To many, the American Dream is still just that, a dream. While some people succeed, achieve their dream and go on to enjoy great success and prosperity, others do not. Most end up spending the whole of their lives toiling in low-paying, under-appreciated jobs while dreaming of a better way of life.
As we get ready for Labor Day—the national holiday dedicated to paying tribute to the contributions American workers have made to the strength and prosperity of our country, let’s give pause to think about what it takes to help ourselves succeed and flourish too… How can we each get our own piece of the American Dream.
As you know, I’ve gotten my piece of the dream with real estate. The secret to making (and keeping) money is to invest in property. The need for property never ends and it never changes. As long as people need some place to live and work there will be a demand for land. Real estate can be a very rewarding business, both financially and personally. Take for example the satisfaction of purchasing a property at a low price, rehabilitating it and turning it around to become an income-generating machine—very satisfying.
One of the best ways to make money from real estate is to purchase a multi-family property, rehabilitate it, rent it out and allow it to generate a passive income for them indefinitely. The more property an investor is able to accumulate and get to work for him or her in this manner, the more income the investor is going to be able to enjoy.
The problem (as anyone who has ever attempted to purchase a home can tell you) is that buying property, even property that needs to be rehabilitated, does not come cheap. And you certainly do not want to find yourself trying to climb out of a mountain of debt from spending too much money too soon and too fast.
There are a number of methods much better than sinking into debt for obtaining the capital to purchase property.
The easiest would be to take on a partner who has the means but not the time. Your partner would front you the capital to purchase the property, you would do the work to repair and rent it. Then, both of you split the profits 50/50. This is the most guaranteed method, and your partner can serve as a sounding board if you ever find yourself running into problems.
Of course, you don’t want to split your profits down the middle indefinitely. Once you have accumulated enough income to start buying some property, you could consider exploring the flipping strategy, which of course is the process of purchasing and rehabilitating a single-family home, then selling it for a big chunk of capital. Once you do that, you can then take that capital and use it to purchase a multi-family property.
There is also syndication. This is when you team up with a group of investors who pool their money together to acquire assets bigger than each could purchase on his/her own. The person who is in charge of the investment, the coordinator, is called the promoter or the syndicator. A syndicator is generally paid a fee for organizing deals. The size of the fee depends upon the size of the deal, but it is fair to say that no syndicator is going to go into a deal for peanuts.
For the investors who form the syndicate the benefits are twofold. First, they gain a foothold into the competitive real estate investment market without having to put up a whole lot of money to begin with—this means reduced exposure for them and fewer risks for their money. Second, they gain someone who will do all the legwork, close the deals and work for their profit. All they have to do is sit back and enjoy it.
The surest way to get more deals for syndication is to ensure that each of your deals pays off as handsomely as possible. Keep this at the forefront of your mind as you structure each deal. Do the hard work necessary for the payday that’s coming. The only reason investors are knocking on my door is that I have worked hard to develop a reputation of delivering high value to those who trust me with their money—that is the best form of advertising I could ever have.
These methods definitely would serve to get you started on a prosperous path. And of course, as you move forward and succeed in real estate you will find that you have more than enough capital to expand your investing.
Create Cash Flow
There is an old adage among real estate investors that has remained true throughout many market cycles and other influencing trends…
“We buy and sell real estate to create cash, so we can then buy and hold to create long-term wealth and cash flow.”
This old adage is one that very much captures the very essence of what real estate investing can do to help you achieve your piece of the American Dream.
Of course, you don’t want to make a career out of flipping properties for cash, if you don’t also have a long range vision for buying and holding properties for cash flow.
Quick cash from buying and selling real estate is a necessary tool for many real estate investors especially novice investors. It also happens to be an investment tool that can produce some very impressive profits. However, I never met a real estate investor who got rich by flipping properties… Why?
Once the property is sold and the profits are collected, the investment ceases to be an investment. In order to earn more money, you have to repeat the process over and over again. Long-term cash flow centers on the accumulation of income-producing assets. This is a much stronger long-range approach that has made countless wealth for investors worldwide.
Overall, cash flow should be your ultimate goal as a real estate investor. The best opportunities for achieving optimal cash flow lie within multi-unit properties, or apartments. Cash flowing properties are those that you keep as long-term investments—they not only provide income, but also help build significant asset value and wealth.
That said we often have to crawl before we walk. Therefore, the idea of generating cash in order to generate cash flow is very viable and one that you could strongly consider as you grow your own real estate investment business… and grab your own piece of the American Dream.