\/span>not waiting on the sidelines to try and find the \u201cperfect\u201d deal.\u00a0<\/span><\/p>\n

Leverage People, Not Just Money<\/span><\/h2>\n

When real estate investors hear \u201cleverage,\u201d they immediately think \u201cdebt.\u201d\u00a0<\/span><\/p>\n

Sure, that\u2019s one type of leverage. But it\u2019s not the only type.\u00a0<\/span><\/p>\n

To begin with, you can leverage other people\u2019s expertise. That\u2019s a huge advantage to an investment club: You get the benefit of all the other members\u2019 knowledge. My co-investing club vets deals together on a big video call so we can all grill the operator and analyze risk together.\u00a0<\/span><\/p>\n

Speaking of operators, that raises another type of leverage: labor and time. After a miserable decade-plus as a landlord and active investor, I unloaded all my rental properties in my late 30s. <\/span>Today<\/span> I <\/span>only<\/span> invest passively<\/span><\/a>, <\/span>which includes investments like<\/span> syndications, silent <\/span>joint venture partnerships<\/span><\/a>, private notes, and funds.<\/span>\u00a0<\/span><\/p>\n

Someone else hassles with tenants, property managers, city inspectors, contractors, and the like. <\/span>I <\/span>just<\/span> watch<\/span>\u00a0the cash flow hit my bank account.<\/span>\u00a0<\/span><\/p>\n

Your time is a limited resource. Every hour you spend putzing with tenants and toilets is an hour you can\u2019t spend boosting your career, building a side business, or spending time <\/span>with<\/span> family or friends.\u00a0<\/span><\/p>\n

Liability Management<\/span><\/h2>\n

When I was an active investor, I took on both legal liability and debt liability. I was sued several times as a landlord. It sucked, costing me money, time, stress, and lost sleep.\u00a0<\/span><\/p>\n

On the debt side, when I signed for loans, I didn\u2019t just put up the property as collateral. I had to sign a personal guarantee. If I defaulted, the lender could come after every personal asset I own.\u00a0<\/span><\/p>\n

I don\u2019t have that liability risk as a passive investor. No one can sue me or come after my personal assets. That risk <\/span>is outsourced<\/span> to the deal operator. <\/span>This<\/span> matters to your long-term success as an investor for two reasons.\u00a0<\/span><\/p>\n

First, losses could wipe out your entire net worth, and then some. A judgment doesn\u2019t go away when your net worth hits $0; creditors can attach liens to your home and garnish part of each paycheck you earn.\u00a0<\/span><\/p>\n

Second, it can also demoralize you so badly that you quit investing in real estate entirely. Either way, it\u2019s Game Over for you.\u00a0<\/span><\/p>\n

Risk Management<\/span><\/h2>\n

Liability is, of course, one type of risk. But investors face many other types of risk, and the best investors layer in several ways to mitigate them.\u00a0<\/span><\/p>\n

I\u2019m willing to accept market risk. The stock market and the real estate market don\u2019t always go up, after all. Sometimes they dip or even crash. (That\u2019s one reason I practice dollar-cost averaging\u2014so I get the benefits of those lower prices and don\u2019t get too peeved.)<\/span><\/p>\n

Even so, I still look for <\/span>protections<\/span> against it when possible. <\/span>I want to see conservative underwriting assumptions <\/span>such<\/span> as slow rent growth <\/span>projections<\/span> and high expense growth <\/span>projections<\/span>.<\/span> I want to see a solid preferred return, low operator fees, and an operator with plenty of their own skin in the game.\u00a0<\/span><\/p>\n

I also look for extra <\/span>downside risk protections<\/span><\/a>. For example, in some of the private partnerships we\u2019ve negotiated in my co-investing club, the operator guaranteed us a minimum return on our investment, even if the deal underperformed. In one of those cases, a house flip didn\u2019t go our way, but we still earned the 8% floor return <\/span>on it<\/span>.\u00a0<\/span><\/p>\n

Again, your goal as an investor is longevity, building long-term wealth. You\u2019ll have your share of hiccups along the way, so try to minimize risk where you can and spread it out where you can\u2019t.\u00a0<\/span><\/p>\n

One of those is operator risk. I want to make sure that the operators I invest with are both competent and honest. While you can never eliminate that risk 100%, you can minimize it through <\/span>operator due diligence<\/span><\/a>.\u00a0<\/span><\/p>\n

Portfolio Planning<\/span><\/h2>\n

Long-term success as an investor also involves <\/span>intentional<\/span> planning for your portfolio. How much of your portfolio should sit in stocks? In real estate? In bonds? In alternative investments?\u00a0<\/span><\/p>\n

Within your stock portfolio, how much should be U.S. versus foreign? Small-cap versus large-cap?<\/span><\/p>\n

Within your real estate portfolio, how much do you want in income-oriented versus growth-oriented investments?\u00a0<\/span><\/p>\n

I\u2019m a huge proponent of diversification. <\/span>In fact, I diversify my real estate investments <\/span>in<\/span> not one or two but <\/span>six different ways<\/span><\/a>.<\/span> I want investments spread among many cities and states, operators, and asset classes. I want my investments to mature along different timelines.\u00a0<\/span><\/p>\n

That\u2019s part of why I invest $2,500 to $10,000 per investment. I know I won\u2019t always hit a bull’s-eye\u2014a few investments will inevitably underperform. But others will overperform, and most will perform around the middle of the bell curve. That distributed bell curve is exactly what I want from my returns.\u00a0<\/span><\/p>\n

That helps me sleep at night, rather than tossing and turning over that one deal I put $100,000 into that\u2019s underperforming.\u00a0<\/span><\/p>\n

Tax Planning<\/span><\/h2>\n

There\u2019s another type of diversification I want too: tax benefits.\u00a0<\/span><\/p>\n

Some passive real estate investments <\/span>come with outstanding<\/span> tax benefits. <\/span>Others don\u2019t come with any, but they <\/span>come with<\/span> other advantages, <\/span>like<\/span> stable passive income.<\/span>\u00a0<\/span><\/p>\n

With my equity investments (including syndications and JV partnerships), I practice the \u201c<\/span>lazy 1031 exchange<\/span><\/a>\u201d to <\/span>keep deferring<\/span> my taxes indefinitely <\/span>into the future<\/span>.<\/span>\u00a0<\/span><\/p>\n

Investments that don\u2019t offer any tax advantages (like private notes) are often a better fit for a self-directed IRA or solo 401(k). Read up on some <\/span>clever uses of your IRA<\/span><\/a> for more ideas.\u00a0\u00a0\u00a0<\/span><\/p>\n

The bottom line:<\/span> Investors who get strategic to minimize their tax burden build wealth faster because they\u2019re leaking less money to taxes.\u00a0<\/span><\/p>\n

$0 to $1 Million in Seven Years Without a High Income<\/span><\/h2>\n

My wife is a school counselor (<\/span>same<\/span> salary as a teacher). I run a small business that has always been more of a passion project than a cash cow.<\/span>\u00a0Yet we went from starting over financially to a net worth of <\/span>over<\/span> $1 million in less than <\/span>seven<\/span> years<\/span><\/a>.<\/span>\u00a0<\/span><\/p>\n

We built wealth faster than most investors for many of the reasons outlined above: consistency and staying power. In particular, it helped that we lived on a tiny budget and invested such a high percentage of our income.\u00a0<\/span><\/p>\n

Those<\/span> savings<\/span> went toward high-return investments <\/span>like<\/span> stocks and passive real estate <\/span>investments<\/span>.<\/span> We invested steadily without grinding through the side hustle of active investing.\u00a0<\/span><\/p>\n

Many investors <\/span>just<\/span> can\u2019t stomach the thought of relinquishing control over their investments.<\/span> So they keep building that <\/span>active investing<\/span> business, grinding with tenants <\/span>and<\/span> toilets <\/span>and<\/span> property managers and contractors.<\/span> And they still <\/span>suffer from plenty of<\/span> risks <\/span>outside<\/span> their control, such as market risk.<\/span>\u00a0<\/span><\/p>\n

I started earning better returns after <\/span>easing my grip on control<\/span><\/a>. <\/span>That\u2019s the price of leveraging other people\u2019s time, but it also helps maintain <\/span>that<\/span> staying power <\/span>of continuing<\/span> to <\/span>invest<\/span> year after year and <\/span>compounding<\/span> your wealth.<\/span>\u00a0<\/span><\/p>\n

And that\u2019s how you ultimately win the investment game.\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

Imagine two investors, Grinding Gretchen and Relaxed Rachel, who both start with $50,000 to invest.\u00a0 Most people\u2014including Gretchen\u2014think they\u2019ll sprint or trip based on market timing, hustle, luck, or choosing […]<\/p>\n","protected":false},"author":158586,"featured_media":156890,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[5182],"tags":[],"class_list":["post-187784","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-personal-finance"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/187784","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/158586"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=187784"}],"version-history":[{"count":3,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/187784\/revisions"}],"predecessor-version":[{"id":187787,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/187784\/revisions\/187787"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/156890"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=187784"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=187784"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=187784"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}