Build Generational Wealth through Real Estate

Guides & resources to help you understand, simplify and get into the right mindset for real estate investing.

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Why Real Estate?

There are many ways to invest our money. And Real Estate is one of the best investment vehicles to build generational wealth.

There are five reasons why:

1. It’s a proven method.

For thousands of years, real estate, and real properties (including land, estate, buildings, etc…) is the primary ruler to measure wealth.

Even today, over 90% of millionaires in the world became so because of real estate. 

2. Real Estate appreciates in value

As long as you hold on to your investment, it will continue to appreciate. There are always a limited amount of land & homes, but there isn’t a limit to the world population. 

Population growth feeds real estate value through generations.

3. Cashflow

You can rent out part of your home (or the entire home) to generate cashflow income. This is passive income revenue source aid in building leverage.

4. Leverage

Real estate helps provide loan leverage when you need additional capital for business (or more real estate). Borrowing to invest in real estate is one of the smartest leverage you can make.

5. Tax Benefits

In many countries/state/provinces, rental income is taxable. Which means your expenses can also be claimed to gain additional tax benefits

You can do it anytime, anywhere, with and without money

There are hundreds of way to invest and make money in real estate. It is the type of investing that you can do anytime, anywhere. The sky is the limit.

Think about it, real estate encompassed so many aspects of our lives. The buying process involves realtor, mortgage broker, the bank, insurance, lawyers, contractors, etc… And after you purchase, it involves maintenance and ongoing upkeep lik lawnwork, plumbing, heating, cooling, etc…

Involving in one of these aspect means you are part of the real estate ecosystem.

Real Estate investing is also one of the types of investing that you can do while holding a full-time job. And having a full-time job actually comes with many advantages; such as getting bank financing easier, or stablizing your income while you build wealth.

With real estate, you’ll need to have a small saving to get started. But it is also possible to invest in real estate if you don’t have money at all.

These no-money strategies leverage investor strategy and is more complex, but definitely doable. They include wholesaling, lease to buy, partner syndicate, government programs, leveraging line of credit or utilizing private money to buy real estate.

Real Estate Is not a Get Rich Quick Scheme

It is a great vehicle to build generational wealth, but it takes time. It takes planning, patience, and persistence. You often don’t make millions right away but on-going investment will bring tremendous growth in the long run.

Success in real estate requires hardwork, and we’re here to help you with that.

Learn to Invest in Real Estate

Real Estate transactions are often complex, so don’t skip out on learning and understanding how it works, the terminology and mathematics behind each transaction. Your success or failure depends on them.

Sources of Real Estate Education

Books & Blogs – You can always get educated in real estate investing via real estate books. There are thousands of them and some best ones might be available at your local library. Spend sometime to acquaint your self with the top few books to arm yourself with the fundamentals of real estate investing. Real estate blogs are also another great source of information. 

Mentors – One of the fastest and most powerful way to learn real estate investing is with a mentor. Find someone in your circle that have been investing in real estate (2 or more properties) and have a chat with them regarding their methodology, how to get started and issues and obstacles. As you gain experience, some of these mentors might even become your investing partners. If you don’t have anyone in your circle, ask your friends or family about people they know and can introduce you.

Real Estate Terminologies

There are hundreds, but any good book can introduce you to the fundamentals. The best way to learn is to speak with someone and start discussing with them about real estate. 

Real Estate Mathematics

You won’t need a math degree to understand real estate mathematics. There are a couple main concepts that you’ll always need to arm yourself with to get started:

Income – amount of money that the property brings in if you rent it out.

For example if you rent out one bedroom in your house and it brings $700/month. Your income is $700.

Expenses – anything that cost you money within that same property. Things like mortgage interest, maintenance, hydro, water, garbage collection bill, etc… are all expenses.

For example, if the above house have $100 gas bill, $100 hydro bill, $50 for internet, and $50 for garbage collection per month. Your total expense will be $100 + $100 + $50 + $50 = $300/month

Cashflow – cashflow is the amount left over if you subtract expenses from your income.

Your cashflow for the above property = Income – Expense

Cashflow = $700 – $300 = $400/month.

Return on Investment – Return on Investment, also called ROI is the percentage of return that you make after each year. 

ROI = (Annual Cashflow / Initial Investment) * 100

With the above property, if your initial investment is $100,000, and you make $4,800 a year ($400/month x 12 months), your return on investment will be ($4,800/$100,000) *100 = 4.8% return.

A word of caution: Analysis Paralysis

Sometime, it’s easy to get stuck in a cycle of planning, research, and evaluation without actually making a decision and moving forward with your investment. You’ll have to take action to get started. 

Focus on an area that you’re most comfortable with, and get that first investment going. We assure you, your confidence will be sky high after it’s done. Just get started.

Investing Strategies to get Started

There are many ways to invest in real estate. We’ll introduce you to some popular methods to get you started:

Investing in Land – the most basic of them all. Land can be improved to increase value, leased out to create cashflow, or subdivide and sold for profit in the future.

Investing in Small Apartments/Condo – owning and living in your own property while waiting for the avalue to appreciate. This is a great way to get started in real estate investing if you have limited budget.

Investing in Homes – including townhouse, semi-detached or single detached homes. This is the most common investment strategy. These homes are easy to rent out, sell or refinance at a later date. 

Investing in MultiFamily Houses – including duplexes, triplex and quads. These small multifamily properties has the same benefits of homes in the above method, but also has higher potential for cashflow.

Investing in Apartments – if you have capital, you can invest in these properties. They often have anywhere between 5-20 units for a small apartment and 50+ for larger ones. These properties generate significant cashflow, but is also more difficult to finance.

Investing in Commercial Properties – commercial properties include shop house, supermarket or larger office/warehouse spaces. They provide consistent payment over long term because commercial tenant often sign multi-year leases.

Investing in Real Estate Investment Trust – REIT is similar to stock where you invest in a company or group of individuals that have a large real estate fund. This allows the REIT to purchase larger properties such as malls, offices and complexes. Your shares in the REIT often have dividend payments.

The most common and basic way to get started is to invest in condo or homes. We highly recommend that you pick one of the above methods and focus on that strategy when you started. You can expand to other methods once you gain experience.

Flipping and Wholesaling

There are also other investing methods like flipping or wholesaling, however, they require significant experience and knowledge to beable to gain a profit. We do not recommend them to new investors as you’ll more likely to loose money.

Forming a Plan

To be successful, you’ll need to form a plan. It serves as the foundation and guide your course through your investing journey. 

The plan begins with a goal. 

What do you want to do? Do you want to achieve financial freedom by achieving $3000 a month in passive income? 

Or do you want to be known for land ownership? Whatever it is, put down a goal for yourself so you stay motivated.

Timeline

Be realistic about achieving the above goal in your timeline. A perfect timeline give you enough time, but also force you to be slightly uncomfortable so that you will focus and work hard. We recommend setting a 5 year plan, and breaking it down to yearly increment so you can have sub-goals for those 1 year increments.

Strategy

Choose one that you’re comfortable with and learn as much as you can about it. You’ll need to focus and stay on course to achieve your goal within the time period set out above.

Evaluation Criteria

Based on things that you learn above about your investment strategy. Take sometime to set out some fundamental property evaluation criteria. This will help filter out properties that are not within the scope of your investment, and help reduce analysis paralysis.

Financing

Approach this investment like a business. A business is designed to make money, and needs startup capital. You’ll need to explore options on how to save up or gain that initial startup capital; whether it’s through family support, personal saving, or other financing methods.

Team

A real estate transaction involves many pieces, and each piece is best handled by a professional. Looking for deal involves a realtor, financing requires a mortgage specialist, closing requires a lawyer, and any work done on the property requires a contractor. Form that initial team with people you trust.

Partnering

Evaluate if you want to have a partner in this plan. Most investors work alone, or together with their spouse, but there are amazingly successful tandem partnerships out there. Only partner with people who you truly trust as breakup can distrupt your plan and prevent you from achieving your goal.

Your Exit Plan

Investing in real estate is fun, and rewarding, but sometime, you’ll have to divest your investment by selling. Generational wealth building involves cleverly managing your asset in many area so if there’s a downturn in one type of investment, it won’t wipe out your gains. 

Throughout your investing career, you’ll have to sell one or more of your properties to reinvest into other property types. Below are some exit strategies to keep in mind.

Private Sale by Owner

As the name suggests, you can advertise and sell the property directly to Buyers. To increase your chance, you can have a Buyer Agent commission set up so that there is more exposure to buyers. 

Traditional Sale through a Realtor

When you list your property for sale with an agent, you’ll sign a listing agreement and outline the important features of your home so that they can enter them into the MLS system. Once in MLS, your property is featured across many sites across the web and increase visibility, hence a higher chance of it being sold. 

An agent can also advise you on selling price, and help during the negotiating process to increase the selling price. An agent would earn commission if they sell the home.

Less Used: Lease Option

This is a legal arrangement between Buyer and Seller that gives the Buyer the option to purchase the home for a certain price within a set period of time. During that time, the Buyer continues to pay rent. 

Example: John wants to sell his 2 bedrooms condo but currently has a tenant. As the market is slow, John is unable to sell. The Tenant offers to buy the condo at an agreed price of $400,000. However, the Tenant is not in the position to purchase at the moment due to insufficient funds. John and the Tenant sign a Lease option giving the Tenant a 2 years period where the Tenant can pay John the $400,000 to purchase the home. Until that time, the Tenant will continue to pay John monthly rent.

What's Next?

You should now have a clearer understanding of real estate investing, and building generational wealth with real estate.

Your journey now begins.

Thanks for taking the time to read this guide. When you choose to start, select the next section of “Complete Guide for Home Buyer” to get started in your journey.

Are you an investor? Would you be interested to discuss your real estate needs? Check out our “35 Steps Stress-Free Buying Experience” to see what set us apart.

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