Fastest Way to Make $1 Million?

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.

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Ujwal Velagapudi

Investor/Agent/Entrepreneur · Dallas, TX · Member since 2016 · 464 posts · 564 votes

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.

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Eric A.
Queens, NY · Member since 2014 · 153 posts · 64 votes
6y
@Erin Dorsey Robinson I'd say specific to REI, the fastest way to make $1 million is to buy properties in gentrifying areas of a major coastal city (SF, LA, NYC, etc). You'd have to do your homework and get in basically right after the first gentrifyers move in. I know people that bought condos in Brooklyn in 2010 for around $600k that were worth $1.4mm by 2016. Obviously that's in the past but there always a gentrifying area somewhere.
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Jeff S.
Specialist · Portland, OR · Member since 2010 · 3k+ posts · 1k+ votes
6y
@Eric A. Gentrification in Portland has been huge. A dirty word among the politicians though. Every solution creates new problems. When Portland started focusing their efforts on inner city decaying areas people with money moved in and they improved the properties too. Tear downs can be 300k residential.
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Erin Dorsey RobinsonPro Member
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Real Estate Agent · Cleveland, OH · Member since 2020 · 280 posts · 365 votes
6y
@Matt Wanner I agree. We also buy and hold and it has been great for cash flow for us. I imagine that there are still a lot of great opportunities to be found in Pittsburgh as in Cleveland. How long have you been investing?
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Erin Dorsey RobinsonPro Member
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Real Estate Agent · Cleveland, OH · Member since 2020 · 280 posts · 365 votes
6y
@Steve Stuart It sounds like you've had quite a journey! What kinds of units were you housing your marketing contractors in? Has your focus changed since then? It's always amazing to look back on our lives and see how we got to where we are. There are some really unexpected turns that lead to the best destinations sometimes. Thanks for sharing your experience.
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Terry Madden
Investor · Jersey City, NJ · Member since 2016 · 40 posts · 10 votes
6y

@Erin Dorsey Robinson

Making a million dollars in real estate is 100% possible. The fastest way, which may be a gamble, is to buy and flip. This is risky, especially in the current market we are in. Make sure you have a ton of cash to burn as well.
Depending on what your goals are long term, you may want to buy and hold properties and let other people (your tenants) pay down your mortgage, provide you with cash flow, and paying off the principal.

If you are seeking to make $1MM quickly, I'd suggest not doing it in real estate, but researching a company whose stock is about to explode and buy as many shares as you can. Right now, biotech & technology companies are the way to go in my opinion.

Good luck!
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Andrew SyriosPro Member
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Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
6y
"Start with a billion and start an airline." - Richard Branson
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Erin Dorsey RobinsonPro Member
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Real Estate Agent · Cleveland, OH · Member since 2020 · 280 posts · 365 votes
6y
@Andrew Kiel Thanks for your thoughtful response. There ARE a lot of ways to skin this cat!
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Steve Stuart
Rental Property Investor · Myrtle Beach, SC · Member since 2018 · 41 posts · 54 votes
6y
Originally posted by @Erin Dorsey Robinson:
@Steve Stuart It sounds like you've had quite a journey! What kinds of units were you housing your marketing contractors in? Has your focus changed since then? It's always amazing to look back on our lives and see how we got to where we are. There are some really unexpected turns that lead to the best destinations sometimes. Thanks for sharing your experience.

My first three purchases were condos (in the $20-30k range... I miss those prices). After that it was a triplex, then quad, 6 plex and so on.
Nowadays I focus almost exclusively on multi-family but if the price and/or terms are right, I’m open.
An example: in September I purchased a 7-plex from someone who was ready to retire and move to Florida. I purchased it on terms with $60,000 down. He mentioned he also had a townhouse that he wanted retail price for ($150k) and a C-class condo about 25% under market ($60k). I wasn’t interested in either so made an offer where it would make sense:
Owner finance
$210,000 total. $10,000 down. 30 year amortization, 10 year balloon @ 4%.
He accepted.

These numbers put my CoC return at almost 100% but I could never have done that deal if I hadn't purchased his multi family with $60k down (about a 30% CoC).
I wouldn’t have been able to purchase his Multi-family on terms if it hadn’t been within a couple blocks of several other properties that I own and extensively rehabbed -which he saw happen (even though we didn’t know each other).

He could easily have sold everything to a retail buyer, but he the extra interest (5% and 4% respectively which is low for owner-finance) was enticing and really, I think he liked me.
In the end though, it was my experience/credibility which sealed the deal- where he was confident he could retire and the checks will come in every month without fail.
That type of credibility you have to develop deal after deal, winners and losers. There’s no shortcut to it, even if you’re a great salesperson.

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Account Closed
Rental Property Investor · Sacramento, CA · Member since 2015 · 1k+ posts · 893 votes
6y
@Erin Dorsey Robinson
I did it "wholesaling", sort of. More or less buying low, selling high, and scaling that operation. It allowed me to scale rapidly with little money- the bottleneck in my business model is basically execution. Marketing is cheap, minimal capital is required to do these quick flips, and not a lot of payroll is required to do a lot of deals if your system is designed well.
I quit my job in 2017, and by 2019 had my first million+ $ net year. It was very fast. 2020 was on track to grow quite a bit, but obv Covid throws a lot of uncertainty into things with banks not lending.

I love this type of model to make the first million... bc it take very little in resources upfront to grow and maintain high profit margins. The downside for most is it takes a very high level of sales & marketing aptitude and process orientation, which is the reason I would say most wholesalers fail or take very long to reach financial breakthrough.
1 Reply
Kanwar Sodhi
Real Estate Agent · Chantilly, VA · Member since 2016 · 245 posts · 61 votes
6y
Who cares about making A million, find a process that works and you'll get past that million in no time
2 Reply
David McKelfresh
Member since 2020 · 10 posts · 5 votes
6y
I love the variety of answers here. Honestly, I would agree that it's really hard to give a silver bullet answer. There are just too many options based on your situation, risk tolerance, access to cash, etc.
What I would say is that you need to focus on 2 things:
1) Pick one thing to get started with, laser focus on it and get really, really good.
2) Get started...

Good luck!
2 Reply
Brian M Sweeney
MBA, CFP®, EA · Columbus, OH · Member since 2018 · 175 posts · 207 votes
6y
@Erin Dorsey Robinson real estate, stock market, Business ownership
1 Reply
Rylee Knox
Real Estate Agent · Augusta, ME · Member since 2018 · 24 posts · 37 votes
6y
@Erin Dorsey Robinson
I love this question. One thing that I might add is that it depends on your goal for the million dollars. For example if you have a $1M net worth held in private stock that you cannot sell, does it actually generate a better life style for you. Additionally, if you are named in a trust to receive $1M in 25 years, you also will have a hard time generating a better live in the near future.
For most people, I think the reason to generate a $1M net worth is because theoretically, you could live off this using the 4% rule and have $40k a year in net passive income.
The goal of 40k a year in net passive income is very manageable and there is a very straightforward path with less than a 3 year time frame. I just had my 24th Birthday. My wife and purchased our first owner occupied 3 unit in October 2017 on an FHA loan. We lived there exactly 12 months then moved out and used the extra cash flow to save for our next property. An owner occupied 4-unit in June 2018 with 11% down. We saved the cash flow, and bought a 3 unit in March 2020 with 20% down. These are all high cash flow properties.
We have invested a total of $65k cash and generate $41k net cash flow annually after putting 20% of our Gross revenue away for vacancy and CAPX.
Now we own roughly $500k in real estate (mostly financed), and our net worth is less than $200k, but we have accomplished the $41k in passive income goal in less than 2.5 years without coming anywhere close to the $1M in net worth goal.
I think this model is extremely simple, not too risky, and very very repeatable. I would be happy to share more concrete #s if anyone is interested.
I might add that we live well below our means and invest every spare dime from our middle class incomes. And I believe that this (living well below your means) is the most powerful practice for wealth building individuals.
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Erin Dorsey RobinsonPro Member
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Real Estate Agent · Cleveland, OH · Member since 2020 · 280 posts · 365 votes
6y
@Rylee Knox first, thank you for your service! I love your approach. Very smart. I think new investors can learn a lot from your approach. Building wealth through real estate is achievable for everyone who can be disciplined and patient enough to educate themselves make a plan and follow it closely.
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Erin Dorsey RobinsonPro Member
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Real Estate Agent · Cleveland, OH · Member since 2020 · 280 posts · 365 votes
6y
@David McKelfresh Yes! So do I. This is way more response than I was hoping for. But who couldn’t read through this list and find something that makes them say “hey, I think I could do that”? I agree. No one way to do this. But you do have to pick one and go as hard and as fast as you can in that direction. Become a master of your one thing and then branch out. Great advice. Thanks for responding and Happy Monday!
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Ian WalshBusiness Member
Lender · Philadelphia, PA · Member since 2016 · 2k+ posts · 1k+ votes
6y
It really has more to do with their skill sets, what their personality is designed for, prior experience etc. Many of the methods can get you there in a similar timeline but when the prior characteristics don't line up, it can take forever.
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Shakira Walston
Rental Property Investor · Member since 2020 · 1 post · 1 vote
6y
@Ujwal Velagapudi makes sense to me. I’m new at this but I’m considering C neighborhoods in CT as well. I’m stutter stepping a bit because of the potential headaches that one can incur, but then again the headaches will come at some point with any venture. I know the neighborhood and figure start out with what I know. I suppose I just need to get out of the analysis paralysis & just do it
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Nathan GesnerBusiness Member
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Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
6y
The fastest way to make a million? Get into politics or start a charity.
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Account Closed
Realtor · Portland, OR · Member since 2020 · 87 posts · 43 votes
6y
@Erin Dorsey Robinson I havent seen anyone mention the John McNellis strategy here. I would give him a looky on Youtube as well.
Essentially... JV with larger developer, piece a big deal together > 1 Million. I have enjoyed his content here recently in the last couple months.
Plus, sometimes its nice to work on nice things vs the 1-4 unit business and working with people that eat with fork and knife lol (dont get offended).
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Erin Dorsey RobinsonPro Member
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Real Estate Agent · Cleveland, OH · Member since 2020 · 280 posts · 365 votes
6y
@Account Closed I will investigate John McNellis. Haven't heard of him. Thanks for sharing that. It's nice to give people something to reach for. The JV route is a completely different thought process. But for people who are oriented toward a specific piece of making the deal, it's a good way to go.
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Erin Dorsey RobinsonPro Member
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Real Estate Agent · Cleveland, OH · Member since 2020 · 280 posts · 365 votes
6y
@Shakira Walston Go for it! My mother told me once when I was considering grad school that 5 years would go by whether I did it or not. She asked what I wanted to look back and say I had done with the time. It was a very motivating question for me :)
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Account Closed
Realtor · Portland, OR · Member since 2020 · 87 posts · 43 votes
6y
@Erin Dorsey Robinson not a problem. This is why we are in BP Yes?? Of course.
In regards to deals: This is how my offers begins. Motivated Seller. Long term. Owner-Finance. Subject-to. Master Lease (commercial). Contract For Deed (24-48 months balloon (with kicker). Last resort in residential: Traditional bank etc.
If you learn to utilize these I think you can be off and running. 👍🏽
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Daniel HymanBusiness Member
CPA · Milwaukee, WI · Member since 2016 · 2k+ posts · 1k+ votes
6y
I'll be happy to chime with good advice and a definitive answer once I get there :)
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Jim Chuong
Rental Property Investor · Toronto, Canada · Member since 2012 · 102 posts · 95 votes
6y
Originally posted by @Erin Dorsey Robinson:
@Shakira Walston Go for it! My mother told me once when I was considering grad school that 5 years would go by whether I did it or not. She asked what I wanted to look back and say I had done with the time. It was a very motivating question for me :)

You're mom is wise!

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Erin Dorsey RobinsonPro Member
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Real Estate Agent · Cleveland, OH · Member since 2020 · 280 posts · 365 votes
6y
@Jim Chuong yes, she is :)
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