Using Real Estate as a Vehicle for Wealth

Eric Broermann November 26, 2018

For many of us, our most significant investment and largest profits in life are due to having bought a house – something that acts as a de facto bank account, grows in equity and provides shelter all at once. But what if we want to use real estate as a money-making opportunity instead?
 
Real estate has, of course, made many millionaires. The Wall Street Journalrecently reported how more than 80% of borrowers who refinanced in the third quarter chose the “cash out” option, withdrawing $14.6B in equity out of their homes, according to government-sponsored mortgage corporation Freddie Mac. Now, many are finding their homes to be a tappable source of wealth. “Home equity is the big pot of gold,” said Sam Khater, the chief economist at Freddie Mac.
 
It’s not hard to see why many have successfully made money buying and selling real estate because of the diverse ways to grow wealth with real estate investments. Forbes writer David Greene talks about having become a student of creating wealth through real estate and has compiled a list of some of the traits he sees as common among the most successful investors, whether they’re house flippers, residential home landlords, or large apartment complex owners.
 
Knowledge is, of course, key. Real estate investors always seem to know more than those around them – what drives markets, how to time market cycles, and which things to watch out for. “They are much more likely to recognize shifting markets before others do and are prepared to take advantage of these opportunities when they present themselves,” says Greene.
 
“The very best never stop learning, and real estate is no exception,” says Greene. Apart from websites where investors can learn, network, and find solutions to their problems, some also collect books written on how to invest in real estate, reading them over and over again. Greene recommends developing the ability to analyze a property for cash flow as well as recognizing an under-valued property when you see one. Then develop a basic understanding for estimating rehab costs along with the various pieces at play when it comes to owning rental property.
 
“The more you know about real estate investing, the less fear you’ll have,” he says. “Overcoming fear is one of the best things you can learn to do if you want to carve out a successful career for yourself in real estate.”
 
Patience is also a virtue. Greene agrees that it may sound simple, but that’s not always the case. “When it comes to real estate investing, there is a lot of pressure on you to move and move fast. The best deals go quick, and allowing projects to run past the agreed upon timeline can be expensive. Investors are constantly facing pressures to do more, do it faster, and do it cheaper.”
 
He goes on to say how the best investors know when they need to run fast and when they need to stop and wait to see how things develop. “Patience can take several forms when it comes to real estate investing,” he says. “Learning to recognize areas where you’ll need to practice it can save you from a lot of expensive mistakes.”
 
Understanding market cycles are also of vital importance. “Top investors zig when everyone else zags. They are fearful when others are greedy and greedy when others are fearful. Waiting for the market to slow down, or crash even, can require more intestinal fortitude but it is also a much better time to be picking up assets.”
 
To study advice Greene offers regarding how to transform a property, how to be efficient, and how to be keenly focused and how to develop important relationships, he encourages you to go to BiggerPockets.com, where you can get tips like this for free. “In a hot market, you don’t just find good deals,” he says. “You make good deals. Top notch investors see ways to add value to properties without spending more money than they have to. For those with the vision to bring it about, there can be big rewards for those who buy the ugly duckling and turn it into the beautiful swan.”

Our Blog

Shades of Gray: Selecting Design’s Most Neutral Color Is Trickier Than You Think

April 3, 2024

It’s important to figure out which shade will complement the furniture and textiles.

A cozy living room with a light-colored couch, pillow, blanket, coffee table, side table, hardwood flooring, and white walls.
How to Update Your Kitchen Cabinets With Paint

April 3, 2024

Let’s take a look at when paint works, what colors of paint to use on your cabinets.

Significant Tax Credits? / The MCC, Explained

March 14, 2024

Each State has slightly differing MCC eligibility guidelines and requirements, such as.

5 Common Reasons to Evict a Tenant in Washington, DC

January 26, 2024

A question that almost every prospective client asks us is how we handle evictions.

A Festive Fall Gathering: The Vassar Broermann Group Client Appreciation Party at Butler’s Orchard!

November 1, 2023

This party was truly memorable and everyone had a great time catching up, and eating some food.

Selling a Property in Maryland? You Might Be Eligible for a MD Non-resident Withholding Tax Exemption

October 18, 2023

This was a great thing to know when helping our out-of-state client to sell their investment property.

Easy Home Improvements to Sell Your Home Faster

August 16, 2022

We have always felt presentation is key to selling for top dollar – even in a strong seller's market.

How to Look Up Permits in the DMV

January 16, 2022

We are frequently asked about how to find permit information, so we decided to aggregate the list of links for you!

The Daunting DC School Lottery System

December 9, 2021

The DC School Lottery system opens in January and closes in March each year. You are not alone!

Work With Us

Get assistance in determining current property value, crafting a competitive offer, writing and negotiating a contract, and much more. Contact us today.