By Mark Ford, founder,
The Palm Beach Research Group
Do you invest in real estate?
I’m not talking about your home. Owning a home has more to do with security (emotional and personal) than it has to do with
I’m talking about rental real estate.
I love real estate. It’s not without its problems, but it’s the best way I’ve found to accumulate a good deal of wealth on a part-
In the many years I’ve been actively investing in real estate, it has given me returns much better than the stock market. In fact,
my average return has been between 5% and 8%, without leverage. When I use bank financing, those numbers are in the 12%-15% range.
I’ve tried all sorts of real estate investing. But I’ve gotten the best results by sticking to this plan: direct investments in
income-producing properties… either residential or commercial.
You receive something with rental properties you don’t get with many other real estate deals: guaranteed income. Sure, you get
appreciation, too. But I’ve come to see that as secondary to having dozens of extra, ongoing income streams. (And did I mention
it’s money cost of borrowing, the maintenance, and the theoretical loss of income by charging a modest rent.
I netted something like $10,000 per year on a condo I bought for $65,000. That was a return of roughly 15%, cash on cash. (Cash-on-
cash return = annual dollar income / total dollar investment.)
Had I used bank financing, I would’ve made more – without any significant increase in risk.
I own dozens of individual properties like this. They send me checks – usually thousands of dollars – on the first of every month.
That’s a nice way to begin your month.
Mark on his favorite day of the month: the first.
On the credenza are 24 small red binders. Each represents a separate real estate investment I’m involved in.
Some are individual properties I own myself. Some are properties I own with friends. Some are direct investments. Some are in
partnerships or corporations. Some are rental plays. Some are build-and-sells.
If you decide this is the year to begin a real estate portfolio, start slowly.
My first real estate investment was a bad one. I’ve written about it before. It was a rental unit in Washington, D.C. (It was
overpriced and occupied by a prostitute who would neither pay me rent nor do her business elsewhere.)
It took me years to dig myself out of that mistake. I emerged a smarter (but not-yet-smart-enough) real estate investor.
Take your time. Be selective. Educate yourself. Some of what’s on the bookshelves is full of misguided advice.
My best advice is to subscribe to our rental real estate program. It’s part of the Palm Beach Research Group’s Wealth Builders
Club. That, you can trust.
You can also take adult education classes… if you can find them. Be leery of free seminars –they’re likely to be selling
Here’s a promise: If you start investing in rental real estate this year, you’ll be glad you did. If you keep investing – buying at
least one new property per year (which will be easy once you get going) – you will be a real estate multimillionaire in no
time (not counting your other assets).
And you’ll be well on your way to retiring as a multimillionaire.
When you look back on all the wealth you acquired, you may feel the way I do now: that real estate was the easiest and – next to
your personal business – most lucrative wealth-building activity you ever got involved in.