For most of us, the dream of building great wealth—enough to pass on to our descendants –seems like a long shot. Doing so with real estate looks even less attainable. Many think that it’s a path to riches that’s least likely to open up for the average person. Isn’t real estate supposed to be the preserve of people who are already financially comfortable?
It isn’t. You can accumulate significant income-generating property holdings over time if you plan and execute a smart, long-term strategy. Granted, it will require a lot of discipline and sacrifice—and maybe even a bit of luck –but it’s doable.
Here we’ll run through the steps to building wealth through real estate—wealth that you can deliver to your successors.
Set Your Goal
You need to know where you’re going in order to know how to get there. So, define what ‘generational wealth in real estate terms’ will mean for you. What kind of holdings do you want (land, commercial or residential real estate, etc.)? And what would they be worth in financial terms?
Don’t just note the type of property (or properties) you’d like to own. Visualize it (or them). Think about what it would mean to earn from those assets, and how grateful your children will be for the wealth you’re handing to them. Doing so will motivate you to achieve your goal.
Save To Invest
Of course, you’ll need money to get started in real estate. Ideally, that money will come from your savings. If your income is decent enough, you could set some of it apart for your investment.
However, most people can’t afford to save up the amounts required to get involved in real estate. Here’s where we’ll recommend developing skills that can create extra value. If you’re able to improve the skills you have (or learn new ones), you can leverage them to get better-paying work or start a side hustle to supplement your income. Over time, you’ll be able to increase your savings.
Your route to succeeding in real estate doesn’t have to begin with large investment outlays. There are a number of low-cost ways to start out in the industry. One would be to flip land in locations where land is inexpensive. Learn how to do this in our article, How to Flip Land for Profit in Nigeria.
Another low-cost way to gain entry into real estate is through joint venture deals. You could join a group that develops, markets, and sells property; contribute your resources (it doesn’t have to be financial), and get a share of the proceeds that come out of selling property. There’s more on real estate venture deals here.
Purchase And Hold Land
As your earnings from smaller deals grow, you’ll accumulate enough to begin buying and holding land. But don’t just purchase any sort of land. Go for plots that are in the path of present or future development (in simple terms, places that are likely to become urbanized in the near future).
Spots that fit this description are usually located on the outskirts of major cities. The price of land in such places will rise as demand for them climbs. If you hold them for several years, you could sell them for a significant profit (and reinvest in the next best upcoming districts).
Build And Rent Out Property
There’s also the option of building and renting out property. If you do this in a place where there’s high demand for residential, office, or industrial space, you could generate a lot of income from it. And it’ll be a fine asset to hand over to your successors.
It’ll cost you quite a bit of money to build a house or office block. But on the upside, you’ll very likely begin to earn from them soon after they’re completed.
Have A Mix Of Investments
Holding a variety of asset types could be the way to go. For example, you could hold land and have a block of flats to rent out. The flats will yield income for you and your heirs in the short term, while the value of your land appreciates.
Real estate offers you a great way to create, preserve, and transmit wealth. You don’t have to be well-off to take advantage of it. Work with a smart investment strategy that suits you, and you’ll build wealth with real estate that you can pass on to your descendants.Featured Image Source: CNBC
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