Why Buy When Renting Makes You Millions?

Where in the world are you getting that in South Florida? This article is giving me that push. I see it being extremely lucrative especially if I stay in the social interweb environment that garners so much attention from advertising once you get a big following. Not sure what the writer is talking about with creating and selling businesses. Surely it takes years to create a business that is profitable enough for people wanting to purchase on their own. And if the business is doing so well…then why would you be so quick to sell it anyway?

My point though is that your net worth will benefit more so from building a business versus buying rental property, unless you make buying rental properties your business. With my wealthiest clients, these exits have occurred at different stages of life. Most people live and work longer. And real estate investments can often mean a real estate business, though not necessarily.

Hi BJ, many businesses are built just so they can sell them away to do something bigger or do something they love more. I am sure you do business everyday with companies that belonged to someone else who built it just to sale it to a bigger company. Sometimes a company can grow so fast that it can get overwhelming. Then a bigger company offers an insane amount of money to take a growing headache off their hands. This happens quite often.

I thought the same. I am glad to see that I am not the only one thinking this way. I am not disagreeing with your assessment that rentals generally take a long time to generate wealth: Let me explain…my goal has always been to grow my businesses and use the revenues to buy more real estate quickly. The job is no longer a hindrance, as of 4 months ago and my wife and I are celebrating the last of k formally k and income tax money being spent this week cleansing our financial system of corporate tokens.

Thanks for your real life example. I wish more people thought this way, hence my desire to write the article. I guess I am completely lost. Will you and Michael give a couple examples of wealthy people building businesses and selling? I must live in a smaller world…lol. The reason to sell is complex. Generally, the entrepreneur has to get out of the way.

Liquidating is a great way to realize the fruits of your labor. You are likely working long hours, so your hourly rate is so darn small that you consistently question why you are doing what you are doing. Once you can finally liquidate, you get a large payout that makes it all worth it. The Millionaire Next Door gives a lot of examples of this based on academic research. Thanks for splashing a cold cup of realism in the face of so many RE investors and a full bucket of realism water over the head of the gurus selling their dreams of wealth.

I think many RE investor get started due to the bad taste left in their mouth every time the stock market tanks and they look at their K or K. I suspect without proof that many markets have been picked pretty clean by established RE investors and new investors have a tough time both from trouble finding deals but also from a lack of experience.

I have an ebook copy that I will share only with Brandon. Kevin — thanks for your comments and I concur. You will run out of cash or the banks will cut you off. I guess maybe that Japanese properties are so well built they have no expenses. Total net income per year: The goal of a Pattern Interrupt is to make a statement that has Shock Value and will get you to perform a certain Action.

It Basically interrupts your normal thought patterns, thus getting you to engage in this excellent discussion. It worked on me as well. Difference in Japan — property generally depreciate. I guess you have to look at both ROI and appreciation. On one hand, this is a solid article with some information that a lot of folks need to read. As an experienced CPA who has worked primarily with businesses, I would think your viewpoint is skewed towards the positive. Most of the people I know who own and operate out of necessity a business have a pretty poor quality of life, and pretty poor income to boot.

They have to do it all themselves just to stay afloat. Lots of people read self-help books and business books, and investing books, and whatever else and lots of people put a lot of effort into trying to make those things happen. I think most folks get into REI like they get into any other business: Best Paragraph on this page Brandon, either invest in your mind to grow a business you can sell or stay miserable on a job you hate. Your financial freedom and wealth can happen because of you or not happen because of you. The common denominator is you.

Like single or dual family houses. I was wondering when someone would mention this: Used to work in a management consulting office and heard a lot of stories about broke and desperate business owners. So I learned to dismiss the idea of having my own business. Plus the fact I am too lazy to be my own boss.

For all the millionaires and investment gurus or those that prefer to have their ears tickled vs more pragmatic advice, move on, you made it, and congratulations. For everyone else, I would suggest reading my reply. This is a great article. Unfortunately, I think it is very true. I have been investing now for about five years and it really gets frustrating when you have really high expectations. I have found from my experience that real estate is a get rich slow business.

I did not truly understand cash flow when I started in it over 20 years ago, and find that even now in my area cash flow is nowhere near what folks are getting in other parts of the country. My first 12 years it was more of a hobby, for about 8 years it became a lot more work when my investing partner moved out of town and I took over managing the rentals. When I bought my partner out 3 years ago it began to consume nearly spare moment I was not at work. Of course I have nearly doubled the gross income in the last 3 to 4 years. I ran on the principal of if I have a 15 year loan and 10 properties in 15 years I will own 10 properties free and clear, so buy as many as you can.

I also found I had to keep cashing equity out of my older for the down payment on new purchases. The end result is expansion of properties, but very little true cash flow. I am now contemplating retirement so have decided to slow or stop expansion and concentrate on paying down loans. Using the snowball effect I should be able to pay off all debt in about 10 years. Since my mortgage payments are in excess of my gross income from my W2 job, when paid off my retirement income will be much more than my current income.

Overall get rich slow has worked for me. Get rich slow works for tons of people. I think many people enter real estate expecting to leave their jobs within a handful of years until they pick up that first rental and reality sets in. My current plan fairly passive, modest cashflow requires some capital on my part but really starts to compound and snowball in years 5- whatever.

The article has its merits and I enjoyed seeing a different argument. I knew the risks going in. The article seemed to downplay the risk associated with starting any business. High income W2 employees get downsized when the economy turns sour. They get downsized when a new system is invented to replace them. There is no safety in the W2. When the market tanked in , I owned Washington Mutual stock which essentially vanished and was taken over by Chase Bank. Today, I can drive to any of my properties and stand on them and touch them.

If something bad happens, they are insured. I have leases in place with the tenants both commercial and residential and have done my best to insure they are solid. I can drop the rent and get aggressive if they are vacant too long. Great article I agree with. Timing and the right market can produce significant returns quickly in real estate. There are lots of roofs, toilets, sewer pipes to fix alone the way and many that are very costly repairs that will delay that monthly wealth!!!

Big money, big happiness, right? And I believe that financial independence is certainly attainable through years of solid RE investing. My dad started buying rental properties in For 25 years before that he was a portrait photographer who ran his own business.

Today he has about 15 college rentals and lives quite comfortably in northern Wisconsin. It only took him 4 years. He never got there with his previous business. I lived there from and graduated from Menomonie High and Stout. I never said real estate was unattractive. I continue to invest and build out my own portfolio diligently. They spent their time building out other income streams and switched to rentals later on or had rentals supplement their main income stream.

Excellent real life example Tim! And I think you are right on the money about what most people here are seeking — the freedom to live life on their own terms — freedom from the — not massive wealth. Running a business is a huge investment of time and usually money, and there is definitely a lot of risk. There are those that strike gold, but that is not the norm. It has been and continues to be a lot MORE work than just a ! But with a lot of satisfaction as we see our creation succeed, and with a lot of hope for the future we will be able to create by continuing smart investments of our cash flow.

Brandon Hall, Thanks for the thought provoking article. I hear the same desire from many want to be investors that they want rentals to enable them to quit their day jobs. Hard to make happen though. I told the story of the first purchase in Bigger Pockets Podcast 82; which I later sold for about 4x what I paid. Your business is building a portfolio of prime properties, selling them when the time is right then buying a bigger property with the high returns. You beat me to the punch Michael. David built a business plain and simple. His product is real estate.

It is the massive action, backed by your knowledge and experience that got you to where you are. Brandon — Fantastic article. Too many people miss the difference between passive investor and active business. My thoughts are that if you treat your real estate investing like a business doing more than buying one or two SFDs a year you can do very well with it. The reality is that the net worth of the average American age is around 14K excluding their primary residence. I took from this that having a more clear and defined plan of wealth building is what is important.

The idea of rapid massive wealth through small rental portfolio is accurate it is cash and time intensive. Brandon is correct that running a business around real estate and investing the profits would significantly accelerate the process. Know what you really want what it will take to get there is the point I got. That being said, obviously building a massive business for yourself would do the trick too. Regardless of your investment strategy, that will take quite a long time to build. Tons of people will invest with you. But the seller was in rush and had to sell, and the buyer was at the right time at the right place.

Nonetheless, I bear first hand witness to it. And no I was not the buyer, even though I really really wish I was. Scary how close he was…. REI is full of hype, but is a great way to diversify. Thanks for presenting it in a very eloquent way. I have read many articles on BP over the last 4 years and this one, in my opinion, is the worst. It is simply untrue and discourages people from using real estate to achieve financial independence. I am not a guru, I have nothing to sell. I am a small multi family investor who has achieved financial independence in 4 years using methods I learned about on bigger pockets.

You base your post strictly on your own experience, market and customers. I encourage you to branch out and look for other examples of how people have used rental investing to create significant wealth and passive income in short periods of time.

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A not so famous quote comes to mind: Some highly successful, some woefully unsuccessful. The point of my article is that, for the most part, those people have been misled. Instead, you are building a business and rental properties are your product. There is a huge difference. How funny, I was thinking the exact opposite.

Rental real estate property, on the other hand, one that you actively manage probably employing your family or close friends — or even better complete strangers with operation controls in place is a business. You have a product to sell, you have marketing budget, you have a payroll or at least employees , you have suppliers and vendors, you have maintenance contractors, you have books and general operating budget, you have reserves, and you have clients; your tenants!

I will concede that Rental Real Estate Properties, along with property management in general, is great way to buy and hold Real Estate. I understand that Brandon comes across as deterring from buying RE to rent. Your initial investment was 5k, as you stated verbatim! Very insightful and well written — a large percentage of people would be well served to have exposure to this reality.

This is really a question of where you spend your time, energy, and focus. A rental portfolio with 10 units may demand 5 hours of time per week and involve little risk. A business may demand 50 and involve much risk. That said, many props to brandon hall for these articles — fresh content, deep treatment, and well written!! Hi Justin — two very excellent points that I wish I would have thought of.

As in — how do they come up with the data? Maybe this is something I can dig into more. Brandon — Phenomenal article and one that every single new real estate investor should read! Doing this and self managing to protect your margin and accelerate growth is more like running a business. Well guys I think that there are multiple ways to do anything. And no one knows all the ways to invest in multi-family.

I personally have invested k and am at monthly cash flow and have done that in two years. Of course you can not do this with some turn key property but it can be done. Some cost overruns have hurt, lol. Timeline more years for full bye-bye W Minimal risk is the thing I love the most.

I am pretty new to BP however I am a real estate investor. I agree with Brandon with the fact that rental investing takes a long time and like any investment is subject to cyclical peaks and valleys. Is BP spinning off from real estate into business brokering? The majority of the extremely wealthy that I know have all had some real estate pieces in their portfolio however have made their major wealth buying small to mid-sized businesses making them profitable then selling.

I think that with 77 million baby boomers retiring there is probably a huge surplus of Mom and Pa businesses that do not have successor plans within them that just need a few talented millennials to take them from a decent profit margin to the next level. You hit the nail on the head. Absolutely, I did it. Is it pretty easy? Can everyone do it?

What you missed is that the strategy is to create value and I created far in excess of k in value. One that uses rentals as a product to deliver value. Shoot, just by your statement about creating value I know you are thinking like a business owner. Great BP article which is very applicable to the San Diego market where cap rates are historically an average of 3. You can see there is a bit of a debate going on in the article comments. You cannot deny that the proof is in the pudding and if Brandon is seeing the genesis of high wealth in his customer base on average being one of his 3 categories such as business ownership — it should make you pause and consider this.

Props to Brandon for writing this! Brandon, great article again. Brandon — I absolutely agree with your article. Some of it is arguing the details numbers but a lot is the inability to see the world from your perspective. None of them got there by only building a large rental portfolio. I personally know people that sold their businesses for millions over a period as short as 10 years. Not everyone can duplicate that success but some can and will. The potential is there.

The whole become a billionaire by not finishing college and building technology in your garage makes for nice visionary conversation but it is not the reality of becoming wealthy through small business. Great article and has reinforced what I have been pondering for quite some time. I have a dear cousin that realized this before you and I. He originally was buying property to fix and flip and while he was doing well at it, he forged a new path.

Now he specializes in buying e-commerce businesses with seemingly insurmountable problems and turns them around. He buys them and within a year, has them extremely profitable and leverages the cash flow to buy others. He has some capital he uses for equity but for the most part, the US govt recognizes him as a small business owner so he borrows from the SBA to but these businesses and he goes to work making them profitable.

Has opened my eyes. You simply stay open and receptive to the right idea and opportunity. Things must evolve and provide more opportunity if you are looking for them. I doubt any of the wealthy business owners had it all mapped out on day 1. We have to be ready to learn and optimistic for opportunity. Glad to have read this last article! Last time we talked, I was still at a Big 4, myself, and have now moved to a smaller law firm specializing in tax law, estate planning, asset protection, and wealth preservation strategies.

And yes, I tend to pick their brains, as well! Smart people surround themselves with even smarter people than themselves! Glad to see you are doing well! Thanks for this splash of cold water to the face. As a new investor, I can always appreciate a heavy dose of reality. Pretty discouraging to a newb going to her first walk through tomorrow. Did I just waste my time dedicating myself to learning about REI?

Real estate is a fantastic way to build wealth and financial security. The point Brandon is making is that if you want to build multimillions of wealth, you might be better off starting a business that you can sell and still do real estate thought. Sounds like you are already on your way with your purchase. And we keep learning when we are receptive how to get where we want to go!

Not necessarily a great way to build wealth. The really rough rule of thumb that I use is that what I pay for a property is equal to just putting that money in savings and drawing off of it for 30 years. The upside is that with a rental property, after 30 years I get to keep drawing. Trying to understand your theory here. Would you recommend cashing out and buying properties with that cash? Owning them free and clear and generating passive income? Would you do single family homes or multi-unit? What are your thoughts? I have never posted on BP before but the title of the article really interested me.

This is obviously my full time job and I have created 10 full time jobs within my company. I have met some pretty smart people in the business and some pretty dumb ones. I think what you are getting at in this article is that holding a normal job and buying a rental every few years will not make you rich.

People with high incomes i. Rental real estate is a business and requires a commitment to make big money. It also requires raising money, spending time developing contacts and spending time searching for deals that actually have upside and that will cash flow. On the other hand, the reason there are so many dumb people in Real Estate is that if you hold it for a long time it is very forgiving. I have seen many people who do not really know what they are doing make a lot of money from real estate but there was a lot of speculation involved.

At the end of the day, buying rental property is usually better than stock market investing In my mind the stock market is a scam. You just need to have a realistic view of what will happen to your investment. He did the right thing by looking for a value -add property that cash flowed and just got lucky with the rent bump.

It is also not unheard of to have people start out with a salaried job, do some real estate work on the side and then use that success on the side to quit their jobs and actually raise some money. Fantastic article Brandon — I think this does a great job of highlighting the difference between running a real estate business and investing in real estate for passive returns.

IMO, Brandon has successfully written the words that BP consumers have subconsciously known all along: Brandon selflessly uses himself as an example, and refers to Josh to second his notion. Real estate investors and successful business owners build wealth partly because they learned how to consume debt and leverage it. This was a foreign concept to me growing up pre-BP and remains so to the masses. Think Suze Orman and Mr. If you are adept at this and educate yourself by whatever means works best for you, then you have exactly what Brandon refers to in his article- the readers here are quite capable.

And some think like Grant Cardone 10X and others have self-doubt and many are in between. Even a slow and steady pace with the property snowball method reinvesting all rental income should get you there relatively fast! So, You can get rich quick if you make over K a year or sell a business worth millions.

And yes I agree that real estate investing is not as quick. But the problem is there are thousands of sales people that never break K and many businesses that never sell for millions. How do I create a business worth millions? The most important part is missing. I will continue to invest in real estate simply because I know it works and I know how to do it. I have no idea how to create a business worth millions. Hey Brandon, Sorry, but I have to disagree with you.

This is not how successful people invest in real estate. You forgot to mention multifamily, cap rates, value added properties, etc. Plus you mentioned businesses, sales people and stock option for becoming extremely wealthy….. Steve, you clearly misunderstood the root of the article. I would suggest going back and reading the followup comments to help you better understand what was said in the article.

You are talking about running a business using real estate as your product. Brandon is talking about the rate of growth from a person investing passive income. You just misread the article. More or less agree with the central premise. I always wanted to get into buy-and-hold RE but waited until my 30s so I could first build a small business and get some working capital.

After being inspired by a great BP episode, my wife and I now live off her salary for the most part, and almost all of my business income is free for investment. Nice to be able to reap the benefits of a cash deal. I still think the returns are far better just buying smaller online businesses. Many real estate investors, rich and poor, are looking for ROTI return on time invested.

There is a reason why investors pay x earnings for commercial real estate and x earnings for your CPA firm. Holding real estate is the safest and surest way to wealth but certainly not the fastest. Starting, running, growing and selling a business is faster but riskier. I have started three other businesses with no success. I might give it a couple more tries. If I try a couple more time with no success, I would have been better off putting the capital in real estate.

When his embezzlement was discovered, he committed suicide. For some people, money is as addictive as heroin and you never have enough not matter how much you have. Just a question though, what do you think about hotels? Hotel business in general? I believe Brandon Turner often mentions this. He takes time to explain that this is really a slow process. Anyway, my take on this is to have multiple streams of income from several businesses, most of which should be reinvested to a lot of rentals, and this builds a lot of wealth. Just my two cents. Great article, thanks for sharing Brandon.

I also really liked the bp podcast episode you were on. Thanks for the insight. I really like what J. Scott has done in house flipping and he offers business plans to copy, but do you think this is a business one can scale then sell later? Will it offer enough profit as a business to reinvest? We put that money down on a song family bank foreclosure.

None of our w2 income into real estate. Last year I bought 4 single family houses, a duplex, a 10 unit apartment building, a carwash, and a laundromat. This is March 1st and we have bought to rentals this year already, with an offer in on another 1. I turn 30 in a couple of months and I expect to quit my w2 job within the next 5 years under my current investment strategy. I currently run all of the day to day of the rental business myself.

I typically put in a half day Friday and Saturday. I have no doubt Brandon had the best of intentions when writing this article but I think the execution was poor…and this from a newbie that has a whopping one! No one if you exclude Bigger Pockets Podcasts, books and forums. He compares wealthy men who flip businesses to those who would go the route of saving up for one property…per year. Again, a casual stroll into the forums and the podcasts and the BP books and you can quickly run into people who buy properties in less than 5 years. Why not use those people instead of comparing Bill Gates to grandma who wants a little extra for Christmas gifts?

He speaks about mistakenly thinking he could quit his job quickly. I wonder where you can hear stories about people who bought properties and quit their jobs in less than 5 years? If only there were like a community of investors that could get together and share information. Wishful thinking I guess. And he sets up 10 years as an eternity. I am starting out seriously with R. Lastly, he says wealth is NOT going to happen with rentals.

I am a Statistician so the word never even if not said but implied based on interviews with wealthy people I know he says thousands grates on my nerves in a special way. Why not say I have not seen it happen or it is highly unlikely? I understand he did not write the title so I am comfortable lobbying this criticism on that person as well.

Hi Charlotte — I think you missed my point. You most certainly can. Too many people promote investing in rentals as a quick way to build wealth and leave your job. Well, ten years is not quick at all. People start investing with big dreams and expectations but investing is slow and methodical. Often times that gets lost in all the sales pitches, many of which happen right here on BP. I wrote the best I could without disclosing client information. I wish everyone could see what I see, your mindset would change. Would sell off and buy properties free and clear to create income?

I think Brandon is spot on. The big difference here is the distinction between pure investing and building a real estate business. All I need is money and some time to do my due-diligence. This, in the long run, can be very lucrative. In any event, my time is better spent lending money to those in the real estate business by either making hard money loans or taking equity positions in their property.

I tried to post yesterday but the page bonked. While I agree with your larger point, I disagree with the method you suggest. Starting something from scratch, especially if its tech, can be a highly risky proposition. Better, I think, to buy an existing company that has already gotten to, say, K in sales.

Find an industry you know something about and start looking on bizbuysell or other spots. You can buy companies for x cash flow and you can get financing. Ideally you do both in parallel.

But I think you should only start from scratch once. People meeting with Brandon are generally going to be successful people. At this point, one could assume they have more than one venture going on because a single venture may or may not require a CPA. The likelihood of seeking out a CPA increases as you have greater wealth or more complex financials. One who had a business idea, and another who was going to invest into a rental property, in 10 years, my bet is that I would have more wealth via the real estate investor than the entrepreneur with a business idea.

Sorry, But Investing in Rentals Won’t Build Massive Wealth. THIS Will.

If you want to maximize the possibility of making massive millions, the business idea will be your better shot. As I said in another comment — those who are reading and participating in BP are not average. I doubt anyone would refute that. How many of them build a business after they start in real estate. For some the path to owning their own business is to generate passive cash flow through real estate first to free up their time to work on a business.

I think the error in you article was that starting a business can be an excellent way to make money, but also a far greater way to lose money than buying real estate which to many seems more stable. In my experience, people building those type of businesses had a large amount of luck. Either they worked a company and they learned a unique set of knowledge… or they had a friend, parent, or relative that could guide them or provide startup capital…or they were simply in the right place at the right time. Sorry David, I strongly oppose your view.

The majority of my clients have come from BP. The majority of my clients are running businesses, some RE related some not, and they are realizing great success. You seem to be building a case against your article. Again, the majority of my clients are from BP. People who are on BP are above average in terms of wealth build and business building. I wrote this article for BP readers. Thus, individuals reading this article are above average and can likely build alight profitable business. Wealth is created by ownership. Ownership in companies, real estate, etc. The other key thing that you hit on is real estate is a get rich slowly game.

Leverage and time work in your favor as a real estate investor, but you have to have patience.

Sorry, But Investing in Rentals Won't Build Massive Wealth. THIS Will.

Rental properties may not make you rich quickly, but they are a low risk way to slowly replace your W2 income. I have as many friends in business who are slaving away for a half way decent salary as friends who are making a million a year with their slightly larger businesses. The former risk their time, while the latter risk much more capital. I guess it depends on how risk tolerant you are. I like my W2 job and my cash flow that has slowly replaced my W2 income. Slow and steady, minimum risk. My wife quit her job last year, for her 41st birthday, and I can leave my W2 job at anytime too. But think of it this way — a service business will have s of clients.

On the other hand, your employer could leave you at any time. As a newer real estate investor I keep listening to a lot of turn-key podcasts.

You still need money to make money. But your article confirms I was. Thank you for sharing! From what I understand, the genesis of BP was based on the idea of giving investors a central hub to learn how to get started and navigate through the challenges and opportunities in real estate investing. Back to this blog: Many of us have seen people dump their entire life savings into businesses that went belly up. Sometimes people can and do recover, other times not. Although your personal experience may be based on your dealings with successful business owners, the facts about those who lost money and went out of business cannot be ignored.

Despite their stories being seldom told, the risks are very real. Before I ever buy a product, or start done a path, I look for reviews who can offer an unbiased opinion. This article was intended to be a gut check for anyone that has drank too much Koolaide. I think it worked. As an extreme newbie about 3 weeks into consuming all that I can about REI through bigger pockets podcast, forums, blogs, etc. It has not turned me off in any way from continuing to look into different avenues of real estate investment and also helped give me more perspective on expectations and ways to achieve my goals.

Thanks for the article! Hi Brandon, Thank you for taking the time to write this article. I think you make a good point. I believe a lot of the members are missing the point. It is true that REI builds wealth but also,on the average, it takes a long time. On the other hand, as you have mentioned, the more stream of incomes you have, the faster you will built wealth. As someone that has started many businesses. Buying real estate smartly over time is virtually a sure bet on significant net worth. Building a successful business in itself is a very difficult thing to do.

Building one that is around in years that you can sell is a much slimmer reality. Look up the the odds of starting a successfull business and the odds of being around in 10 years. What I do agree with is a high paying commission based sales job. Training yourself in sales and working hard for a great position is much more doable and invaluable. There are many sales positions that you would make more yearly than a small business owner. Without any of the liability and headaches of being that business owner.

Thanks for your contribution! Although I agree that hard work to build a business is a great way to make wealth, it is surely not a sure fire thing. I started an IT business back in We were very successful. Spreading the cost of professional IT services for everyone in a complex we a great selling point and it worked great…for at time….

It was unbelievable how fast we lost market share. We just could not compete with that. If I had put all my time, effort and money into real estate I would be miles ahead of where I was. Everything worked out OK in the end, but it was a tough time. I had not considered real estate investing at all back at that time. I was focused on what I knew best and tried to fill a need and it was very successful for a time. I do think there is a certain amount of luck involved with any business. That is tempered by planning, experience, knowledge etc etc, but it can never be removed entirely.

Now our family is shrinking one kid left at home and my wife and I are looking at doing some real estate stuff, specifically focusing on short term vacation rentals and are still looking for our first one. Great article overall IMHO. This is a real world example of a refute against my article which I truly appreciate, unlike the majority of comments who are flaming me with nothing to back it up. Brandon, you are wrong. Majority of startup fails. Want the quickest way to wealth? Buy a winning lottery ticket. Brandon, please stop writing this kind of articles.

They are pointless and useless. Learn from the millionaires and billionaires like Trump, Kiyosaki, and Buffett. If you want to only work on things on weekends and through a couple timely based phone calls to contractors and via the use of a lockbox at your property, real estate might be an option. I think this is a great article. Diversify your streams of income, whether real estate, business, stocks, etc..

The more units one can aquire that produce income, then the faster one can arrive at financial independence and become wealthy. As the article mentions, the more units one have, then the more your portfolio starts to become a business in and of itself. All very interesting comments to a very interesting post. To build wealth one must obtain assets that hold value and appreciate over time. Also, in either scenario, creating efficient operating systems to free up time and cut costs will help in managing the operation. Whether you work for yourself or someone else, if you stop your income stops.

There were references to Trump, Kyosaki, and Buffet. These people own assets that stand on there own, generating income on a daily basis with systems in place managerial and organizational. A check hits the mail box on a regular basis no matter what else is going on in their lives. That is the Freedom we all desire. It takes roughly k in equity to see 10k a month. First, thanks for the great article. It occurs to me that there is a survivorship bias at play in your article.

Many businesses fail or are mediocre. The owners of those businesses will not likely be using your services and will be underrepresented in your analysis. If you looked at averages as opposed to only the super successful would your conclusions be the same? Rentals are slow and tedious, but how safe are they compared to businesses? Huge fan of your work, Brandon. Though building a business outside of real estate, I found, can be more challenging. As a CPA in the midwest with a good combination of investing background and real estate taxation Brandon is right on here.

I made that realization myself this year and have started my own accounting firm and property management business in the same space and will most likely add on maintenance, cleaning, and several other aspects of the business to generate more income to use to invest in real estate for the long game.

One thing I would add is the ability to use real estate to be able to own a business. My couple of rental properties raised my net worth enough for me to bring a very successful franchise to my town. We open in two weeks! I enjoy just coming back to get the different views on this subject. I Learn something new each time I come back. What I took from your article is that REI is good. Making more money to put into REI is better. I know my results are not typical at all as I used VA loan and really good local bank and relationship.

I started summer with my first unit, purchased a 2 unit with VA loan k, no money out of pocket. Refinanced my original 2 unit was appraised for k less than 4 years later able, to get K cash-out. This allowed me to use my VA loan again on three unit, had to bring 32k since it was a VA jumbo loan. Tenants cover all utilities and they perform lawncare. Overall I believe I have invested k approx to attain this. Between selling one property and refinance two I was able to attain approx k. Approx 47k additional I had to contribute to be where I am. I am about 5 years in the game. All my properties are in A or B neighborhoods campus or near downtown.

I am 29 now and still rent with a roommate, and drive a nice car. I am trying now to prepare and protect my investments of any bubbles that may come up. Some people say I overlevereged guess time will tell. You must have acquired those properties handsomely to net that cash flow. Your advice is too late for me, but I take a different view with my kids.

Learn something about how businesses operate, gross vs. They are all the same.

But I Never Said It’s Bad to Invest in Rentals

Nobody needs that money. If you do, you are living for the wrong purpose. Then you say it may outlast you. Wow I sure hope so. Otherwise again you have gone off the deep end of life. You can have a great life on much less passivde income. If you walk around wondering who is a millionaire, I suggest a hobby or two. Until then, buy a couple rentals and enjoy life. I became a Real Estate agent on the side and 2 years later started my own Brokerage.

I specialize in helping investors find, analyze, and purchase REIs. My business side business should outpace my primary income probably next year. I loved this article. Very thoughtful and debatable. Real estate is expensive and you simply cannot buy enough rentals through your savings to replicate enough income from your regular job. I calculated I had to accumulate 60 rentals to equate to replacing my income from a job.

Raising money from an equity partner was the way to be able to grow the number of units I own. Plus making money from ancillary real estate businesses such as brokerage. I always said that landlording is a slow bank account. However, that does not exclude you from running an extremely profitable global business that will allow you to bring your level of expertise to the market.

This is not a new concept, but there are specific factors to be aware of when you are approaching a "time based" model that is not as easy to scale as an online product model, but the rewards are worth it. The world needs your knowledge, so do not second-guess your ability to build a high-growth business model and demand by using your own intellectual capital as your primary product. When we discuss building a successful business, renting our time to others is rarely the first thought that comes to mind, so we try to develop content, products and concepts that are outside of our knowledge base.

You can rent your time and expertise to high profile individuals, celebrities and corporations; while creating a demand for your expertise. In addition, many of those who rented my brain in the past became our largest clients and referrals once we were established, which allowed us to set our valuation early for future investors. Create a level of urgency for potential clients. This is your moment to highlight all of your achievements, credentials, etc within your respective industry. Create a due diligence process that allows you to select from a pre-qualified base of committed people and businesses.

Creating a pre-qualification process allows prospects to understand your vetting and selection process, which will also view your required criteria for acceptance.