Making money in the real estate game isn’t as easy as buying a home and waiting for the cash to roll in. Some individuals might be too hesitant to even buy real estate in the first place because they don’t believe they have enough capital.
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Both of these are rookie beliefs according to famed entrepreneur “Rich Dad, Poor Dad” author Robert Kiyosaki. His website features an article entitled “Money Myths and How to Really Get Rich in Real Estate (In 3 Simple Steps).” This guide breaks down common misconceptions and how to actually get ahead in real estate investing in three straightforward moves.
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Research a Property’s Income Potential Before Buying
The article points out that the common belief is that real estate is an asset, but the truth is that not every piece of property is guaranteed to bring money in. The article advised the best way to generate money from property is to “find real estate with a guaranteed upside.”
This involves researching the property beforehand. If it’s a commercial apartment building, is the current landlord renting apartments below market? That’s a money-making opportunity. If it’s a home, is the seller asking for a price well under comps in the area? That’s a way to make money on the buy.
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Partner With Other Investors
Real estate investing doesn’t have to be a solo activity. This is an especially helpful tip for those who want to purchase commercial real estate. The article suggested constructing a plan for the property, then networking with investors to raise the money needed to buy it.
This can help make upgrades to an apartment building, which then gives landlords reason to charge more rent and bring in more income.
Refinance the Property
Once investors have bought a commercial property and made money off it for a few years, the article suggested refinancing. After the refinance, the guidance is to “pay back all the investors their original capital plus a generous return on that capital, and still have ownership in the building that cash flows each month.” This enables investors to still make money off the property without having to put any of their own money in.
One myth the article dispels is the idea that people need to save a significant amount of money to buy a property. Instead, the guidance given is to make partnerships and invest strategically. “That is an infinite return,” the article said. “And that is why debt infinitely trumps savings.”
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Sources:
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Robert Kiyosaki, “Money Myths and How To Really Get Rich In Real Estate (In 3 Simple Steps)”
This article originally appeared on GOBankingRates.com: The 3-Step Plan To Get Rich in Real Estate, From ‘Rich Dad’ Robert Kiyosaki
