Recently, we attended the Florida Realtors Conference in Orlando, Florida, as an exhibitor for the National Association of Real Estate Investment Advisors.
While there, I met with several hundred real estate agents and introduced them to NAREA. Since my time with each individual was short, I usually started the discussion by asking a simple question: “Are you currently investing in real estate?” A few Realtors said they were, but most emphatically said they were not or looked at me like I was from some other planet for even asking the question! On more than one occasion, I found their responses puzzling. Needless to say, the conference was eye-opening.
Why would anyone want to be a real estate salesman and not want to invest in real estate, one of the best investments in the world? A career in real estate is tough. Getting into the business is fairly simple. However, the work is extremely demanding. As a residential agent, you’re working days, nights, weekends and some holidays. It’s a challenging 24-7 job that requires a lot of work. For the average real estate agent, who is making about $43,000 a year, that’s a lot of work for an average paying but demanding job!
As a licensed real estate broker, my whole objective has always been to become a millionaire by investing in real estate. I thought having a real estate license would expose me to the best real estate opportunities and, in some ways, it did. Like most Realtors, I started with no income and no investments. However, I did have a leg up on many agents since I had a degree in accounting and an MBA. Today, after 30 years in the business, I have a number of income-producing real estate investments and a steady, monthly income from those investments.
Investing in Real Estate Makes You Wealthy
As a Realtor, listing and selling real estate is your job. That’s how you make money. But like everyone else who has a job, it does not, in and of itself, make you wealthy. What makes you wealthy is investing in real estate. That’s what builds true personal wealth. To build true wealth, you need to work every day to increase your net worth. I teach this concept in my real estate investment courses.
Net worth is the amount by which your assets exceed your liabilities. It is a measurement of your financial worth (total assets – total liabilities = net worth).
To be clear, not all assets are created equal. A car, for instance, is an asset, but unless you are a taxicab driver, it does not generate income. It’s an asset that, when purchased new, drops in value by 15 percent every year until it’s worth nothing. If I told you I had an asset that you could invest in for $40,000 and in five years it would be worthless, would you be excited about investing your money with me to buy that asset? Absolutely not! But that’s one of the biggest expenditures a Realtor makes. They buy fancy cars instead of real estate.
Income-Producing Real Estate Increases in Value
Income-producing real estate, on the other hand, is an asset that increases in value every year and generates steady income. At the end of 30 years or less, if you buy an income-producing real estate investment, the mortgage is paid off, and you’re banking some serious cash flow. Now that’s an asset that has value and builds net worth!
The more income-producing real estate you acquire, the faster your net worth increases. Because you can leverage real estate by acquiring a mortgage, your return on the investment practically doubles. Do you know of any other asset that does that? Stocks and mutual funds don’t do that. Bonds don’t do that. Gold doesn’t do that. Those investments require 100 percent cash to acquire. There’s no leverage.
Start Investing in Real Estate Today
So, if you’re a real estate agent or someone who is contemplating investing in real estate, find someone who knows about real estate investing and get started. The sooner you start investing in income-producing real estate, the sooner you can begin building net worth. If you’re an agent who isn’t investing in real estate, you are doing something wrong. You work every day with the best investment in the world; you should start getting a piece of the action. It will be the best thing you can do for yourself and your clients.
If you don’t learn how to invest and start investing in real estate yourself, you’re stuck with a job that requires a huge commitment of time for an average wage. You can find easier jobs that earn $43,000 a year. But no other job will expose you to all the best real estate investments available in the market.
Learn the Ropes
When you’re looking at real estate investments, there are good investments and bad investments; you need to be an expert in real estate investing to know the difference. The National Association of Real Estate Advisors (www.NAREAGroup.org) teaches real estate agents everything they need to know about real estate investing.
Contact us if you want to become a Certified Commercial Advisor (CCA).
As president of NAREA, I have found the information contained in our courses to be invaluable for building my own income-producing real estate portfolio and personal net worth. Go ahead and take the plunge! The investment in your education will be well worth it.
Ken Holman has been investing in real estate for more than 30 years. Mr. Holman is the president and owner of the National Association of Real Estate Investment Advisors and Overland Group, Inc. Contact him at kholman@overlandcorp.com. Or sign up for one of his classes at www.NAREAGroup.org.