Wealth Creation with Real Estate

Wealth creation within real estate. All right. So a lot of money has been made recently in real estate, but does that money become true wealth? And there’s a distinction between this. Right. So you might have heard a lot of people saying like, oh, I have all this newfound equity in my properties, went from A to B and I have this.

So how do I unlock this? How do I take this money and make it wealth? Right, and how do I take it and continue on future? And so there’s a bunch of different strategies with it. But what we want to do is talk about the fact that you now have it right.

Not you. If you own a home, it’s went up in value. And we’ve been seeing this go on all over the place. And now you’re looking to potentially move to the next thing, to the next thing and what’s going on. We do have a meeting this afternoon regarding 1031 exchanges.

It’s a vital part of it. And the 1031 is a vehicle in which allows you to grow this wealth on a tax deferred, tax, free tax deferred, new step up in basis. There’s all these different words that are going to go along with it, but it allows you to continually move to the next thing.

And it’s a it’s a tax avoidance tax deferral tax mitigation strategy that allows you to continue to build. Right?

Right. Yeah. You shouldn’t look at it as just the tax, right? I mean, it’s truly a wealth builder. And I think a lot of us in real estate, we’re so busy and we get honed in on I’m going to become wealthy just by the career loan and buying and selling homes for people.

And I disagree with that. I think that we have the understanding and knowledge of real estate to take it, and you have to do something with it yourself on a personal level to be able to build that wealth. Right. It’s not just, hey, I sold 100 homes this year.

There’s much more to it. And now that we’re all educated and have a great foundation, I think it’s time that we all start thinking about that for the future.

You know, I always want everyone advancing in their career. Yes, right. And the moment you become stagnant, it just becomes hard. Like Groundhog’s Day was a movie, but it also becomes a real thing. Yes. Because within real estate, it’s like wake up a ten AT&T prospect, do this right, like call more people, go show, go get listings.

And it’s you’re on this treadmill. And I always think that you need to be progressing, at least from my own perspective. Within my career, I’ve hit many different places where I’m like, just like lift and lift and lift and get good. And like, you get to a spot and then you’re like, I just can’t do that every single day.

And I need to take that and I need to notch it in and lock it in, and I need to move on to the next thing that is bigger. And instead of selling it by one, sell it by ten, or instead of be transacting it for somebody else, be transacting it for me. Like, find those ways to make your career grow.

You don’t want to stagnate in the same way your career. You want to do the same thing with your wealth within real estate and making that.

Well in your building for the future as well. You know, are you going to do this till you’re 90 years old? Probably not. Maybe you are. I don’t know. But I think that it’s really something, you know, and we should talk about it. There’s a stat and I think I told some of you before, but there’s a stat that 60% of real estate professionals have $0 saved for retirement and the other 40% have less than 10,000 or less saved for retirement. So, gosh, that’s crazy.

But it’s because we’re we’re in the moment. Right. And not looking at the big picture in the long term. And I think, you know, it took us a while. It takes a while to be able to do that. But I think there’s tools and ways that you can really dive in and do it sooner.

You know, we just we didn’t. But hopefully we can we can help you guys where you can do it sooner than we did.

So so we’ll creation real thing. Let’s look at making serious money together and look at real estate as your vehicle in doing this right. As you move from one to the next to the next, you could stay in the same one. But what happens is when you only have one properties, you’re not re leveraging that same money. That’s kind of the key. So I’m never in favor of risk taking.

We were just talking and we won’t talk about any names or anything. But you were saying that you have somebody that’s continually buying all these properties with no money down. And to me, I was like, Oh. Oh, no. Yes, immediately.

I was very young person. I was super scared immediately. She’s smart. But doing this in a market that is a certain you know, it’s good and a good market. But you have to always think, is this investment long term? Is it good now and what happens in the market downfall?

So there’s certain things. I always have believed that as long as you invested in real estate, that you would be totally fine. If you speculate on real estate, then that’s when you can start to have a problem.

Because any type of downturn, if you don’t have adequate reserves to handle a downturn or correction, any one of those things, then you’re in trouble. You know, when you start to get to a place where you’re like, I bought this place with no money down and you start hearing that a lot. That’s that’s a sign.

Deja vu, because we heard this years ago that I got in with zero down and I’m only paying interest. And then what happens? Their wealth builder went away. They had to start over.

Yeah. So? So if you’re investing in real estate, then that’s how you get to wealth creation. There’s not a shortcut to it. It takes time. It takes money. It takes effort, it takes work. The work results in money. The money then you have to leverage correctly and deploy kind of like little soldiers going out for you.

Right. And they’re supposed to bring back some of their friends and then you’re able to grow that. Wow.

That’s how it works, right? Yeah, that’s how it works. Yeah. And that’s it. So just create it. But it needs to be re leveraged consistently.  

And if you, you know, the first step is owning a home. If you don’t own a home yet, it’s okay that’s your first step is to is to to work on getting your first home, getting your first home under contract, owning it. And then you, you know, if you do it correctly, then that’s, that’s all you have to do. Right. Goes up from there.

Yeah. And people are talking all the time right now about like I’m just going to wait till interest rates are better. So let’s have a comment on that one. So if you do the math in the house goes up by 100,000 and then you get a better interest rate.

Well, you didn’t actually do anything except potentially lower your payment from what it would be, but then the house is more expensive. So now your payment is actually more even though your interest rate is less, and you missed out on the opportunity to create the wealth of the home appreciating by that $100,000. Now you bought it with a lower interest rate, but your total monthly payment is still more right. And that didn’t actually help you? No.

So but if you wait and you’re. You’re renting. Talk about that. I’m just going to wait. We are still. How much money are you throwing away and doing nothing with when you rather get in and be building something? Right. Because the market’s not going to I mean, we’re not going to have high interest rates forever. There’s always going to be the ups and downs of real estate.

So owning something and having control of that to me is just if you can do it and it’s attainable for you. I 100% think it’s the right move no matter what market it is.

Yeah. And then as properties are going up in value, you’re going to see rental rates going up as well. Yeah. If a house that was, you know, four or 500,000 becomes $1,000,000 home over a period of time, then you can’t keep the rental rate at what it was when it was four or 500,000. It needs to be re checked in at this higher value and the market will bid that up as well.

People with you know, the the landlords will also push that price up. And all of a sudden if you’re still in that rental market and you want to pay the same amount, you’re going to get less house for it. Then you previously had.

We talked to I think it was Jody, somebody had a client who left their home and went to rent an apartment and rented out their home. So there’s like, what? Really? Yes.

That’s amazing. I don’t know what happened there. Congratulations to Jody for multiple listings.

Episode Links

AT&T, Groundhog’s Day, 1031 exchanges, Mike Acquisto , Shana Acquisto , TNT 

Episode Recorded Live on YouTube 05.18.22

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