Blog | Real Estate

How to Get Rich in Real Estate with Infinite Returns

This is how to make money you can count on every month

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Summary

  • There are several ways to generate income with real estate, but cash flow is king

  • Strategic real estate investing can lead to infinite returns through consistent cash flow

  • A piece of successful real estate investing is to take advantage of tax laws


Throughout history, people have amassed tremendous wealth through smart real estate investments. Take Shark Tank’s Barbara Cocoran, for example — growing up, she and her nine siblings shared a two-bedroom flat with their parents. She’s now the self-proclaimed “Queen of New York Real Estate,” has a net worth of somewhere in the neighborhood of $80 million and lives in a penthouse on Fifth Avenue.

Now you might think that despite her humble beginnings, she must have worked really hard in school to become a success story. Not the case. Due to undiagnosed dyslexia, she earned straight Ds in her classes. But she had ambition and persistence, two skills that will get you very far in life. Within two years of starting her real estate business, she had half a million dollars in sales. And despite her then-boyfriend/business partner running off with her secretary and declaring, “You’ll never succeed without me,” she made her fairy tale come true — she learned how to get rich in real estate and got the last laugh.

What’s the point of this story? To prove that it’s entirely possible for you to achieve your own success story. You don’t need a formal education, you don’t need a rich relative to leave you an inheritance, and you certainly don’t need to rely on anyone to make money and build wealth through real estate investing. So how can you make money this way? Through a variety of avenues, including:

Of course, while there is money to be made through capital gains, it’s also important to note the risks. First, it’s a formula you have to keep repeating over and over again — you have to keep buying and selling, buying and selling, and buying and selling, or the income stops. Second, if the real estate market takes a nosedive, “flippers”— people who buy a real estate property and quickly turn around and sell it for a profit — can get caught with inventory they can’t sell.
These risks lead many to consider another type of real estate investment: cash flow through rental income.

  1. Appreciation. If you buy a property at the right time (when prices are low), and the value increases, and you sell at the right time, then you will make a profit (capital gains). Sure, that may seem like a lot of “ifs,” but it’s far from a rare occurrence. If you’re in it for the long haul, you’ll often be rewarded—savvy investors will tell you that the longer you keep an investment property, the greater its value will grow. Real estate almost always appreciates in the long run. When searching for properties to invest in, be sure to research the appreciation potential.
  2. Rental income.Successful rental properties provide real estate investors with a steady cash flow — and as you know, cash flow is king.

    Cash flow is realized when you purchase an investment and hold onto it. If you aren’t familiar with the concept, cash that flows in every month without you working for it is produced by investments, or assets, generating cash flow. That cash flow is also called passive income — it’s the primary focus in building infinite wealth. It’s literally the “secret” to how to get rich in real estate.

    Just like in the game of Monopoly, your tenants will pay rent each month, and this rental income goes directly to you. It’s no surprise that choosing the right rental property and tenants will maximize your rental income and boost your returns. Once you have a positive cash flow from a property (one that covers your mortgage and any other expenses), you can use the monthly rental income to reinvest and expand your real estate investment business. Then, you’ll buy more properties and gain a positive cash flow on those, too.

    Don’t limit yourself to only thinking about houses—you can buy apartment buildings, warehouses and office buildings too. Your goal should be to have a 100% return on your investment because once you’ve achieved that, you are playing with what we at Rich Dad like to call free money. Why? You no longer have any of your own money tied up in the deal. You still own the property, you have your original investment back, and cash is still flowing to you each month. Now doesn’t that sound like the ultimate return? It’s actually an infinite return!

    In fact, this is exactly how both Robert and Kim Kiyosaki made their fortune.

  3. Bonus depreciation.

    It’s almost as if our government wants to make it easier for you to figure out how to get rich in real estate. Thanks to the Tax Cuts and Jobs Act of 2017 (TCJA), landlords can deduct 100 percent of the cost of personal property they purchase for their business. Landlords can use this bonus depreciation to fully deduct the cost of personal property they use in their rental activity — including appliances, laundry and gardening equipment, and even furniture. This law changes again in the 2023 tax year (when it starts decreasing and will eventually be phased out by 2027), so now is the time to take advantage.

  4. Pass-through tax deduction.

    The TCJA created a new tax deduction for income earned through passthrough entities. Since most rental properties are owned by passthroughs — such as individuals, limited liability companies, partnerships, or S corporations — most rental property owners can benefit from this new deduction, which could result in thousands in tax savings. The amount of the deduction depends on a landlord’s total taxable income, and, for most landlords, the value of their rental property — it can never exceed 20% of a taxpayer’s total taxable income for the year.

  5. Ancillary services.

    Think back to the last time you stayed at a hotel—you were probably hit with a “resort fee” if they have a pool, and charges for the minibar if you had a late-night craving. This is how hotels make extra money — and another glimpse into how to get rich in real estate.

    Well, you can do the same as a real estate investor. If you own an apartment or office building, you could bring in extra cash by charging for covered parking spots or installing vending machines. Upgrading apartment units with new appliances and granite countertops could allow you to raise rent.

The sky’s the limit, so all you need is some creativity to start increasing your monthly earnings. Investing is actually a very creative process, so you’ll want to look beyond the obvious and have a little fun with brainstorming ideas.

Infinite returns through real estate

Many successful investors love real estate investing because it gives them greater control over the asset (the investment property) than stocks, for instance. Start your journey by making use of some of our free investing classes. You’ll learn ways to fund your investments that don’t take money out of your own pocket (we call that using Other People’s Money ) and other strategies to create major cash flow — we’ll take the guesswork out of the process and tell you exactly how to get rich in real estate.

Original publish date: May 17, 2018

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