If you’re new to real estate investing, there’s one important concept you need to grasp in order to be successful long-term. Most people who get into real estate investing have one goal in mind: cash flow. Of course, that is the ultimate goal, the end goal.
But if you’re just starting out, you might need to adjust your approach. Don’t get ahead of yourself. You can certainly have cash flow, but maybe just not immediately. There are a couple steps before you get there. On this episode of Investing in Real Estate, I’m sharing an important principle you need to understand, the three stages of real estate investing!
More About This Show
This idea is based off Gary Keller’s book, The Millionaire Real Estate Investor. If you haven’t read it yet, I highly recommend it. It’s all about gaining wealth through real estate.
In the book, Keller discusses the three stages of real estate investing. This concept is paramount and has guided me for years. I find that many new investors look at this process in reverse, and quickly become discouraged. You have to understand these stages in order to meet your end goal.
The stages are as follows:
- Cash Flow
So if you’re a new investor, you should be in the first stage, where your efforts are put into buying. You shouldn’t necessarily be concerned with making money. I know that sounds counterintuitive to your main goal, but please bear with me. This stage is all about purchasing properties in order to increase your net worth.
Of course, you don’t want to be in the hole either. You need to make sure your expenses are covered and do the math to make sure you’re making a solid investment.
The second stage of real estate investing is when you own your properties outright. At this stage, you’ve paid back your lender, whether that’s a traditional bank loan, non-recourse, etc.
The last stage, the stage you’ve been waiting for, is CASH FLOW! Gary Keller says, “Buy a million, own a million, cash flow a million.” Although I admire him, I actually think one million is an arbitrary number, and that you can achieve financial freedom in a more attainable way. I recommend finding your unique Freedom Number to see what works for you.
Once you get to the cash flow stage, you can easily rinse and repeat. Most smart investors buy until they die! Why’s that? The tax implications of owning real estate are enormous. I hope this has has encouraged you to move toward financial freedom, and to be patient in the process.
Book a Call with Our Team
The Millionaire Real Estate Investor by Gary Keller
morrisinvest.com/bootcamp ← Download your FREE 90-Day Bootcamp!
Subscribe to Investing in Real Estate on iTunes
Find Your Financial Freedom Number
Subscribe to the Morris Invest YouTube channel
Like Morris Invest on Facebook
DISCLAIMER: I am not a financial adviser. I only express my opinion based on my experience. Your experience may be different. These videos are for educational and inspirational purposes only. Investing of any kind involves risk. While it is possible to minimize risk, your investments are solely your responsibility. It is imperative that you conduct your own research. There is no guarantee of gains or losses on investments.
AFFILIATE DISCLOSURE: Some of the links on this channel are affiliate links, meaning, at NO additional cost to you, I may earn a commission if you click through and make a purchase and/or subscribe. However, this does not impact my opinion. We recommend them because they are helpful and useful, not because of the small commissions we make if you decide to use their services. Please do not spend any money on these products unless you feel you need them or that they will help you achieve your goals.
Ready To Build Passive Income Through Rental Real Estate?
Ready to talk about your goals? We're here to show you the tools and teach you the process to begin earning legacy wealth for you and your family.