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Why building wealth with real estate can be slow (and how to make it faster)

Since you are reading this on my blog, you are obviously interested in building wealth through real estate investing. Most of you would probably agree with the idea that the goal is to accumulate wealth through passive income generating rental properties.

But this can be a slow process. Let me explain…

Yes it’s true, building wealth through real estate investing can take a long time.

In fact a recent article from the Biggerpockets blog echoed the same sentiment and nailed it: “Sorry, But Investing in Rentals Won’t Build Massive Wealth. THIS Will.

Now you might be wondering; what was the blogpost referring to? What is it that can build massive wealth?

It’s building a business or many businesses.

Build a business so you can invest in real estate faster

Yes, a business or several businesses that work, can really build wealth, and can go hand in hand with real estate investing.

My take on this is to create multiple income streams that will complement your real estate investing, which can turn it into another business. Yes, I believe that real estate investing should be treated as a business, but I’m getting ahead of myself, and I should cover that in another blogpost.

Anyway, let me go back to the topic of building a business. Yes, I believe that building a business (or businesses) that work is the fastest way to build wealth.

With a business that works, income from that business can actually be used to invest in real estate. You don’t have to rely only on your salary.

This can also boost the rental income from your properties if your are relying on it as the source of capital for your next deals.

Heck you can even forget about “nothing down” deals because you will actually have money for down payment.

In other words, building massive wealth through real estate via income generating rental properties can take a long time because it would take a big amount of rental properties to have a stream of income that is big enough to re-invest into more rental properties.

Thus you need another source of income. And a business that works can be just that…

But this can lead to another problem… because most businesses fail.

Why do most businesses fail?

Aspiring entrepreneurs often end up building products they “think” people want, spend so much time and money to produce those products, only to find out later that nobody wants to buy that product.

It’s like buying a foreclosed property and spending a lot for the purchase and renovations, with high hopes that it can be good to flip for profit/keep as a rental, but later it turns out either few people want to live in that location or the newbie real estate investor grossly overestimated selling prices/rental rates/demand in that location …

Or spending a lot of time/money/effort to build a website, hire developers/writers, and splurge on ads to drive traffic from facebook and google, only to realize no one is interested in that website’s niche…

Oops! Sorry, I’m obviously biased towards real estate and online businesses, so to be more objective, I’ll let someone else with more experience in other types of businesses do the explaining…

A better way to start a business…

If you want to learn more about starting a business the right way, then you might want to check out a free video series from my friend J3 Patino of pinoymoneyacademy.com along with his co-founder Bobit Ebarle of pinoyinvestor.com (this should be familiar to you if you are a regular visitor of pinoymoneytalk.com).

They call it “Business Start-up Training Series” which aims to help the average Filipino aspiring entrepreneur start their own business.

In the first training video, Bobit teaches:

  • The 3 undeniable reasons to start a business TODAY.
  • The BIGGEST MYTH about what it really takes to start a business.
  • The ONE single difference between aspiring entrepreneurs (who fail in business) vs. the established entrepreneurs (who succeed in business).

And that’s just the first training video, which you can access for free, just go to the following page:


>>>Access the Business Start-up Training Series here<<<

 

Full disclosure: J3 and Bobit will offer a comprehensive training on starting up a business very soon, but even if you don’t join, you will still learn a lot from the free training videos! I am one of their affiliates.

But wait, is this still related to real estate?

Before you think that this has nothing to do with real estate, think again!

At 16:04 of the first training video, Bobit mentioned that the business principles he talked about were also applied to put up an apartment rental business.

That’s the reason why I look forward to this video series. It’s about business principles that work, and they also apply to real estate investing, which should be treated as a business.

We are obviously interested with businesses that are related to real estate, just like most of our readers and subscribers, which is why I am sharing this here.

But if I have a business, why do I need to invest in real estate?

I know some of you might be asking the same question like me, so here’s the logical answer…

Just look at the wealthy people out there, you don’t have to look far (just look at the malls owned by Henry Sy, the Ayala’s, etc.).

You can even check Forbes’ list of the Philippines’ 50 Richest People, and you will notice majority of those on the list are into real estate.

I would even dare to say that most, if not all of them hold a significant part of their wealth through real estate because of the inherent benefits (tangible, can generate income, can appreciate over time, etc.).

Other things to consider

Of course, when starting to invest or building a business (whether related to real estate or not), I always recommend that you don’t quit your jobs yet.

So if you are an OFW, please don’t give-in to the urge and just resign and come home to start a business… please don’t do that!!!

Or if you are employed locally, please resist the urge to resign so you can start investing / build a business full-time… please stop!!!

Think about this only when you have investments/businesses that have income that is more than enough to replace your salary, and you have all the other essentials covered (emergency funds, insurance, etc.). Agreed?

P.S. It goes without saying that what I am referring to here are legit businesses. Stay away from those “get rich quick schemes” that are masquerading as a business.

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About Jay Castillo
People encounter problems and make mistakes when buying foreclosed properties, and Jay wants to help people avoid those problems/ mistakes. Jay encountered a lot of those, which is why he started this blog in 2008 to serve as a guide where he shares lessons learned, and how to overcome challenges you may encounter when investing foreclosed properties in the Philippines … [Read more]
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2 thoughts on “Why building wealth with real estate can be slow (and how to make it faster)”

  1. Thanks Jordan! Very similar to a life principle I try to remember when I was still employed, which was all about character, or who you are when no one is watching. I try my best to remind myself to just do my best even if no one was watching because ultimately God can see everything we do. It was a small poster that I pinned to the corkboard on my desk. I think I still have it here in one of my boxes from work. 🙂

    Reply
  2. Thanks for sharing Jordan! Would you have any link to more info re: the Big Boss Principle from Vic and Avelynn?

    Reply

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