Real Estate Agent · Cleveland, OH · Member since 2020 · 280 posts · 365 votes
If you were advising a new investor starting out, what would you say would be the fastest way to make a million dollars investing in real estate? When I say fast, I don't mean get rich quick. I mean the most direct route from A to B.
Investor/Agent/Entrepreneur · Dallas, TX · Member since 2016 · 464 posts · 564 votes
6y
This is going to come down to the individual and their gameplan, current financial situation, risk appetite, and so many other factors. If I was advising a new investor, I wouldn't tell them to worry about how to get to $1M...yet. First focus on understanding the RE landscape, get your feet wet either through investing, brokering, renovating, managing, etc. in the field either directly or through other investors. Then just jump into something you like and see potential with, and try to become an expert at it. The fastest way to your target financial goal will be being an expert within a particular niche and driving it hard.
You can get to $1M in an infinite number of ways, and just because "X" did it in 1 year by using a certain RE strategy doesn't mean that "Y" will see the same results in the same time. Just like a fitness plan, everyone is very different with so many external variables that will play into the outcome. I used to own a gym, and my personal trainers would always tell our clients to focus on what works for them, and create a custom plan based on their current state, limitations, strengths, weaknesses, goals, etc.
I first started investing in C (some people might call them D) neighborhoods in Detroit. I put my life savings into a tiny commercial building, and snowballed my RE business in the city. I was very naive, putting myself at risk every time I went to the buildings as there was a lot of violence around us and even on our block. But this was my specialty; I knew the area, the types of properties I was purchasing, how to genuinely take care of my tenants, how to find good deals, what was a good vs. a bad purchase, etc. What initially gravitated me towards this was the low purchase price and high cash flow, which as a 22 year was all I took into consideration. I slowly divested and have gone away from this strategy recently, but it did more than 5x (cash flow + appreciation) my investment within a few short years.
So if you asked me a few years ago as I was starting out, I'd say that investing in C neighborhoods is the fastest way (which I really believed then). Today, in a different financial state, I will be considering a different route (apartment complexes, hotels, motels, mobile home parks, etc.) in slightly better neighborhoods. Tomorrow, when I have a wife, kids, etc. there will be other variables that will come into play based on the situation at the time that will definitely alter my investing strategy.
Specialist · Riverside, CA · Member since 2015 · 6k+ posts · 3k+ votes
6y
That question is impossible to answer because the quickest way would be options on REITS or homebuilder stocks or something but it is extremely risky. The most reliable way is probably buy and hold rentals but it is not the quickest way.
Investor/Agent/Entrepreneur · Dallas, TX · Member since 2016 · 464 posts · 564 votes
6y
This is going to come down to the individual and their gameplan, current financial situation, risk appetite, and so many other factors. If I was advising a new investor, I wouldn't tell them to worry about how to get to $1M...yet. First focus on understanding the RE landscape, get your feet wet either through investing, brokering, renovating, managing, etc. in the field either directly or through other investors. Then just jump into something you like and see potential with, and try to become an expert at it. The fastest way to your target financial goal will be being an expert within a particular niche and driving it hard.
You can get to $1M in an infinite number of ways, and just because "X" did it in 1 year by using a certain RE strategy doesn't mean that "Y" will see the same results in the same time. Just like a fitness plan, everyone is very different with so many external variables that will play into the outcome. I used to own a gym, and my personal trainers would always tell our clients to focus on what works for them, and create a custom plan based on their current state, limitations, strengths, weaknesses, goals, etc.
I first started investing in C (some people might call them D) neighborhoods in Detroit. I put my life savings into a tiny commercial building, and snowballed my RE business in the city. I was very naive, putting myself at risk every time I went to the buildings as there was a lot of violence around us and even on our block. But this was my specialty; I knew the area, the types of properties I was purchasing, how to genuinely take care of my tenants, how to find good deals, what was a good vs. a bad purchase, etc. What initially gravitated me towards this was the low purchase price and high cash flow, which as a 22 year was all I took into consideration. I slowly divested and have gone away from this strategy recently, but it did more than 5x (cash flow + appreciation) my investment within a few short years.
So if you asked me a few years ago as I was starting out, I'd say that investing in C neighborhoods is the fastest way (which I really believed then). Today, in a different financial state, I will be considering a different route (apartment complexes, hotels, motels, mobile home parks, etc.) in slightly better neighborhoods. Tomorrow, when I have a wife, kids, etc. there will be other variables that will come into play based on the situation at the time that will definitely alter my investing strategy.
If you were advising a new investor starting out, what would you say would be the fastest way to make a million dollars investing in real estate? When I say fast, I don't mean get rich quick. I mean the most direct route from A to B.
It all depends on your starting point. That is the bottom line. I think if you give a starting point you might be able to put a good well thought out plan together.
If you were advising a new investor starting out, what would you say would be the fastest way to make a million dollars investing in real estate? When I say fast, I don't mean get rich quick. I mean the most direct route from A to B.
I have kids and we talk (well I talk and they eye roll) often about how to use your age to your advantage. Can’t stop time so starting early is the fastest way to get there.
If I had to break it down to a step by step process I’d advise the following.
1. Go to school to good paying job that allows for growth without working more than 60 hours a week. (College isn’t school for everyone). But a marketable skill. 2. Buy a house while in college and househack it. My goal (direction I’m teaching them) for my kids is to have purchased 3 properties while in college each. 3. Graduate and buy a home that can househack and take all savings for down payments of investment properties of 5 units and more.
In 5-15 years which is really a short time they would be worth over a million and have cash flow to pay for their life.
I’m older and my strategy is to buy as many 10 unit and larger multi families as fast as possible. I already have a higher income and want to use that money to create longer term wealth. there really isn’t a wrong answer to the question.
Rental Property Investor · Erie, PA · Member since 2015 · 1k+ posts · 2k+ votes
6y
Hypothetically speaking with knowledge in place and the right market, probably flipping. Of course, someone could become a realtor (not exactly RE investing but it's technically RE income), find deals (as a buying agent), hustle and work with buyers and make money that way as well.
Real Estate Agent · Cleveland, OH · Member since 2020 · 280 posts · 365 votes
6y
@Marlen Weber I think a lot of people are are attracted to real estate investing because they see it as a way to reach for their dreams. In many cases, that probably boils down in large part to having the money they need to afford the lifestyle they want, whatever that may be. I was just putting myself inside their heads for a moment and asking a question that I imagine a lot of people have but might not be willing to ask this directly. I too was curious what people would say.
Real Estate Agent · Cleveland, OH · Member since 2020 · 280 posts · 365 votes
6y
@Aaron K. I agree that the best ways to build wealth quickly are likely not immediately available to those just starting out. So, that would also make those ways not the starting point for a newbie. I agree that the buy and holds are safe and reliable and a good place to get your feet wet in the game. Thanks for responding.
Real Estate Agent · Cleveland, OH · Member since 2020 · 280 posts · 365 votes
6y
@Account Closed LOVE LOVE LOVE this! I'm going to save it and share and say I heard this brilliantly simple plan from Eric C. on BP. :) My husband went to school for free on the GI bill and used student loan money to buy a duplex with a tenant. That tenant is still with us today.
@Karl B. I can't argue with that one. My husband and I do this.
Real Estate Agent · Cleveland, OH · Member since 2020 · 280 posts · 365 votes
6y
@Damaso Bautista I completely agree. I had the exact same thought when I asked the question, but I knew different people would interpret it differently and the answers would be more interesting if I didn't attempt to narrow it. What's the most common starting point you encounter? It's completely open to whatever interpretation comes to your mind. If you want to toss an idea out there it would be cool from whichever vantage point you think makes sense.
Appraiser · Valparaiso, IN · Member since 2015 · 121 posts · 62 votes
6y
Hi Erin and welcome. I once paid a personal finance advisor a lot of money to answer this question. His reply was basically have a plan. Buy as many as u can as quickly as you can then pay them off, for example: I have been buying houses all cash and repairing with all cash. Then do a new mortgage and get some money back. So it would be like a brrrr, but I like more cash flow so I have a lower ltv about 50%. So eventually you run out of money. Then have to save for a bit. Use the flippers rule 70% when u buy. So you end up with good cash flow about 250 a month per property and a good equity position. If it's done properly you should have roughly 40 to 50k equity in each property and 3500 cash flow per property per year. So 10 houses gets you half way just uses basic numbers. plus equity and if it takes 10 years, ur cash flow added up, tax savings equity pay down, etc... Ur getting pretty close. My method is not the fastest but that's my comfort level of risk. In ur area u should be able to accomplish this no problem. Great cash flow in Midwest.
Real Estate Agent · Cleveland, OH · Member since 2020 · 280 posts · 365 votes
6y
@Ujwal Velagapudi Thank you for sharing that. I have a lot of respect for people who really take the time to be thoughtful and share their life experiences with others on this platform. Next, I have to say I love Detroit! It's my home away from home. Both parents were basically born and raised there and my grandmother still lives on the west side of the city. Uncles in the burbs and cousins all over. It's a great market to invest in. Like Cleveland, but a lot bigger.
I completely agree with you that education is an important first step. You don't know what you don't know starting out and it's impossible to avoid making some mistakes that you undoubtedly look back on and wonder how they made it through. After that, knowing yourself, making a plan and being prepared to learn along the way is great advice. I think a new investor would be fortunate to have you as a guide.
If you were advising a new investor starting out, what would you say would be the fastest way to make a million dollars investing in real estate? When I say fast, I don't mean get rich quick. I mean the most direct route from A to B.
Hi Erin,
It's both what you know and who you know.
Make it a point to get to know (be business friends with) people who can help you along your journey to a million dollars. Vendors, contractors, lenders, potential partners, etc... Real estate meetups are a way to do this.
Also make it a point to get educated on what you need to know. The "Education" links at the top of this page have a lot of information.
And if you have not done so already, read Rich Dad Poor Dad.
Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes
6y
@Erin Dorsey Robinson 1. Wholesaling 2. Start with 3 Million 3. Marry Up 4. Bitcoin 5. Beanie Babies. Good luck! Seriously though, impossible to answer this question well without some more info i.e. how much are you starting with, what is your market, what is your background. To answer as sincerely as possible given the limited info, I would say the fastest way to a million is to leverage your skill set, know your market, and pick the best strategy for your specific area of expertise as it fits into your market. If you’re good at rehabbing, try a value add strategy or flipping. If you’re good at marketing, become an agent. If you’re good at raising money... 1 million should be easy. Play to your strengths, think about what you enjoy doing the most, have a plan, do it, and you’re off to the races!
Real Estate Agent · Cleveland, OH · Member since 2020 · 280 posts · 365 votes
6y
@Steve K. Lol @ Beanie Babies. I understand that this is a very broadly worded question. I just think a lot of people from a lot of different backgrounds are asking it so I didn't try to narrow it down. As different people answer from whatever their perspectives are maybe someone will see their path in one of the responses.
I think you've given some good insight for people by taking the strengths view. Everyone is good at something and the great thing about real estate is, whatever people are good at can probably be applied somehow. Thanks for responding.
Appraiser · Valparaiso, IN · Member since 2015 · 121 posts · 62 votes
6y
I hate to say say it but it takes money to make money. Unless you are really really good at something. Save way more than you spend and invest. Invest in what you know. If you don't know it, don't invest until you have a good understanding than at some point you have to get in and learn boots on the ground. I'm talking about real estate of course. Many would argue that starting a business is the real way wealth.
Rental Property Investor · Nederland, TX · Member since 2017 · 44 posts · 30 votes
6y
@Erin Dorsey Robinson Id say the most realistic quickest way to $1 mil is flipping houses. Do 5 houses a year (very doable) with an average profit of $20k equals $100k/year for 10 years and you’ve got $1 million.
If you invest your $100k/year wisely, you could shorten that to 7-8 years. Also, maybe you hit 1 or 2 flips big for more than $20k profit and get there quicker.