The Secret Of REAL ESTATE Explained
Most people don't know what actual Real Estate is. The first thing that comes in mind after hearing real estate is a person who works as a broker or middleman and takes commission from both the buying and selling parties. Big investors or entrepreneurs say that the real deal to make big loads of money is real estate. I used to think that how someone can be a millionaire by taking only commissions. And this curiosity leads me to read Rich Dad Poor Dad by Robert T. Kiyosaki. Its a great book for developing your financial literacy. It revolves around a boy who learns financial literacy at a young age. The book has shown a very clear way to invest in Real Estate and also defined what actual real estate means. I was pretty much impressed by the book. After reading the book, I came to know about a person who actually did this and now he is a millionaire. His name is Kris Krohn. You can watch his video on YouTube.
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So, not wasting much of your time I'll start with the actual plan of real estate and will talk more about Kris Krohn.
Following are the books which I'll recommend to read for better understanding of Real Estate:
1. Rich Dad Poor Dad - Click Here To Buy
2. Limitless - Click Here To Buy
3. The Book On Rental Property Investing - Click Here To Buy
The Actual Deal:
What if I say you can own a USD 100,000 (INR 70,00,000) house with very little money and you can go on buying more houses. Sounds strange? But it is an actual case of how real estate works. The only necessary condition for this is that you should have little money with you for down payment. Here comes the concept of Leverage of OPM (Other People's Money). If you pay around 15% as a down payment and the rest will be provided by a bank or some private institution. Now you own a property worth USD 100,000 for just USD 15000 (INR 10,00,000). Now the next thing is to manage the property properly and this will give you tremendous and constant monthly income. Even if you don't use this income, this amount will be diverted towards the bank as an EMI towards your funding. After some months or years when the price increases, you can sell it for a good profit. Suppose after a year the price of the house is USD 130,000 (INR 91,00,000) which means you earned around $30,000 from your $15,000 investment. And now you can buy a more expensive property for a $40,000 down payment and again using the same concept of leverage of OPM. Within 4 to 5 years you will reach a state where you can buy 2 or more houses depending on your study and research of real estate. The concept looks pretty easy but there are some cons also. Before investing just note one thing - You usually have time to do your due diligence, analyze numbers, make comparisons and then make the best investment decision possible.
Rich Dad Poor Dad
There are many plus points of Real Estate but with Pros, there are some cons also. Before getting into Real Estate, you should keep the below cons in your mind.
Cons of Real Estate Investing:
1. Before starting real estate, remember that these things are going to take time. You should have patience because you are not going to get rich in a night. Offers, counters, appraisals, inspections, financing - These all things take time. This why patience is a virtue. After successfully closing one deal, you’ll know what to expect on future opportunities.
2. If you are going to convert the asset into cash in a hurry, then real estate is not your cup of tea. You simply cannot jump in and out of real estate very quickly.
3. According to Rich Dad Poor Dad - "Of the four asset classes, real estate is the second most difficult (after business). Properties must be managed on a daily basis, including vacancies and bad tenants. This is also why I suggest starting small, where it’s a lot less expensive to make mistakes while you’re still learning."
Limitless
Surely, there are cons to real estate but it is nothing in front of the pros. If you are hard working and have patience, then you surely gonna make it big.
Example:
As I mentioned earlier about Kris Krohn, he was able to do it at the age of 22. It's a simple game and you need to understand this before starting. Kris Krohn began his real estate career while a student at Brigham Young University. During college, he was introduced to the idea of real estate as a means to financial independence. In 4 years of span he created a whole lot of wealth and at the age of 26, he was financially free and took Real Estate as a full-time career. Kris Krohn currently lives with his family in Orem, Utah. He has purchased over 400 properties across the United States and continues to be active in real estate investing and writing. I have mentioned a book below written by Kris Krohn in which he has mentioned his whole journey.
So, not wasting much of your time I'll start with the actual plan of real estate and will talk more about Kris Krohn.
Following are the books which I'll recommend to read for better understanding of Real Estate:
1. Rich Dad Poor Dad - Click Here To Buy
2. Limitless - Click Here To Buy
3. The Book On Rental Property Investing - Click Here To Buy
The Actual Deal:
What if I say you can own a USD 100,000 (INR 70,00,000) house with very little money and you can go on buying more houses. Sounds strange? But it is an actual case of how real estate works. The only necessary condition for this is that you should have little money with you for down payment. Here comes the concept of Leverage of OPM (Other People's Money). If you pay around 15% as a down payment and the rest will be provided by a bank or some private institution. Now you own a property worth USD 100,000 for just USD 15000 (INR 10,00,000). Now the next thing is to manage the property properly and this will give you tremendous and constant monthly income. Even if you don't use this income, this amount will be diverted towards the bank as an EMI towards your funding. After some months or years when the price increases, you can sell it for a good profit. Suppose after a year the price of the house is USD 130,000 (INR 91,00,000) which means you earned around $30,000 from your $15,000 investment. And now you can buy a more expensive property for a $40,000 down payment and again using the same concept of leverage of OPM. Within 4 to 5 years you will reach a state where you can buy 2 or more houses depending on your study and research of real estate. The concept looks pretty easy but there are some cons also. Before investing just note one thing - You usually have time to do your due diligence, analyze numbers, make comparisons and then make the best investment decision possible.
There are many plus points of Real Estate but with Pros, there are some cons also. Before getting into Real Estate, you should keep the below cons in your mind.
Cons of Real Estate Investing:
1. Before starting real estate, remember that these things are going to take time. You should have patience because you are not going to get rich in a night. Offers, counters, appraisals, inspections, financing - These all things take time. This why patience is a virtue. After successfully closing one deal, you’ll know what to expect on future opportunities.
2. If you are going to convert the asset into cash in a hurry, then real estate is not your cup of tea. You simply cannot jump in and out of real estate very quickly.
3. According to Rich Dad Poor Dad - "Of the four asset classes, real estate is the second most difficult (after business). Properties must be managed on a daily basis, including vacancies and bad tenants. This is also why I suggest starting small, where it’s a lot less expensive to make mistakes while you’re still learning."
Surely, there are cons to real estate but it is nothing in front of the pros. If you are hard working and have patience, then you surely gonna make it big.
Example:
As I mentioned earlier about Kris Krohn, he was able to do it at the age of 22. It's a simple game and you need to understand this before starting. Kris Krohn began his real estate career while a student at Brigham Young University. During college, he was introduced to the idea of real estate as a means to financial independence. In 4 years of span he created a whole lot of wealth and at the age of 26, he was financially free and took Real Estate as a full-time career. Kris Krohn currently lives with his family in Orem, Utah. He has purchased over 400 properties across the United States and continues to be active in real estate investing and writing. I have mentioned a book below written by Kris Krohn in which he has mentioned his whole journey.
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