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How do people become Billionaires in Real estate?

A detailed account of a Fastlane process...

chrisbiz4444

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We all hear success story's of millionaires in real estate. Which is very inspiring. These people usually buy cash flow property's in down markets making money through leverage. The other route that I find people use ( Which is much more rare) Is Real estate brokerage.

How do people start with nothing and end up billionaires in real estate? ... It seems like you would need a massive amount of liquid cash to invest which these rags to riches examples just did not have. Is there other Real estate niches that I am missing?

I am finally focused. I am now working on a plan so I can learn the proper knowledge and get into RE with a bang. But with so many avenues in RE It is hard to know the best route. I know some people here have said before to stay away from RE brokerage. But it looks like a great place to start and learn while making some money.

If you know anything about the real estate business I hope to hear from you.
 
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codo3500

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Through developments mainly. Building an apartment building = big money. These people aren't real estate geniuses, what they're actually brilliant at is raising money - that's the hardest part in all of this. Plus knowing the right people to get the right building permits - these people know how to sell themselves and their vision.
 

chrisbiz4444

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Through developments mainly. Building an apartment building = big money. These people aren't real estate geniuses, what they're actually brilliant at is raising money - that's the hardest part in all of this. Plus knowing the right people to get the right building permits - these people know how to sell themselves and their vision.

Thanks for the reply. How does someone even get started in the right direction with something like that.
 
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codo3500

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Thanks for the reply. How does someone even get started in the right direction with something like that.
They start small. My best friend buys large lots with one home on them, then buys a portable house, and puts it on the other half of the lot. It's training him in dealing with councils, while making him a good chunk of money. Once he has some of these under his belt, he'll do a small unit complex - and once you've pulled that off, you have a solid enough track record to attract the right kind of investment for an apartment building.

The other way, is to finance most of it with the apartments sold off-the-plan. I've seen guys sell 80% before starting development, totally covers costs. They need to acquire the land prior to doing this however, and it's normally prime real-estate. Solicitors bills and council approvals stack up too.
 

ArthurDayne

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I'm not an expert in real estate but I am very knowledgeable about paper assets.

The thing that sets real estate apart from paper assets is the much greater ability to use leverage. Leverage, as you've mentioned, is the answer. This is the reason why you've read about so many real estate tycoons having gone bankrupt in the past.

Another thing about real estate that makes it more able to create billionaires is its lack of transparency. Knowing people pays off in this business more than the liquid (and relatively fair) currency and equity markets. So experience and a history of deals tends to compound on itself as you build relationships and get more and more access to exclusive deals. Building permits is a perfect example of this at work.
 

IceCreamKid

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Get yourself a bulk cash strategy and a cashflow strategy.

For example, my primary biz which isn't RE related generates the bulk cash.

I use that bulk cash to buy single family homes that I rent out for cashflow. I wouldn't recommend buying SFH's though, it's not fastlane. I only do SFH right now because I'm not sophisticated enough in RE to get into apartments right now. My ultimate goal is to end up buying distressed apartments that I re-stabilize. The time will come soon.

I like old school business models that are tried and true. No need to re-invent the wheel when there are so many proven models that you can follow.
 
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100k

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Magnitude + scale = billionaire.

i.e Build skyscrapers....10 to 30 of them should do the trick.
 

InLikeFlint

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I actually don't feel like I have heard many stories at all of people making billions from nothing in RE. I think it is more common to hear of a successful individual using money they made elsewhere to invest in RE and then making a lot from that. But the key to that is a large initial investment.

Honestly you could pick a billionaire in any industry and say that you will do what they did to become wealthy, but if it was that easy wouldn't the world be full of thousands of Apples/Microsofts/Johnson&Johnson/Hewlett Packards?

Based on your previous threads I think you need to pick something and stick with it for more than a couple days.

Quit trying to exploit someone else's path to success and burn your own trail. The satisfaction will be far greater.
 

Tick

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I've been heavily into the property investment scene for a while now and my wife and I started a property management company. When I bought my first four-plex, I thought: "Wow this is awesome! I'll just keep doing this and I'll get rich. One cashflow property after another!"

Here's the catch. (And those of you more educated feel free to chime in and correct me) When you start out you are probably using residential loans. ie: 1-4 units. These loans are based purely on YOU and whether the bank feels they can get their money out of YOU if you screw it up. These investments generate a small amount of cashflow and equity building. There are a few main problems with using this as a PRIMARY strategy and I"ve seen this happen over and over again with our clients, as well as personally.

1. After you burn your VA loan (if you're military) or your FHA loan (3.5% down), the banks are going to start wanting 20-25% down. This of course takes time because you are still working a job and not building a business. (Formerly guilty of this myself)

2. Eventually the bank essentially says "Wow dude, you've got a few million in loans and only so much work income to back it up. Yeah, you're cashflowing but we're getting worried about your ability to pay it back if something catastrophic happens." They will then stop lending you money.

3. Finally, (and yes I say this as someone who profits on property management), at a certain point you're trying to all the management yourself. You are probably niaive to the law, and because you don't do this everyday, you just aren't that great at property management. Your vacancies are long and often. Your repairs take forever because you're trying to do it all yourself. Every damn nail must be done by you because you're just so damn good at swinging a hammer and "Hell if I"m gonna pay some contractor to do something I"m perfectly capable of doing myself!" This sucks up your time and you make dumb decisions because you are only experienced at your couple properties. We currently manage 150+ (which is small time stuff) and yet I still have property owners who think they're better at this than me because they've got a whole 3 properties under their belt.

4. You'll want to live in your first property or the loan will require you to. This means that you had to find the best deal IN YOUR TOWN, not the best deals period. Already you've limited the potential unless you just happen to live somewhere that has a stellar climate for what you want to do ie: equity building, cashflow, or both

5. Because you are just starting out with little cash, when you screw something up and you will, it will hurt that much more because you don't have the resources to get recover quickly.

Then you maybe get a little smarter and learn about commercial loans. These loans are generally speaking less about you the borrower and more about the property and it's ability to perform if the bank has to take it from you. They are for properties of 5 units and above. These are generally much better investments but the bank will want to know you've got your feces co-located beforehand. They will most likely want to see management experience on your part as well as want you to hand it to a competent property manager. Here's the catch on these. One, you have to have some experience which takes time. You also need to have some cash, which will also take time because again, you are still working your job and not building a business. David Lindahl is a good resource for learning about getting into large commercial investments with others called "Syndication"

Ok, I'll wrap it the F up already. Here's the bottom line. Property investment is AWESOME and a great way to build equity, build cashflow, leverage other people's money, and have a lot of fun doing it. But, and this is a big BUT..... it takes cash or lots of time. What I have learned through trying it myself is that I need to build a business first to get the cash then use that cash to invest intelligently in real estate to secure and build what I started with my business. Don't be the DIY king. Use real estate agents, property managers, mortgage brokers and other investors to learn and keep yourself out of trouble. Be careful when people start talking about no money down or using credit cards to buy foreclosures. That's masters level stuff and easy to get in trouble.

Me, I'm concentrating on my business which just happens to be in the field of property investment. As I build the business I continue to learn more about how I'm going to use the cashflow once successful. And to prove I'm putting my money where my mouth is, I'm quitting my six figure job and selling my positive cashflow fourplex to use the cash to buy out another company. This is going to catapult me 2 years forward of my normal rate of growth.

Hope that helps and feel free to ask me anything else.
 
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jazb

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Build skyscrapers. Even if you knew how to get one built, you need the huge financial backing. you would need a killer track record (like a decade of ever expanding projects). and the ability to sell ice to the Eskimos.
 

D11FYY

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Read Manny Khoshbins book and Rich Dad Poor Dad these are not Bibles but will give you a better understanding.

I recommend Chris that you find something and stick with it for more than a month I know its hard but try focus on one at a time. Is the old saying he who chases two rabbits ends up with none?
I would however recommend if you do have a good bit of cash to invest in a few propertys.
 

vinylawesome

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http://www.forbes.com/sites/erincar...sch-the-billionaire-king-of-high-yield-reits/

This guy did it through leverage, scale, and OPM.

"Schorsch has long been driven to succeed. At high school in Philadelphia, his senior project was revamping a division of his father’s metals fabrication business with his older brother Peter, then 21. Schorsch ran the plants; Peter was the front man in charge of marketing and business development. Schorsch dropped out of college but continued to read voraciously about business. By 23 he was on to another company, Thermal Reduction. It made 16 kinds of protective anodes when Schorsch started out. When he sold it a decade later in 1994 for just over $10 million, Thermal Reduction made 1,200 different anodes."

"His big-league break came in 2002, when he met Lew Ranieri, the former Salomon Bros. trader made famous in Michael Lewis’ Liar’s Poker for inventing the mortgage-backed securities business. The men agreed to turn Schorsch’s bank-branch real estate into a REIT and take it public. With Ranieri’s connections, they raised about $400 million from private investors in 2002 and another $804 million from the REIT’s IPO on the New York Stock Exchange in June 2003. American Financial Realty Trust (ticker: AFR) was soon a prominent, $2 billion market cap specialty REIT and the only one focused exclusively on real estate for financial institutions."
 
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RHL

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How do people start with nothing and end up billionaires in real estate? ... It seems like you would need a massive amount of liquid cash to invest which these rags to riches examples just did not have. Is there other Real estate niches that I am missing?

Something to remember is that the housing bubble has come and gone. A lot of the people you meet today (or, at least, that I meet) who are worth 10+M got rich in houses at a time when anyone hard-dealing and willing to grind it out, with a lot of seed money or investor-grabbing skills, could do it. The market is not the same today. You can still get rich, but it's like building a website. A website can make you a millionaire, maybe even a billionaire. But it's not going to happen 15% of the time like it did in 1998. Same with housing-make sure that the advice you're getting is advice that works today, not 9 years ago.
 

D11FYY

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Something to remember is that the housing bubble has come and gone. A lot of the people you meet today (or, at least, that I meet) who are worth 10+M got rich in houses at a time when anyone hard-dealing and willing to grind it out, with a lot of seed money or investor-grabbing skills, could do it. The market is not the same today. You can still get rich, but it's like building a website. A website can make you a millionaire, maybe even a billionaire. But it's not going to happen 15% of the time like it did in 1998. Same with housing-make sure that the advice you're getting is advice that works today, not 9 years ago.
Exactly it is good to read all these books and that, but we each have our own journey. People who are well successful just now lived in a different time from us but it is good as a insight.

Manny Khoshbins book says that he believes the Property Market works in 7 year cycles. Going by that in the UK Market 7 years ago was just before the collapse and now the property prices are rising again nicely. Wish I had more money to invest at the moment some 1/2 bedroom flats around my area are going for a decent price.
 

chrisbiz4444

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Yeah, basically. Without a TON of cash starting out it's hard to go from $0 to $1,000,000,000 in a lifetime.
zero.

It's much more than just money.
You're still asking the wrong questions.

Without a ton of cash it is hard going from $0- $1,000,000,000. OK, UNDERSTANDABLE. So I asked how likely is it to go from $0 to upper millions ( $10 million). That question is in direct relation to that response.
 

jon.a

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Shit this is getting old with you.
I think I remember that you have an auto sales background.
Go flip some cars.
Make some money.
Pay off your debt.
Lower your expenses.
Flip some more cars.
Build a nest egg.
Then, come back and post about your results.
 
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chrisbiz4444

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Shit this is getting old with you.
I think I remember that you have an auto sales background.
Go flip some cars.
Make some money.
Pay off your debt.
Lower your expenses.
Flip some more cars.
Build a nest egg.
Then, come back and post about your results.

I have no debt.
I have a nest egg.
And my expenses are low.
I already do flip cars... It is a hustle, not a business or wealth building vehicle.
 

jon.a

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KassandraTB

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Get yourself a bulk cash strategy and a cashflow strategy.

For example, my primary biz which isn't RE related generates the bulk cash.

I use that bulk cash to buy single family homes that I rent out for cashflow. I wouldn't recommend buying SFH's though, it's not fastlane. I only do SFH right now because I'm not sophisticated enough in RE to get into apartments right now. My ultimate goal is to end up buying distressed apartments that I re-stabilize. The time will come soon.

I like old school business models that are tried and true. No need to re-invent the wheel when there are so many proven models that you can follow.
Apartments are way easier than sfh. David Limbaugh has some affordable training classes and books that can help you. also just do a lot of Google searches on apartment syndication. then find a good group. Because I'm a business owner I like to invest in apartments cause I no longer have to do the work. I just wait for my quarterly check.

Sent from my HTC One_M8 using Tapatalk
 

IceCreamKid

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Apartments are way easier than sfh. David Limbaugh has some affordable training classes and books that can help you.

Thanks for your input, Kassandra. I've read so many books on apartments and spent thousands of dollars on training classes which sadly ended up being nothing more than an upsell to more expensive classes, I no longer see the point in reading more stuff unless I'm taking action at the same time.

My biggest issue with learning from training classes is that they often give you the "best case scenarios" that rarely exist in the real world. Ask me how I know this...lol

Just knowing that the majority of seller's statements are cooked up pro-formas helps a great deal. I have rarely found something an apartment seller sent me to be accurate. Nothing beats real-world experience and knowing how to roll the rocks over to see what critters are hiding under them.

then find a good group.

I think this is a very wise path to take. Just gotta make sure it's not a group whose only focus is to stay in the seminar circuit. Back when I was a young ice creamer, I would drive 40 minutes just to play that Cashflow 101 board game with a real estate group...I stopped when I realized that no one there actually had any intention to invest in the real world, they just wanted to play the board game.
 

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