How do people become millionaires in real estate so quickly without very much money to start?

In a word “leverage” and “risk”.

Leverage is the art of investing using other people’s money. In a nutshell:

  • Say you buy a distressed property for $1,000,000. You use $250,000 of your own money and borrow the other $750,000 from bank.
  • Three years later, you sell the property for $1,200,000. You pay off, let’s say, about $27,000 in interest. You get $173,000 for your $250,000 investment. Nice. You have “leveraged” your investment – a profit of over 70% even though the underlying asset only went up 16%.

The other side is “risk”. You may have put up $250,000, but that wasn’t your “risk”. Let’s say the property only sold for the same amount $1,000,000. So, you earn nothing, plus the $27,000 in interest, and you still owe the bank $730,000. Congratulations! You did not lose anything in fact, you get back $250,000 your original investment plus $20,000 your paid up instalment. Even though the underlying asset did not went up, if you have tenant paying you $3000 every month for the past 3 years. You already made $60,000 after minus off your $27,000 interest. This is like a force savings plan for you.

However, if the value of the underlying assets goes down, you do very poorly.

So, yes, a lot of people can make huge amounts of money as long as conditions hold out. If they get the right advise from the right real estate consultants like Khai Rambo

But a lot of people lose huge amounts of money, did not buy the right investment property. Start Your Investment Property Search! Check out Developer Website: Treasure At TampinesThe Florence ResidencesStirling Residences & Whistler Grand


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