How Many Rental Properties Do You Need To Be A Millionaire?

One of the most common questions I am asked is how many rental properties it takes to become a millionaire. People are looking for this information so that they can set goals for their real estate investing. The answer I have, however, is usually not what they expect.

The answer: It depends on what you mean by millionaire.

There Are Two Types of Real Estate Millionaires

The first thing that you should realize is that there are two types of real estate millionaires. The first is those who have over a million in real estate assets; the second is those who can generate a million in income.

You can be the first type of millionaire quite easily. You cannot be the second type of millionaire until you have become the first type of millionaire several times over.

Stop – don’t give up after reading that. Achieving these goals is not as difficult as you may think. However, you must understand this process so that you can become the type of millionaire you desire to be.

Real Estate Asset Millionaire

The first step to becoming a real estate millionaire is acquiring enough rental properties that the asset value exceeds the million-dollar mark. In some areas, you can achieve this with as little as four homes.

You may have to own at least 10 properties to have an asset value of a million in other areas.

So your first goal to becoming a real estate millionaire is accumulating properties that will add up to a total of a million. It sounds like such basic information that it does not sound like good information at all.

However, reaching that million-dollar asset point will change your rankings with lenders. Once you achieve the million-dollar mark in assets, the next homes that you wish to purchase for investment will be easier to achieve.

Lenders are more receptive to lending money to property owners that have a high asset value.

You may even find that you are able to purchase more expensive properties now with lower down payments or may even begin to qualify for multi-unit properties.

This simple change in your rating will make reaching your second, third, and fourth millions in assets much easier and much faster to attain.

Real Estate Millionaire – Income

Now that you have learned how to achieve becoming a real estate asset millionaire, now you need to discover how to generate that type of income.

The first thing that you will have to look at is how much money you are generating profit on each home.

To start, you can figure that you are only going to make between $100 and $400 dollars per month when renting out a home based on the mortgage payment and the rent that is average in the area of the property.

This equals a profit of $1,200 to $4,800 per year. This is a long way from being a millionaire. However, it is important to remember that your profit will be low when you are still working on building your million in assets.

Each property you add to your portfolio will increase the profit you make.

However, it still seems that even $10,000 per year is a long way off of making millions.

That is why when you have built up a large portfolio of single homes to make yourself an asset millionaire matters so much. Now you can start looking at multi-family properties and commercial properties.

Say you found an apartment building with 20 units. Now you have 20 incomes coming in from one mortgage payment. You have made a significant increase. The same applies to commercial properties.

If you find a small strip mall with 10 spaces, you are multiplying rent by 10 and only have 1 mortgage payment. Your profit margin is really beginning to increase now.

You keep repeating this process. Increase your asset value, buy properties with more rental opportunities. Over a span of several years, you will start generating an income that is at the million-dollar mark.

For most real estate investors, it can take between 10 and 15 years to meet this goal. For some, this seems like forever, but remember you are making income in the meantime, and you are building your asset value.

The Number of Properties and Time Will Depend On Your Area

You must account for the real estate market in your area. The price of properties, the types of properties available, and the average rental prices will all need to be accounted for when you begin investing.

It may be necessary to look in other areas than where you live so that you can find the best investment properties.

Real Estate Investors Must Have The Following Qualities To Be Successful

There are some qualities that a real estate investor must have if they wish to achieve millionaire status. These qualities include:

1 – Attention to Detail

When you are investing in properties, you have to have keen attention to detail. You want to make sure that the properties you purchase are not going to require massive investments before they start generating income.

You want to understand as much about houses and building codes and standards as possible.

2 – Build a Network of Real Estate Professionals

You will want to build a network of acquaintances in the real estate industry so that you can find hot properties as soon as they emerge on the market. The more people that you know in the industry will help you build your portfolio quickly.

3 – Build a Network of Financial Industry Acquaintances

When a hot property becomes available, you need to be able to make the purchase quickly. Make sure that you have different options available to you at all times to secure financing for a property.

4 – You Need Patience

The old saying that “Rome was not built in a day” holds true to becoming a real estate millionaire. It takes time, it takes patience, and it takes dedication. If you are willing to commit to the task, you can make yourself a millionaire in real estate.

5 – You Need To Stay On Top of the Market

One of the best things that a real estate investor can do to be profitable is to stay very current on real estate-related information. You want to know what is going on in the market in your area as well as in the country.

You want to know current trends for rental properties so that you invest in the right types of properties. You want to know about laws affecting rental properties and real estate in general.

Knowledge of the real estate industry is crucial to your success because it helps you stay on top of trends and not get caught off guard when the market changes.

My Final Thoughts on how many Rental Properties do you Need to be a Millionaire

It is possible to create a real estate empire for yourself with hard work and dedication. You can make yourself a real estate millionaire if you are willing to dedicate the time and effort to make it happen.

I would love to hear some of your thoughts on becoming a real estate millionaire. Like other real estate investors, I am always looking to learn new things, discover new tricks, and catch on to new trends.

Owning real estate is one of the best ways to invest your money. Unlike stocks that can move up and down wildly, the real estate market has a tendency to stay calm and steadily increase in value.

Of course, nothing is guaranteed, but then again, nothing ever is.

Thank you for reading this post and have a great day.

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