5 Steps to Become a Millionaire from Real Estate in 5 Years

Dream of becoming a millionaire from real estate? 

The good news is that the strategy to become a millionaire in real estate is actually pretty simple. The bad news: simple doesn’t mean easy. It still requires plenty of work and money invested to get there — especially if you want to become a millionaire within five years. 

Follow these steps to become a millionaire real estate investor within the next 5-10 years. 

 

Steps to Become a Millionaire from Real Estate

You don’t need to start with a silver spoon to become a millionaire from investing. You do need to invest consistently, and the more you invest each month, the faster you’ll join the two-comma club. 

Ready to launch your rocket to riches?

 

Step 1: Choose Between Active & Passive Investing

You don’t have to flip houses or become a landlord to build a million-dollar net worth investing in real estate. In fact, you can invest from the comfort of your couch, and never put your name on a deed at all. 

Passive real estate investing options include real estate crowdfunding platforms, publicly-traded REITs, real estate syndications, and private notes. I don’t recommend public real estate investment trusts as a vehicle to becoming a millionaire in real estate. You can’t take advantage of real estate leverage, and public REITs share too much correlation with stock markets. 

Real estate crowdfunding is a viable option as you’re just getting started. Several platforms offer minimum investments between $10-500, helping you diversify into real estate without coughing up tens of thousands for a down payment. But many require a long-term commitment, without necessarily paying the high returns of real estate syndications. Check out Groundfloor and Fundrise as ideal starting points with as little as $10. Groundfloor offers short-term investments, and Fundrise charges a minimal early withdrawal penalty.

The real returns in passive real estate investing come from real estate syndications however. In our real estate investment club, we aim for 15-30% returns on real estate syndications. Most generate passive streams of income while you own them, and come with full tax benefits from property deductions to depreciation. 

No investment comes without downsides though. Real estate syndications require a medium- to long-term commitment, two to seven years, and don’t offer any liquidity. They typically require high minimum investments in the $50-100K range, unless you invest through a real estate investment club (like, ahem, ours). 

If you prefer a more hands-on approach, you could learn how to buy properties directly. Just beware that it comes with far more skills you need to master. 

 

Step 2: Wrap Your Head Around Infinite Returns

For the math geeks out there, if you invest $0 and earn $1, what’s your return on investment? 

To become a millionaire real estate investor sooner rather than later, you need your money to work double and triple shifts for you. And it can — if you achieve infinite returns. 

You might have heard of the BRRRR strategy in real estate, which illustrates this concept perfectly. The acronym stands for buy, renovate, rent, refinance, repeat: you buy a fixer-upper, rehab it, and then refinance it with a long-term rental property mortgage. 

Here’s the kicker: when you refinance it, the loan amount is based on the new after-repair value, not your original purchase price. That means you can pull cash out of the property upon refinancing, often enough to reimburse your original down payment. 

Which leaves you with none of your own money invested in the property. You can take your down payment money and reinvest it to buy another property. In this way, you can recycle the same down payment over and over again, each time adding a new cash-flowing property to your portfolio. 

You can also earn infinite returns on passive real estate syndications. The sponsor buys a property, renovates it and raises rents (which raises the value), and then instead of selling they refinance. Upon refinancing, they return your initial investment capital back to you, but you still keep your ownership interest in the property. You’re free to reinvest that capital in new deals, even as you keep collecting distributions from the existing property. 

Starting to see how you can become a millionaire from real estate without needing to invest massive sums of money?

 

Step 3: Master the Fundamentals of Your Strategy

Now that you’ve decided whether you want to invest passively in real estate syndications or actively in BRRRR properties, it’s time for you to master your chosen strategy. 

Because make no mistake: if you don’t master it, you’ll make mistakes. And when you’re investing tens of thousands per deal, mistakes are expensive. 

 

Skills Required for Syndication Investing

Syndications offer the easier path, and by a long margin. To begin with, you need to learn how to find sponsors who allow non-accredited investors (unless you already qualify as an accredited investor). That in itself requires some work, because by law these syndicators aren’t allowed to advertise. Ask around among other passive investors, join social media groups, listen to podcasts such as How to Scale Commercial Real Estate by Sam Wilson. 

As you start networking with sponsors, you need to learn how to vet them carefully. Ask probing questions such as:

• • What types of properties do you invest in and why?
  • What markets do you invest in and why? 
  • Have you ever issued a capital call? 
  • Can you send me your track record? 
  • Can you send me references of investors who have participated in at least three of your deals?
  • How do you mitigate risk in your deals?

You also need to learn how to vet deals. But vetting deals is less important than vetting sponsors — if you find the right general partners, you develop trust in their expertise and judgment. 

You can also simply join a real estate investment club that specializes in syndications for non-accredited investors. Like, say, ours! Every month we propose a new syndication deal, and any members who want to participate can do so with as little as $5,000. That’s a lot easier than the typical $50-100K.