Unveiling the Path to Wealth through Real Estate: Beyond the Initial Purchase

I was with a group of real estate masterminds recently and posed the following question to the group. How does someone become wealthy in real estate? Everyone in the group smiled and immediately identified the most important first step toward wealth creation in real estate. Buy Property.

Andrew Carnegie once said “90% of all millionaires become so by investing in real estate”. Another sage investor, arguably the greatest of all time, Warren Buffet, has many real estate holdings, including Berkshire Hathaway HomeServices, which is the largest real estate network in the world. Buffet also recently bet big on three of the nation’s largest homebuilding companies, Lennar, DR Horton, and NVR (Aug 13, 2023, The Real Deal, https://therealdeal.com/national/2023/08/15/warren-buffett-bets-big-on-homebuilders/ ).

Buying property is where it starts, however real estate is not a get rich quick venture, even though many people have made a lot of money very quickly in real estate. Real estate is a long game where property is purchased and over time it builds in value, creates equity, generates cashflow, and becomes an incredible asset to leverage and grow wealthy if that is the aim.

As the adage advises, "When is the right time to invest? The best time was yesterday; the second-best is today." Waiting for the perfect time to invest is like having that significant other person in your life. At some point you can only admire and ‘want’ to be with them for so long before you need to decide to make the ultimate commitment by saying ‘I Do’. Otherwise, they may just move on and the opportunity will be in someone else’s arms.

Speaking of getting married, with real estate it’s the price of the property you are forever tied to and not the interest rate. Real estate philosophy is that you date the rate and marry the home price, because you can easily switch rates when the right one comes along by refinancing the property. Many lenders are also offering incentives that allow a refinance at no cost so the chances are good that at some point after the purchase you can get a lower rate, reduce the monthly payments, and not pay added fees to the lender.

Some homebuyers try to time the market by waiting for the ‘right time’ to invest when prices and interest rates are at their lowest. It feels good when you can perfectly time things but it’s nearly impossible to do so consistently and waiting means you potentially miss out on some great properties that have the best long-term prospects. With real estate you are placing faith in the idea that land and homes will grow in value over time and that is always a good bet. If you hold the property long enough, history proves that it will increase in value and you will build equity, regardless of the initial investment.

Certainly, there are moments, and personal circumstances, when investing in real estate does not make sense. For example, if prices are falling consistently month to month, or if owning a property would be a financial burden, then holding off on the investment will be the wise decision. ??

Nashville is a good place to invest in real estate.

In spite of a ‘cooling off period’ home prices in Nashville still rose 7.5% in the last 12 months (Source: August, 2023, Realtracs MLS), and they are expected to continue an upward trajectory. Jeff Hite, Chief Economic Development Officer for the Chamber, says "The growth of our population carries immense positive implications for the Nashville MSA, and the more than 2M people who call it home. New data signifies that our economy, workforce, and overall quality of life (since the pandemic) have rebounded at an accelerated pace compared to our peer cities.”

Nashville continues to have people pouring into the city to call it home and real estate prices will continue to be impacted by this growth. If personal finances allow for investing, the choice then becomes…wait and pay a higher price later or make the decision to invest now and start down the path to wealth creation.