If you want to become a millionaire, then the best thing you can do is to invest in real estate. But finding the right investment opportunities can make the difference between a regular investor and a Real Estate mogul. That’s why we created a list with some of the best tips you can use if you want to invest in Real Estate and reap the benefits fast and easy.
This is one of the best Real Estate investment ideas, and the best thing about it is that just about any time you do this, you can earn a profit. But there are some things to keep in mind. It doesn’t matter how badly damaged the property is, your focus has to be on the overall location. You need to acquire a property in a very sought after location. Then once you repair that house, you’ll end up reaping the benefits, and you can resell it for a profit.
If you go with such an approach, you need to work with contractors who you can trust and who are super reliable. Otherwise, there will likely be problems, which will cut into both profit and timescale.
Most of the Real Estate investment methods listed in this article require you to have tens of thousands of dollars. But in this case, you can invest with $100, $500 or anything like that. Yes, the returns are not as high when compared to other investment methods. But - it’s one of the few ways for a newcomer to start investing in real estate with limit amount of money.
You do need to take your time and find properties to repair and re-sell. In this case, you just invest a minimal amount online and then you go from there. Yes, you need a larger investment for a good ROI, but it doesn’t matter that much in the end. Your focus has to be on investing even a small amount, then you can use your profits for even more investments. And since you can invest slowly without any limits, you will have no problem getting an astounding ROI at the end of the day.
The main reason that online real estate investment works is because it delivers the value you want quickly and it offers some rewarding results. Above all, you can start investing even if you don’t have a lot of money.
When investing in residential real estate is property it is usually single family homes, condos, town homes, or multi-family up to four units. These are the places that you, your family and friends live and sleep. The place most people call home. Anything above 4 units is considered commercial property and will require commercial loans when purchasing. Which is usually why the platforms are divided into those for residential investing and those for commercial investing. For residential real estate investing there are platforms like Roofstock, where you can find homes to purchase and rent out.
For commercial real estate investments, look at platforms like Fundrise. This is where you will find all the other types of properties to invest in. You will find retail, office, apartments buildings, warehouses and even mobile home parks.
Rental properties are great because you buy the property, fix it up a bit and then rent it to other people. You still own the property, so the capital is yours, but this way, you even get to acquire income from it as well. And the best part is that you can sell the property if you want. It’s a really impressive and helpful system, one that will work very well and which you can adapt and adjust all the time at your own pace.
Alternatively, you can rent only a single room. That might be a bit harder when it comes to paperwork, but you can live there as well and the overall costs will be lower. It’s the best of both worlds for a lot of people, for others it might be a bit risky. The trick here is that you want full-property, long term rentals in order to maximize your profits. You can’t become a real estate mogul without using strategy. But once you do it adequately, it will work very well.
Most of the time real estate property prices will go up, so waiting a bit until the price goes up and re-selling the property makes a lot of sense. The challenge here is that property prices can go down too, so knowing the market trends is crucial if you want to use this approach. It’s a much better idea to also rent during this time because you get a steady source of income and you can still stop renting and eventually sell the property when the market prices are back up. The idea is not to rush and sell the property just because there’s an option to do that. Understanding market trends and acting based upon market knowledge is crucial to your success here.
That all comes down to you and what approach you like the most. Purchasing homes and then fixing them up to sell for a profit is very popular. But you have to register as a business and that can lead to lots of taxes. If you want to avoid stuff like that, then opting for the buy then rent approach works. You will still own the property, and you can earn monthly income via renting that home. It makes sense, it gives you an astounding ROI and the results can be good if you do this right.
Finally, You shouldn’t rush with real estate investments, study every detail to ensure that you’re picking the right option. If you’re a newcomer or you want to invest very low amounts, online real estate investment platforms are very good option for you. They will help you earn a good income without having to worry about major risks. And you can always withdraw your investment if you want to, which might bring in a great ROI in the end. Hence, if you want to become a millionaire, real estate investments offer you one of the best ways to fulfill your dreams. But you’ll need to make smart investments, so you have to understand the risks if you go down that path!
Benjamin Graham was universally accepted as being the greatest investment advisor of the twentieth century. He promoted the concept of "value investing", a technique which shields investors from significant error and empowers them to develop long-term strategies. The last line in his book sums up his attitude towards investing: “To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks.” Warren Buffett chose this as the greatest investment book of all time, and it has to be said - Warren's done pretty well for himself.
If you're new to investing, then this is a great place to start. It is based on the same principle as The Intelligent Investor (above) but written for the new, rather than experienced investor. This means that it's easy to understand and gives you a great base to build on. It's also much less 'dry' than a lot of investing books. Part of it's attraction is that it can explain why certain companies consistently outperform others - crucial information for any investor. As well as this, it provides a superb background on the economy and stock market. Start here if you're new to investing.
This is another book to look at is you are new to investing. Marks identifies all of the Important Things to look for when deciding how to invest your money. Looking at both sides of the equation - how to protect yourself from loss at the same time as finding a good return on your investment, this book takes a lot of simple ideas, and rolls them into a solid strategy based (again) on Value Investing. And as the icing on the cake, it gets another thumbs up from Warren Buffet - "This is that rarity, a useful book."
The fact that investing is based on risk is not a new concept to anyone. However, Taleb (after spending a significant amount of time doing exactly that) looks at risk in a different way. This is not the same type of investment bible as you've seen elsewhere - it's more of an observation that beating the system isn't as easy as it's sometimes made out to be. Risk and probability aren't predictable, and knowing more about them will help you identify where you want to risk your money, and what the probability is that you'll get the results you are looking for. He suggests that you keep an open mind about causes, and be ready to change your mind about how to interpret results. Not the easiest of reads, but worth the effort.
This is an investment book wrapped in a philosophical wrapper, but for all that, it contains some nuggets of investing wisdom that are brilliant. This is the 'Austrian' take on Value Investing - a slightly different approach. Part of what Spitznagel preaches is about the attitudes of other investors, and how understanding what drives them can lead to a better return for you. His insight provides a different perspective and that alone will give you an edge. A useful explanation of Austrian theory as it relates to capital markets.
Philip Fisher is one of the most influential investors of all time. The investment philosophies that he introduced almost fifty years ago are still regarded by many as gospel. This is another book recommended by Warren Buffet - "I sought out Phil Fisher after reading his Common Stocks and Uncommon Profits. A thorough understanding of the business, obtained by using Phil's techniques...enables one to make intelligent investment commitments." Despite his theories being nearly fifty years old, the value in them remains the same - Invest with patience, do your research first, and take a long-term view. At the same time, avoid behavioural pitfalls. This combination will always lead to better returns.
Charles T. Munger was the long-time and media-shy investment partner of Warren Buffet. Not only was he a great investor, but he was a lifelong pursuer of Wisdom, in all it's forms. This book is a summary of what he learned and lived by in his career. He espoused the idea that success doesn't come only from genius, but also from avoiding obvious mistakes. Despite sometimes frustrating Buffet, who called him "the abominable no-man", when he wouldn't invest in certain opportunities, Munger maintained that success was down to patience and preparation. And the ability to sit on millions until the right investment came along. A wise man, and one worth reading.
If you can find a copy please let me borrow it so I can read it too!
Buffet started from scratch, but since then, his impressive record has given him a cult-like status in the Investing World. This book covers a lot of information about how he got to where he is now. It talks about the development of his business philosophy. And his most important relationships (business and otherwise) and their influence on him. This book was written in 1995 without the help (or the interference) of Buffet, so it's probably one of the most honest and in depth analyses of Warren Buffet available, and would certainly have been a fully comprehensive review of his life til that point. He is STILL a titan in the Business World. It's well worth reading about the man who became the second-richest in the world.
It's a bit of a truism that "If you do what you've always done, then you'll get what you've always got", so innovation is obviously the way to get something else. The trick is to know if what you are doing so differently is going to get you the results that you want. Thorndike gets straight to the heart of the matter by amassing the wisdom of Eight Unconventional CEOs. He analyses what they did (outperform the S&P 500 by a factor of 20), how they did it, and why it worked so well - both from a business point of view, and from the point of view of their investors. He recognised that all of these Outsiders shared specific traits, and thus, so did the companies that they ran. After years of research Thorndyke explains how they did it, and reveals a very different way to do business - for CEO and investor alike.
It's a bit of a truism that "If you do what you've always done, then you'll get what you've always got", so innovation is obviously the way to get something else. The trick is to know if what you are doing so differently is going to get you the results that you want. Thorndike gets straight to the heart of the matter by amassing the wisdom of Eight Unconventional CEOs.
He analyses what they did (outperform the S&P 500 by a factor of 20), how they did it, and why it worked so well - both from a business point of view, and from the point of view of their investors. He recognised that all of these Outsiders shared specific traits, and thus, so did the companies that they ran. After years of research Thorndyke explains how they did it, and reveals a very different way to do business - for CEO and investor alike.
This is the perfect book for people with minimal or no background in investing - yet it can still add value for experienced investors. It provides the reader with a good understanding of the fundamentals of investing in Stocks and Bonds. Explaining the basics required by every investor - financial statements, analysis, cashflow, income generation, stock price valuation etc. Another good one to start off with, it will explain, in plain English what you need to know before you get involved in the world of Stocks and Bonds. Effectively it manages to break down accounting and financial jargon into layman's terms, making it much more likely you'll get it right first time.
OK, so AFTER you've read the beginners books (if you are a novice investor) but BEFORE you actually start buying, take a look at Malkiel's book, it's a Classic. Easy to read and digest, it uses the dot-com crash as the basis of 'how not to manage your portfolio'. Offering a life-cycle guide to investing, it gives useful advice to investors from every age bracket. Reading this book will give you a great understanding of how the markets work. This isn't a 'Get Rich Quick' scheme... quite the opposite - Malkiel is renowned for being quite risk-averse. But it's a great counter-balance for the more adventurous investor and puts the risks into perspective while giving the reader a great understanding of what's possible, and what's involved.
This is another book you need to read before you start spending. Schiller (a Nobel Peace prizewinner in 2013) goes into depth about the effects that individuals, institutions and specifically the media can have on the Markets. One of his focuses is the concept of the 'Market Bubble', and the problems it can cause. He talks about the influence of Behavioural Economics and puts his case against the 'Efficient markets' theory (which is a broadly popular tenet within investment houses). He also gives the reader an in-depth overview of Financial Economics. This is a comprehensive analysis of how the Markets work - and sometimes how - and why - they don't work the way we expect, at all.
This book is based on Rule #1 from Warren Buffett: "Don’t lose money". Phil Town was a River Guide, he didn't want to spend his life looking at facts and figures about Investing - but he wanted to make money from it. Because of this, he came up with a very simple formula upon which he based (and still bases) his investment decisions: "Part is knowing the only five numbers that really count in valuing a potential investment. And part—maybe the most important part—is using the risk-free Rule #1 approach to consistently pay a mere 50 cents to buy a dollar’s worth of a business." Another great book to read if you're new to investing.
Want to know more about Deep Value Investing? Here are the five top tips you need to know before you jump in!
Warren Buffett is one of the best Deep Value investors of all time. In the 24 years between 1980 and 2003, Warren Buffett’s investment strategy has beaten the S&P 500 Index in 20 of those 24 years. He’s done this by using Value Investing, a philosophy he learned while a student of Benjamin Graham. In his strategy he looks for companies whose share price is trading below their intrinsic value and buys them. He looks for a simple-to-understand business with good management, high profit margins, and low debt -and then he holds their stock for a long period of time.
Basically, Deep Value Investing is investing in companies that have a low stock price in relation to their intrinsic value. Undervalued stocks give you a larger margin of safety when it comes to the market. They don’t have as far to fall, and have a bigger upside. There are various formulas used to screen for Deep Value stocks, including Benjamin Graham’s Net Current Asset Value per Share, Joel Greenblat’s Magic Formula, and Tobias Carlisle’s Acquirer’s Multiple.
Deep Value Investing focuses on finding under-valued stocks, i.e. stocks where the price has been driven down. This lowers the risks and increases the returns. Net Current Asset Value (NCAV) is calculated by taking Current Assets - Total Liabilities - Preferred Stock.
Basically, it’s the net worth of a company.
The Net Current Asset Value per Share (NCAVPS) is a measure created by Benjamin Graham and expresses what the company would be worth (per share) if all of its assets were sold off and all its liabilities paid off - divided by the number of outstanding shares. Graham considered preferred stock to be a liability so any preferred stock is subtracted as well. In some cases the stock price can be lower than the NCAVPS.
Graham believed that you would benefit by investing in companies where the stock prices was no more then 67% of the NCAVPS. In fact a study at the State University of New York showed that between 1970 and 1983 that an investor using this strategy and holding the stock for one year could have earned an average return of 29.4%
There is a reason these companies are under priced. Typically the company is going through a rough patch, revenues have dropped, they might’ve lost a large order or contract, or perhaps are subject to government fines. Or perhaps Management could be doing a poor job of running the company.
In the end the company has fallen out of favor with the market and it’s price is hurting because of it. But you need to be careful, there’s a big difference between a good company in a rough patch and a bad company headed down the toilet.
Look out for Management whose interests are not aligned with minority shareholders and check to see if they are extracting cash from the business for themselves or if there’s any possibility of fraud.
Nothing can sink a company faster than debt. High debt repayments can turn a profitable company into an unprofitable one, and an unprofitable company into a bankrupt one. Avoid the stock of any companies burning through their cash to make debt repayments.
Debt is included in the various formulas used to calculate value, like the Acquirer’s Multiple by Tobias Carlisle or the Magic Formula by Joel Greenblat. More debt = more risk.
You need to make sure you are diversified. There are tons of opinions on how to be truly diversified, like how many stocks you should own, what sectors, stocks vs bonds vs commodities vs real estate. In the end it comes down to what you are comfortable with. Regardless - make sure you are diversified by your own standard.
There is a reason most people don’t/can’t/won’t do Deep Value Investing – it takes patience. It can take several years for these companies to turn around, but when they do, watch out.
There’ll also be some years where your investment will go down. Most people freak out and get out before their Deep Value picks have a chance to turn around and make them money. It’s human nature.
Do you have the will power, grit, and determination to make it work? I hope I do.