Blog | Real Estate

The Opportunities of Real Estate

Learning How to Reap the Rewards

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Successful entrepreneurs always see opportunity where others don’t. When you look at the rich, they often make their money through real estate investments.

While everyone else is panicking and worried about a market crash, you’ll see entrepreneurs and real estate investors excited and ready to find some deals. This is a great time to be looking for real estate investments.

You might have read one of Tom Wheelwright’s blogs about tax rewards for entrepreneurs. The tax laws are set up to reward entrepreneurs for stimulating economic growth and employment.

What some people forget is that the tax laws offer benefits to real estate investors who provide housing for employees. It also rewards investment in commercial buildings since the businesses that typically operate out of those buildings stimulate the economy.

Another interesting point of view when it comes to real estate investing is your income. Most people don’t realize that you can actually earn four different types of income through real estate.

  • Your tenant’s rent – which we look at as cash flow (income - operating expenses)
  • Depreciation – which allows investors to write off the structure and improvements to a property over time
  • Amortization – (your tenant paying down your mortgage debt)
  • Appreciation (capital gain or increase in value of real estate over time)

The best way to leverage this?

  1. Find a building in a good area with job growth.
  2. Once you find a good area, pinpoint an underperforming property that you could add value to.

One example I love to share for the latter point is washers and dryers. If I come up on a decent building in a good area that doesn’t have washers or dryers in each unit, I consider making that addition. Why? Because by doing so, it can raise the rents, increase occupancy, and drive higher Net Operating Income (NOI).

This, in turn, increases the overall value of the property. Then I can eventually refinance the property, pay back all my investors, and reinvest that money into a new property.

Now, this is the part that is difficult for some people to understand, but when I buy another property, I’m essentially getting it for free. I will use the equity from our other property to purchase it. And because of the increased operating income of the previous property, we will still have cash flow.

This formula is how my team and I went from owning a handful of small duplexes to building an entire empire worth millions.

I fully believe that anyone can use real estate to accelerate their wealth just like I have. They just have to be willing to take the time to learn. Go out and become a property manager. Learn what it’s like on the ground floor. I believe that immersion is the best way to learn. I believe in it so strongly that I still use it today in my corporate office.

All new employees start out in the field. They manage properties and therefore learn every aspect of the business. We get the best of the best when it comes to our employees because we train them to be the best.

So like I said, if you want to be a real estate investor, immerse yourself in business. Take classes, shadow people in the industry and learn all you can on the ground floor.

Original publish date: May 22, 2019

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