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How do people become Wealthy? (Part 1 of 2)

Fortune Magazine publishes an annual list of the wealthiest individuals and along with this list of august individuals all of whom possess $1.0 billion or more they also identify how these individuals acquired that vast sum of money.

A while back, I had the opportunity to study this list in great detail as I was genuinely interested in where these people came from and how they became rich.

Some of these individuals’ stories were self evident. The Walton kids had acquired their wealth from the efforts of their dad in establishing the Wal-mart chain.

There was a guy named Mark Cuban who hit the list by creating innovations in providing Entertainment media. There were a couple of guys who had just set up these new “cell phone” delivery companies (Yes take a wild guess as to when I did my research).

There were a handful of individuals who were media moguls like Steven Spielburg and Oprah Winfrey.

I remember a smattering of widget inventors, people who invent things like the spork that literally change the world.

But I found an interesting trend in how the VAST majority of these billionaires became billionaires.

Next to over 20% of the names on that Forbes list were two words: Real Estate.

I stared at those two words repeated over and over and over on the Forbes list and wondered, “How?”

How exactly does one become a billionaire through “Real Estate?”

At the time, I had no idea. Not a clue.

I imagined that at the most basic, that you would buy Real Estate cheap and sell it when it becomes more valuable. Right?

Time has passed and I had an opportunity to help a friend grow his business and it was through that opportunity that I began to learn and understand how Real Estate becomes a source of wealth building.

As of now, I know of two ways to become wealthy with Real Estate.

1) Flipping.

Flipping is easy to understand.

First you buy a house that no one in their right mind would buy and you pay very little for it.

Next, you fix that house and make it the envy of the neighborhood.

And then you sell it.

Rinse and repeat.

Flipping is very work intensive but if you know what you are doing you can make a good living at it, especially if you can do a lot of the work yourself.

I don’t flip and I will not pretend to be an expert at flipping.

2) Renting.

This is the area where I have become an expert.

– First you purchase a home (or an apartment or condo).

– Make it rent ready.

– Get a good tenant into the rental unit.

– Make sure the rental remains a good and habitable place to live.

– Collect rent.

Check back next week as we discuss successful Rental Real Estate in detail.

We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.

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