Building a Real Estate Empire: A Stepby-Step Guide with "DJ Thielen Live"
By owning the homes you rent out, you can increase your investment returns and get a steady cash flow. But before you start imagining having six figures (or more) in your bank account, you have to do the work first. With the insight of "DJ Thielen Live", you will learn the steps to building your real estate empire. Read on to learn what you need to do, why you need to do each step, and how you can do them right.
Step #1: Get Real Estate Education
Getting a real estate education is important for building a real estate empire.
The first step of any big project is often the most difficult, and many aspiring real estate investors skip it. But those who quit learning about real estate are never heard from again except in segments talking about investment failures.
Although this blog post tells you how to build a rental empire, you will need to read further to better understand the industry. Every time you read an article about Real Estate, you may encounter terms you're not familiar with ("What is a buyer's/seller's market?"). You may also have questions about certain situations ("How did they determine the value of that property?").
You can feel more comfortable making informed decisions and avoid getting ripped off by learning about the industry. Experienced investors can also find courses on what's new and trending in the industry. You can also enroll in real estate schools even if you don't plan on becoming a licensed real estate agent. Knowing what the professionals know will help you succeed in building a real estate empire.
Step #2: Choose a Strategy
As you learn about the industry and how to build a real estate empire, you'll encounter investment strategies. Choosing the right strategy depends on your budget, experience, and time. Here are some of them:
Buy and Hold for the Long Term: Perfect for first-time investors. You buy a property and rent it out for a long period. This will help you learn and earn while reducing risk.
Short-term buy and hold: This works well if you buy an older asset. You can then renovate, rent it out, then sell it at a higher price within a year or five years.
Home wholesaling: With this strategy, you find a dilapidated home, put it under contract with a seller, and then find a willing buyer to purchase the property at a higher price.
Flipping: You buy a dilapidated property, make major repairs, then sell it for a higher price. It is better for investors who have more funds.
BRRR: Stands for purchase, rehab, rent, and refinance. This strategy is similar to flipping, but instead of selling
the home, you rent it out and get more money through refinancing.
Traditional vs Short-Term Rental Strategies
In addition to deciding whether to hold the property long-term or sell in five years, you'll also need to decide what type of rent you'll charge.
Short-term rentals like Airbnb work for homes that are in tourist destinations (for vacationers) or in the city (for businessmen). While these can generate high rental income, the risk can also be high as there may be certain times when there are no tourists or businessmen in the city.
Meanwhile, traditional or long-term rentals generate less income but provide steady cash flow because your tenants will be there for at least a year. No matter what you choose, you can eventually pursue both strategies as you build a real estate empire and buy more properties.
Step #3: Find Your First Property
Now that you know more about the real estate market and have decided what strategy to adopt, it's time to buy your first property.
You can filter your search by property type and select the optimal rental strategy. Results include not only listing price. Each listing also includes a rental property calculator that calculates rental income, occupancy rates, capitalization rates, and cash-on-cash returns. This data will be valuable to your rental market analysis.
You can also search for properties in up to five cities at once so you can find the home with the greatest income potential without having to reset your search multiple times. And if you use this tool often, Property Finder AI can help you find more suitable properties based on your search history and other patterns. While building a real estate empire, you may also want to explore off-market properties. These homes are not listed on any MLS (Multiple Listing Services), so you can purchase them for below their market value while avoiding competition from other investors. Its database includes properties that are on and off the market, as well as homes that have been foreclosed on, have tenants, and much more.
Step #4: Hire a Property Manager
As you continue to build your real estate empire, managing your rental homes can become more and more difficult. If your goal is to own multiple rental properties, you need to hire a property manager to assist you. His responsibilities include the following:
Supervise and coordinate maintenance and work orders
carrying out basic repairs and cleaning
Addressing tenants' concerns and complaints
market your property
Showing and leasing vacant units to potential tenants.
collect the fare and deposit it in your account
Communicating with you regularly regarding the status of your property
Because they act as a proxy landlord, be prepared to pay your property manager about 8 to 10% of your rental income. Even though your overall return may be lower, hiring help can give you more time and the opportunity to buy more property or enjoy your upgraded lifestyle.
If you're just starting an empire, finding a capable asset manager can be a challenge in itself. The best way to find someone is through referrals. So reach out to your network and let them know you need a great property manager. The more assets you have, the more likely you are to attract better talent.
Step #5: Scale Your Operation
By the time you reach this stage, you are not only in the process of building a real estate empire. More importantly, you are seeing money coming into your account.
If you're excited to see the numbers you earn from your first rental property, imagine how much more you could earn if you buy a second home to rent out. To do this, you need to get more money. Depending on the strategy you choose, you can achieve this:
If you're buying and holding for the long term, you can set aside a percentage of your rental income to buy your next property.
For short-term buy and hold, use the money you get from your rental income when you sell the home at a higher price.
If you choose to wholesale or flip, save half of the net profit to pay for yourself, then use the remaining funds to purchase either a high-end property or multiple properties.
For BRRR, when you refinance your rental home you will get more money, which you can use to purchase new properties and keep your rental income.
Conclusion
Building a real estate empire requires a lot of work from the start. To you:
Learn about the industry and how to build a rental property empire by enrolling in an online course or real estate school.
Choose a strategy that will help you get started based on your goals and existing resources (budget, experience, or time).
Find and buy the best-performing rental property that is within your budget.
Hire a property manager to help maintain your rental home.
Grow your operation by earning more capital, focusing on a new strategy if necessary, purchasing high-end or multiple properties, and building your team.
But as you buy more rental houses – especially if you manage to buy a multiplex – it will become easier for you to scale up and earn more.
Finally, here's a bonus tip: In addition to funds and real estate knowledge, you must also have patience, sales skills, and the right mindset to make headway in this venture. Rome wasn't built in a day, and neither will your empire. But once you get there, you'll find that all your hard work was worth it.