Could I become a millionaire off real estate in this day and age, and what would it take, in reality, to make it happen?

Yes, it definitely is possible for anyone – but it’s not as easy as they purport to be in those ads selling get-rich-quick “RE courses” for $99 with “Lambos” in their pictures. Otherwise, they won’t sell as well and you’d see everyone be a millionaire in net worth, excluding primary residence. If they were so good they were a billionaire in Real Estate – they won’t be selling you an e-book for $9.95 – they would be managing a fund or private holdings! Correct me if I’m wrong, but I don’t know any Real Estate billionaires that sell e-books promising quick gains. That being said, I don’t think e-books are all bad deals either – it depends.

I’d imagine most people are about 3–4x more likely to become a billionaire with a career in finance, with the same general intelligence. Hence, you should rethink what your strategy is if finance interests you instead.

Most people start best with single family homes, since it’s pretty hard to have a huge downside, if you avoid common traps. However, other niches such as RV parks or commercial can do very well too, if you do an extraordinary amount of research to find the “right” ones.

Here’s some pros to gaining a million dollars for Real Estate:

  • 1031 like-kind exchange provides tax deferral benefits. Over a long period of time that is very good for investments.
  • Primary residence can have a capital gains tax advantage, if held for 5 years and living in 2 years.
  • Leverage relatively easy to obtain. Most banks will lend your first home at high leverage with 20% down. (Sometimes even less at 3.5% with a FHA loan – crazy considering 28x leverage)
  • Market is generally stable with a long term cycle of supply and demand.

Here are some cons that can bankrupt you in Real Estate:

  • There are market risks. You could go underwater, so don’t overleverage yourself especially if you’re speculating on price appreciation.
  • It takes time to manage properties and property managers aren’t cheap.
  • Finding a trustworthy contractor for anything isn’t easy, if you aren’t already there with a lot of trusted contacts already.
  • Liability is high for high risk tenants. You need to find out what the risks are. Generally, low risk, high credit tenants are much more pleasant to deal with. You can get sued for minor items that cause any sort of “accidents”. Make sure you read up, lawyers aren’t cheap.
  • Property taxes, repairs, insurance, maintenance and other fees must be factored in.
  • You might overestimate the value of a home. Getting a decent professional appraiser isn’t cheap.
  • Urban planning may change in the next decade. Self driving cars are shipping.

Now that’s out of the way, if you’re still thinking about it – you should learn as much as possible. You don’t need to pay – most information you need is free. However, you should fully understand what you’re investing in – and that takes a lot of understanding. Don’t skimp on reading the fine print.

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