Seeing people with 50 million up to hundreds of millions of dollars in net worths all in real estate, how does that work exactly? Do they just buy properties and flip them? Are they real estate brokers or do they just get lucky that the property increases in value?
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Complicated answer with lots of paths, but generally real estate appreciates if managed properly. These folks usually also own commercial, which is heavily tied to rental income.
Let’s say you put up a down payment and finance an underperforming 20 unit strip mall in a decent part of town for $100,000 with only one tenant paying $10,000 a year. You market the property and get 14 more tenants paying $10,000 a year, the value will increase dramatically.
Now refinance the property, and take advantage of tax benefits, and do this again 5 times. Now package your portfolio and do this same concept with portfolios of properties.
Over time you will have enough cash flow and assets to get any loan you want, and can make the same or new investments with relative ease.
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