Blog | Real Estate

Real Estate Opportunities

Learn to reap the rewards of real estate investing

Summary

• Don't let anyone own your financial security

• Real estate opportunities are everywhere if you know how to seek them

• Don't let your fear of a crash hold you back from a real estate opportunity

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Far too often, people can find themselves feeling imprisoned by the choices they’ve made or, in some cases, the unfortunate cards they’ve been dealt. Over the many years of Rich Dad Poor Dad, we’ve found that these people can be grouped into three distinct categories:

1. Full of excuses.

   These folks are constantly saying things like: “I want to leave my job, but I can’t because I don’t have any savings.” “I want to leave my partner but I can’t because I have no money.” “I’m financially dependent on my employer or spouse.” “I’m stuck and have no options.” “My dreams are unsupported.” And finally, “This is how it’s going to be for the rest of my life.” Instead of making excuses, wouldn’t you rather make something incredible happen in your life?

2. Head in the sand.

   Others will say that someone else is taking care of all their finances. These people feel secure in another person’s decision-making when it comes to investments and savings (even if they’ve never seen any of the numbers themselves) and feel comfortable that they’ve got their future “under control.” Unfortunately, a lot of these people find out — usually when it’s too late— that things weren’t being “handled” in a way that created a positive financial future. In fact, this is how a lot of people discover they are actually broke.

3. Seeking salvation.

   The third group will say that they are looking for someone with money so they don’t have to worry about their future. Seriously? It’s 2024.

The truth is, you cannot make anyone else your source of financial security if you want to become rich. You can’t count on a spouse that can leave at any given moment, or an employer whom you have no control over when it comes to layoffs, firings, demotions or pay cuts.

You can only count on yourself, because you are your biggest asset. The only thing you can truly count on is creating your own financial independence.

Financial independence gives you freedom and choices. And that gives you the confidence that allows you to walk away from a bad job any time you want. Financial independence is simply the most empowering position any one person can be in because you are in control and have choices to make.

Why real estate investing changes everything

Successful entrepreneurs always see opportunities where others don’t. When you look at the rich, they often make their money through real estate investments.

There are various asset classes to choose from — such as paper assets (stocks, bonds and mutual funds), commodities (such as gold, silver, oil, gas or corn), a business (either your own or someone else’s), and cryptocurrency — but let’s focus on the crowd favorite: real estate investing.

Why real estate? There are two reasons to invest in real estate: the first is for cash flow (an ongoing stream of income you receive from an investment, such as the rent you collect from a rental property), and the second is capital gains (the one-time profit you earn from the sale of an investment).

When done right, rental real estate property, which produces a positive cash flow, could be your ticket to financial freedom. Whether you invest in a single-family house or a shopping center, it’s an excellent way to build ongoing income that isn’t reliant on your current job (which could disappear with no notice) or your current partner (who could also disappear, or make bad decisions that bankrupt you). Who wants to rely on something you can’t control?

Real estate investing opportunities

One thing to keep in mind when starting on this journey: it’s okay to start small. Below are some examples of unexpected real estate options to invest in:

As you can see, these options (and there are even more out there, so get creative!) are inexpensive investments perfect for first-timers. As you start to earn a return on your investment, you can use that money to buy the next one and so on. If you desire, you can graduate to apartment buildings, office buildings, retail shopping centers, warehouses, and more — the sky’s the limit when it comes to real estate investing opportunities.

Pretty soon, you’ll be on your way to the financial freedom you crave and the independence everyone needs.

1. Mobile homes

   Kim Kiyosaki’s sister found an inexpensive and relatively easy way to get into real estate: mobile homes. She found that she could buy a used mobile home for about $3,000 and receive a positive cash flow of about $200 per month. That’s a pretty healthy return on her money. She also discovered that in California, where she lives, a mobile home is deemed a motor vehicle, which means she doesn’t even have to go through the whole real estate process of getting title for each mobile home — she simply goes down to the Department of Motor Vehicles and picks up the title. Let’s just say she very quickly discovered why real estate investing can be so lucrative.

2. Billboards

   Did you know that billboards are considered real estate? Better yet, they are real estate without the hassle of tenants. One woman invested in billboards and found that they are a good investment in all markets — when the economy is good, they are used, and when the economy is bad, they are still a lower-cost option for companies who want to advertise. You can make $1,000 to $5,000 in rent per side per month.

3. Vacation home

   Mona, a friend of the Kiyosakis, and her husband had always wanted to own a cabin in the mountains so they could escape Arizona’s summer heat. They didn’t like the idea of taking on a mortgage for a second home, so they did some research and discovered a shortage of rental properties in the area they were looking at. Clearly they weren’t the only ones with this plan. So they bought the house (making it an income-producing asset instead of a liability) and rent it out whenever they aren’t using it (people also want to use it for winter skiing).

4. Airbnb

   Many travelers love Airbnb, the website that allows travelers to find comfortable accommodations that are local, authentic, sustainable and inclusive. But these aren’t hotel rooms; they are in people’s homes. Travelers can rent out a room or the entire property (depending on the listing), so they can feel more at home in an intimate environment. What does this mean for you? Depending on your circumstances, you can rent out a spare room or your entire house (which is particularly attractive to anyone who spends their summers or winters in another city) and make a daily or weekly income. Once you understand how to start an Airbnb business, you can evaluate if this choice is right for your lifestyle.

Why the rich are waiting for the next crash

Now, depending on the season, you might be wondering if it’s really the best time to buy. That’s because you’ve probably noticed how people are constantly worried about the next real estate boom and bust.

But while everyone else is panicking and worried about a market crash, you’ll see entrepreneurs and real estate investors excited and ready to find some deals. This is a great time to be looking for real estate investments.

First, familiarize yourself with the seven stages of a financial bubble, which will help set the stage for what I’m about to discuss. As you can see, booms, busts, and bubbles are very familiar and natural cycles in our economy.

Ok, now here’s the answer you’ve been waiting for: Market crashes can be the best time to buy, because people are so panicked and focused on selling that they’re far more likely to make you a better deal. Robert and Kim Kiyosaki witnessed this first-hand when they moved to Phoenix, Ariz., and began buying up properties left and right. Amateur investors wanted out of their financial commitments so badly that they were actually calling the Kiyosakis and offering to pay them to take their properties off their hands. Robert and Kim happily agreed and definitely got the last laugh: they made so much money during this period of time, that they were able to retire by 1994.

The tax advantage

You might have read one of Tom Wheelwright’s blogs about tax rewards for entrepreneurs.

The tax laws reward entrepreneurs for creating economic development and employing people. In addition, tax laws offer benefits to real estate investors providing housing for employees and buying commercial property. Why not reap the benefits of the tax laws as both a business owner and a real estate investor? When investing in real estate, you receive not just one type of income, but four types of income from:

• Your tenant’s rent, less operating expenses (cash flow from real estate or net operating income)

• Depreciation deductions that offset income (called paper losses or phantom income)

• Amortization (your tenant paying down your mortgage debt

• Appreciation (capital gain or increase in value of real estate over time)

The best way to leverage this?

1. Find a building in a good area with job growth.

2. Once you find a good area, pinpoint an underperforming property that you could add value to.

One example for the latter point is washers and dryers. If you were to find a decent building in a good area that doesn’t have washers or dryers in each unit, consider making that addition. Why? Because by doing so, it can raise the rents, increase occupancy, and drive higher Net Operating Income (NOI).

This, in turn, increases the overall value of the property. Then you can eventually refinance the property, pay back all your investors, and reinvest that money into a new property.

Now, this is the part that is difficult for some people to understand, but when you buy another property, you’re essentially getting it for free because you’ll use the equity from other original property to purchase it. And because of the increased operating income of the previous property, you will still have cash flow.

Dealing with the haters

Although a crash is actually a strategic time to buy, the market’s immense pessimism also makes it a tough time to do so. Your family and friends, possibly even your financial advisor, will think you’re absolutely crazy and try to prevent you from “making a big mistake.”

People will also be lined up warning that “investing is risky.” However, the important detail to note is that not everyone defines “investing” the same way. Many amateur investors bought into the real estate market when it was hot, prices were soaring, and they invested on the hope that home values would keep going up and up. They probably had plans to flip the property and make a quick $50k. Investing for the purpose of capital gains instead of cash flow is the very definition of risky.

Experienced investors understand the fundamentals of real estate investing. Investing doesn’t have to be a gamble. Good cash-flow investments are based on having a solid financial education. Knowing and following the fundamentals takes much of the risk out of investing. Sure, there’s always some element of risk, but by sticking to sound investment strategies and planning for ways to cover the downside, the risk can be greatly reduced.

What are you going to do to increase your financial education today? Will you be ready — and more importantly, willing — to jump on investment opportunities when the next crash happens? You can start the process by learning other secrets the rich use to get richer at a free, upcoming real estate investing class.