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20-Year Plan to be a Millionaire - Investing in Real Estate



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By : Steve Kane    99 or more times read
Who wants to be a Millionaire...investing in real estate in one way to make that happen. If you look at the history of the richest people in America from the declaring of our independence right up until today you will notice one common thread in their portfolios and that is real estate. Some of them used real estate to amass their fortunes while others used it as an investment for their money either way owning real estate long term has been the cornerstone of wealth in America.

With that being said, you should evaluate your own investments, maybe you have only invested in a home which is fine and a great start. As we have learned over the last two years, it does take some effort to understand the value of real estate, the importance that finance plays in a good investing and how important location is to any investment. But with some help from real estate professionals and some hard work studying the values, rents, demographics and financing involved in a real estate transaction you can become wealthy investing in real estate.

Here is a simple formula for building wealth by owning Real Estate: Buy a home every two years and take your existing home and make it a rental property. Now this seems simple but it does take some study to learn home values and understand financing to be successful. But buying a home, taking care of it and preparing it over the next two years to become a rental while you live in it and at the same time be on the lookout for a new property is a fairly simple process. And if you stick to this simple formula over a twenty year period you will have amassed ten rental properties, increased your net worth, increased your equity, increased your buying power, increased your passive income, and become wealthy by anybody's standard.

Here are some recommendations to help make this plan a success:

First find an area that you want to live over the next twenty years and become familiar with the house prices, growth of the area, and look for rising values. This could be right where you are living right now so the process might be very simple but if you have not put much thought into exactly where you want to live then you must go through this process.

Second, I would find a Real Estate Professional who is experienced with Real Estate Investing (owns rental properties) and has at least five years experience as a Realtor. Once you find a person you like, that meets your requirements I would go over your plan with your Realtor, that way you have another person looking for properties for you and you have gained the wealth of information your Realtor can provide.

Third, I would start studying property management and home repair the two things that will be crucial to your success besides finding good properties. Then get started, either with the home you currently live in or if you are renting start considering to buy your first home with this plan in mind. Your Realtor should be able to help you with the financing options that are available to you, make sure you look into the FHA 203K program which allows you to buy a home that needs repairs and you can finance the repairs into the loan. This financing opens up the possibility of making a good deal on a foreclosed home that might need some cosmetic repairs, so be sure to ask your Realtor about this financing option. And always keep your long range plan in mind when buying the home.

This 20-year plan is very simple and possible to achieve for anyone who wants to build wealth. Here is a very basic breakdown of your wealth building potential with this simple plan to become a millionaire:

Assume you purchase your first home at $125,000 and put 10% down ($12,500). You now have a $125,000 property with $12,500 in equity (your own money). Let's assume you get a 30 year mortgage at 5% interest which would give you a principle and interest payment of $603.92. Let's also assume your taxes are $1000 per year and your homeowners insurance is $300.00 per year, this would give you a Principle, Interest, Taxes and Insurance payment of $712.25. After living in the home for two years you are ready to convert this home to a rental. We will assume because you have researched the rental market and your home is in great condition you can rent this property for $900.00 per month.

One of the advantages of this plan is that by buying a home every two years and living in the home you will qualify for owner occupied financing. This will open up many more options for down payment amounts and interest rates. If you were to repeat this scenario ten times over the next twenty years you will have amassed a portfolio of well over one million dollars of Real Estate, cash flow income, equity and most importantly wealth. After taking into account increased home values, increased rents, paying down mortgages, and tax advantages you will be a millionaire by any standard and be on your way to financial freedom. Remember to plan your work and work your plan.

One of the greatest discoveries a man makes, one of his great surprises, is to find he can do what he was afraid he couldn't do. - Henry Ford
Steve Kane is a thirty year Real Estate Investor in Kansas City trying to help people with their Real Estate Investing.

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