Becoming a Real Estate Millionaire
Without flipping or risking your life savings.
Delaying buying a home was my biggest financial mistake. We bought our first home in 1994. We didn’t do it to make money. We did it because my wife wanted to buy a home.
One of my MBA profs said home ownership was not a good investment. Homes just went up with inflation. When you sold you just had to buy another, and you weren’t ahead. So, I wasn’t interested. Besides, what did my wife know about investing, I was the one with the MBA.
Our payments were about the same as rent. So, we weren’t out more cash every month. We got a 3% down loan. I had a patient who was a home designer. He designed the garage to be two bedrooms, a laundry room and a computer area. Another patient was a carpenter. In a weekend he had the garage framed. Soon our three-bed, two-bath home became a five-bed, two-bath home.
Ten years later we sold the house and netted about $100,000. Now think about that. We weren’t out hardly any more money every month. We only put about $6000 down and ten years later we netted $100,000. That’s quite an investment.
Yes, houses do go up with inflation. Inflation isn’t the only reason. We all know people who bought homes and wound up selling them for less than they paid. Why do some people make money and others lose?
What happened? I took the coursework to become a real estate agent. I then realized why homes go up in value. It isn’t just inflation. Homeowners add value.
Some people just get lucky. I was lucky. I did things that increased the value because I needed them. Then right before selling, I did even more. The key is doing the right things and not doing the wrong things. You must be a savvy investor.
You don’t have to be a flipper to increase your net worth. I’ve only owned three homes. We downsized in 2016 and paid $250,000 for our home. We put about $80,000 into it. We could probably sell it tomorrow for about $650,00.
However, in ten years it will probably double in value. In ten years, we will have the mortgage paid off. In ten years, we’ll be 80 years old. We might be ready for a change, and we’ll have over a million dollars to help out.
That is what I meant when I subtitled my book, Becoming a Real Estate Millionaire. You don’t have to do a lot of work. You don’t have to flip houses. Just be a savvy investor when you buy a personal residence.
You may have already figured it out. Have you systematized your knowledge? Have you passed it on to your children? I wrote a book to help systematize the process and pass along what I learned. Future posts will include more insights.