What have been some of your best strategies learned to accumulate the most wealth the fastest? I've heard mixed strategies and conflicting pros and cons of each. The most profitable one I've heard for average people to get into is

Get a job, buy a fixer upper, put down lowest %, fix up and possibly make into a duplex , rent a room or two out, sell the house after 2 years to avoid capital gains tax, repeat.

Pros-Seems like this is the best way to do it with the minimal amount of money moneynoit of pocket, avoiding capital gains and not having to pay your mortgage while owning it.

Ex: buy 100k prop, pay 5k down-payment , rehab 5k doing it yourself, tenents you make 2k/year profit, 2 years later sell for 150. Make around a 40k profit. In 10 years you've made around 220k profit.

Cons - renting out rooms individually or living on property with tenants. Heard people don't really like doing this but don't know exactly why when it brings in more profit.

Sounds like a lot of people buy investment properties, pay them off early but doesn't make a lot of sense to me as paying 100k cash and only making 800/month profit would take around 10 years to even break even. Then once the property is sold, almost 30% is lost from capital gains, fees and commissions.

Ex: have five 100k properties paid cash over 10 years every two years. Let's say average monthly profit over ten years was 14k/year. Sell each for on average at 150k minus 30% puts you at around 105k times fives houses for 525k plus 140k rent for 665k but you started with a 500k investment 10 years early for only a 125k profit.

The only other way that seems the quickest and most lucrative is flipping. However, it seems pretty difficult to find places to flip that can turn a decent return.

What are your thoughts and experiences with the pros and cons of what you think are some of the best ways? If you could give realistic numbers and figures that'd be great.

Time is ultimately what makes your investments look good.

google tom lundstedt seminars

Steal 'em when you buy 'em.

Scott,

To build wealth

-keep your expenses LOW and invest the rest. $10 a day can make you a millionaire.

-only listen to happy, wealthy people

-make the effort to get around wealthy people. Their style of thinking does rub off onto you.

-DREAM BIG! Fill your mind with you DREAM until it is deep in your gut, a part of you. You cannot see yourself without it.

-no technique will be fully effective without a DREAM to propel you forward.

-have a written goal puts you in the Top 10%

-write your plan for the day every night BEFORE bed. Work that plan.

-put your phone on silent and close ALL social media. Only call back the REAL messages. Facebook says the average user spends (wastes) 47 minutes per day on FB.

-get financial smarts. Learn how money works in the big leagues. Unlearn W2 thinking.

-if RE interests you get educated. Learn 6 ways to buy a property and 8 ways to sell it. Then try them all until you find what suits you. Each method is not right in every area. AND markets change.

-it’s not about OWNING, it’s about CONTROLLING the property for a profit.

-understand you have ONE JOB- to make decisions. Don’t get caught up in doing minimum wage work. Do the $200/ hour work.

-flipping can be great but are a lot of work and you can easily lose money. No ongoing* income. Wholesaling can be lucrative in some areas but is constant work. No ongoing income.

I like renting because once I buy and rehab the property I just have to keep it filled with decent people. Ongoing income. But LLing is not for everyone.

-there is no such thing as GOOD DEBT. Debt is debt. Controlling your actions and profit. It’s like fire. Used properly can help but a tiny breeze can turn it into an out of control forest fire. Seen that happen to too many RE investors.

First, those with a get rich quick attitude tend to not get rich. It is a marathon not a sprint. You have to stick with a plan for YEARS to really be successful. You have to have a dream that you focus on to keep your motivation high for a long duration. First, wealth accumulation is a formula: (Monthly income - Monthly expense) X Large number of months. So how do you increase the accumulated wealth? Increase monthly income, reduce monthly expenses, increase number of months of doing it.

For quick money, you flip (if you are careful, a bit lucky, and really good with budgeting expenses)

For wealth, you build long term.

There is no real reason to not combine the two activities.

Lots good answers explained here. It is a long journey of buying and holding properties, counting on appreciating over time and rents increasing, mix a few flips every year and you can have a great lifestyle.

...-no technique will be fully effective without a DREAM to propel you forward...

And accepting that sometimes you will not just go forward but also branch to the right, left and sometimes backwards... with the determination of picking up and moving forward again.

-write your plan for the day every night BEFORE bed. Work that plan...

Every night I write a "to do" list for the next day. I have another "to do" list that has tasks that can be accomplished (due to timing or size) within the foreseeable future. I also have a long term "to do" list. All are hand written (because that's how I like things) on brightly colored paper and get scribbled on constantly. I cross off what I accomplish and the two bigger lists get rewritten every so often.

Scott, it’s a little difficult to give specific, actionable advice to your situation without knowing a few things like, how old you are, what is your day job (if any) other sources of income, amount already saved for this enterprise, where you live, how much local real estate costs, and rents for. Do you have a rich uncle or other source of funding? Do you have the time, skills, and ambition to do renovation work yourself?

I got started 25 + years ago buying low-priced homes at a discount from HUD, VA, and FHA, mainly via online auctions. I remember using dial up internet access to see the list of available homes.

I bought homes that needed light rehab like cleaning, painting, and minor handyman stuff. My family and I worked on it together as a bonding exercise, and to tell you the truth, it was fun. I live in a low cost area, and these houses could be bought for $30,000, required about $10,000 in rehab and rented out for $600 - $700 a month. Repeated a dozen times. Never did more as that’s the amount of time that I felt I could spare.

Paid them off first over 15 years, then 10, then 5, then all cash. Established a relationship with a local bank and a local banker, which is an important piece of advice. Because I had a great paying, steady job the whole time, paid 20% down for the first few, then nothing down thereafter. Tenants paid the mortgage and maintenance, and now throw off not a King’s ransom, but definitely pay for a couple of nice vacations a year. Now the kids are in college, have sold off a few to pay their tuitions. They are worth now $60,000 - $100,000 so they have appreciated a little even in rural America.

I don’t know of any shortcuts, sorry, but real estate is a pretty attainable path to real wealth over time.

What is your story?

I like single family better than duplexes because when you go to sell there are more potential buyers. Single family the tenant mows the yard. A duplex you need to mow it or hire it out. That said, you go where the money is. Right now, single family is high in my little rural town so I am looking at some duplexes.

I focused on 3/2 ranches from the 1960s because there were plenty of rental competition in the 2/1 1940s houses and apartments. 3/2 Ranches set me apart from the competition. I have a friend that just does trailer parks because the cost to enter the market is low and the return on the money is high.

Try to know your market and what you can get for things. In my area this is what single family homes bring (look at Apartments, Zillow, Facebook Marketplace, or other sites to see what your world brings):

Bed / Bath Rent

2/1 630

2/2 807

3/1 758

3/1.5 1009

3/2 1095

Scott you wanted some examples so here is one. Hopefully the formatting won’t be too wonky as this is from a spreadsheet

3/2 Ranch

TOTAL Purchase Cost $146,826

Cash Invested (20%) $42,201

Financing Amount $104,625

(Rate 5.50%/ Years 30 /P&I month $594.05 / P&I year $7,128.59)

Depreciation for year 1 is $5573 and year 2 is $6914 (calculations not shown)

Annual Rent $14,400 Vacancy 5.0%

GROSS OPERATING INCOME $13,680

Annual Operating Expenses Schedule E

Real Estate Tax $1,893

Insurance $532

Repairs $864 guess 6%

Management $1,440 estimate 10%

TOTAL EXPENSES $4,729 (35% Operating Expenses)

CALC 1 - Cash Flow Before Tax

Gross Operating Income $13,680

minus operating expenses $4,729

equals NET OPERATING INCOME 8,951

minus annual debt service $7,129

equals CASH FLOW BEFORE TAX $1,822

(This is your cash in pocket and can be sheltered by depreciation)

CALC 2 - Loan reduction

Annual Debt Service $7,129

minus interest $5,754

equals principal reduction $1,374

This is your loan reduction from Tenants which increases your equity)

CALC 3 - Taxable Income

NET OPERATING INCOME $8,951

minus interest $5,754

minus total depreciation $5,573

equals taxable income -$2,376 Passive loss rules apply

multiplied by tax bracket 35%

equals TAX PAID OR SAVED $832

(Taxes Saved if positive / Additional Taxes if negative)

CALC 4 – Appreciation (I run my calcs without figuring appreciation)

Appreciation 0% $0

Return on Investment with Appreciation 9.5%

(Cash flow before tax + principal reduction + tax saved + appreciation) / cash invested)

Capitalization Rate 6.1%

(Net operating Income / Purchase Cost) doesn't consider financing

Cash on Cash 4.3%

(Cash Flow Before Tax / Cash Invested) Use this to compare properties

In my experience and in my market, when I got a fixer upper I spent so much money that I could have bought a move in ready house, so as a general rule, I only buy a house if it is in pretty good shape.

Our strategy was to keep the day job, buy fixers, hold and rent.

We started with mobile homes and moved up to brick houses. We have always lived below our means and reinvested every penny from the rentals.

Gevans, thank you for the information. Can you give some numbers with some of the properties you purchased?

Gevans, thank you for the information. Can you give some numbers with some of the properties you purchased?

Gevans, thank you for the information. Can you give some numbers with some of the properties you purchased?

I've been buy and hold. Multi units were where I made my big money. Back in the 80s and 90s through the early 2000s, I owned cheap places in poor parts of town (not the slums). I then started purchasing small single families on the edges of the suburbs but still near town... folks would move there for the better school district but many home owners didn't want them as they were in alleys and on main roads. A few years ago I started purchasing a little better quality home in different areas for appreciation. I thought the appreciation wouldn't be here for another 10ish years. Values jumped so high in my area I decided the past 6ish months to sell most of them and take a really good gain - not necessarily as high as they'll go but good enough.

How I can answer is to look back and pick out the bad moves along the way.

I should of stopped using banks. This would have meant purchasing fewer shacks, however the banks have proven to not be accommodating. Meaning, the staff at the banks, as well as the lending rules have changed so years later, I have good credit, good payment history but it is still difficult to get a loan (compared to what I expected).

That said, Why did I pay the banks so much? Why didn't I pay that interest to friends? Why did I help strangers?

Why didn't I buy few and move forward with just cash. By now, I would be buying alone and with just cash.

The secret to wealth accumulation is use what method is working, and when it begins to slow down, pull back the troops...go to cash and wait.

Scott,

Bought our first single wide and 1/2 acre lot for $18k in 98. Rented it for $300. We still have it today, and it's rented at $670.

Have put around $8k into renovations (we do all our own work) over the years, but have pulled in well over $100k in rents. Taxes are low on MHs, but drama and repairs are high.

Current value is around $50k.

No plans to sell!

We added several more like it, then eventually moved up to brick houses.

Example: 3/2 1400 square foot house bought at foreclosure auction for $62k. Put another $7k into it immediately and have rented it for 12 years. $750 up to $1100. Just sold it last week for $146k, but we did a big renovation on it first, about $20k. Roughly $130k in rents. It was paid for, so we banked the money and are looking for the market to fall. If/when that happens, we will rinse and repeat. Several others like it during the last 12 years. LLing has been good to us.

YOu won't like what I have to say, because I'm in the "no debt" camp. Your post makes some assumptions that are not true. I have properties I paid $65k for (not the $100k you mention) and I WAS (past tense) getting $800 rent...but over the years you increase rent and now I'm getting $925 rent. As far as losing 30% on the sale, no no no...you only pay capital gains on the GAIN, not the entire house. If you buy it for $70k and sell it for $100k with no improvements, you only pay taxes on the $30k. And as for fees and commissions, think about negotiating them down, selling yourself, or carrying the financing....all of which will increase your profits.

Buying with OPM sounds good until something goes wrong in the market. As someone famous once said..."you never know who's swimming naked until the tide goes out".

Gevans and Hoosier,

Thanks for the details. Also, how much were capital gains when you sold? I've read it can range from 0% to 20% based timed owned and income brackets.

Debt and other peoples money is great when the economy is booming and real estate is appreciating. It allows you to expand faster and make more money and have a great return on investment. Play with the ROI calculation and you will see that 100% your money has a lower yield than 20% your money.

My Ex-partner was worth 14 million dollars before 2008. He was totally leveraged. He owed 13.3 million in loans. He lost every thing and ultimately filed bankruptcy a year or two after the stock and real estate market crashed.

One property we had together was pre-construction condos in Myrtle Beach. You can never go wrong with beach property right? WRONG!. We locked in at 275K. The market was going up 25K a quarter. The market was hot! People were making money hand over fist. We did one previously and made 70K just by flipping it 8 months later. The market tanked, the condo got completed and we had to complete the contract and pay for the unit. Or should I say I had to complete the contract and paid 275K for a condo that was now worth 125K. I held it for 10 years and rented and it cashed flowed but ultimately sold it for 149K. Not my best investment.

You are in business to add value for your customers. How do you that? Well that is largely up to you. It depends what skill sets you have and what you like doing.

Some people are great at sales, others are awesome at repairs, others like management task. They all add value.

So what works best? It depends what your local market place looks like and what techniques you employ at that exact time.

At this point in my local cycle, I am doing more options now, but will be shifting more into a subject too environment soon.

You want wealth? Build yourself an awesome toolbox of tools and surround yourself with others that will lift you up when you are getting kicked around. Time and optimism are force multipliers.

You are in business to add value for your customers. How do you that? Well that is largely up to you. It depends what skill sets you have and what you like doing.

Some people are great at sales, others are awesome at repairs, others like management task. They all add value.

So what works best? It depends what your local market place looks like and what techniques you employ at that exact time.

At this point in my local cycle, I am doing more options now, but will be shifting more into a subject too environment soon.

You want wealth? Build yourself an awesome toolbox of tools and surround yourself with others that will lift you up when you are getting kicked around. Time and optimism are force multipliers.

Kevin,

Before you start to convert your house to a duplex or start to rent a rooms, learn your local rules.

Gevans,No matter where you are in the World,America,Canada or Northern Ireland There will always be someone looking to rent a place from you,So the owner will always be in the Driver’s Seat so to speak.It’s the nature of the beast.Remember I came here with £20 in my waist band and if I can do it, so too can other people.....................charlie.........,,,,And why not????? I even rented for almost a year and from another immigrant from Italy .Remember this is America,the land of Oppertunity..........