Spending more time and/or more effort is a finite game of getting results. Changing your thinking and perspectives is an infinite game and is therefore more worthy of your attention and resources.

                        --Brian Koslow

            I come from a Real Estate family. My folks preached the gospel of homeownership as the ticket to the American Dream. My brother was the best listener and as I write this he owns several millions of dollars worth of rental properties and a personal residence worth over a million dollars.

            Now, that level of success would be an outstanding accomplishment for anyone, but it is particularly so for my brother, Jim. He has endured medical problems, he never finished high school, and he has worked as a barber all his life. As a barber, I doubt he has ever earned more than $25,000 in any year.

            But as far as building his net worth is concerned, Jim never let any of these factors prove to be what defined his level of success. Instead, he took the hand he was dealt and played it about as well as it could have been played.

            Jim, you see, quite early on, saw the opportunity in real estate. He started with a single duplex, moving into one side and renting the other. In this way, he was able to save the money for the down payment on his next purchase and, then, the next.

            After a few years he stopped buying and simply let the market take him along for the ride. This is not to say that there were not bumps in the road. There were tenants who paid late or not at all. There were evictions and properties left in shambles. There were vacancies and times when the market took a turn for the worse.

            But Jim hung in there and it was that ability to persevere that proved to be his genius. If you give it enough time to work its magic, investing in real estate can, likewise, be your ticket to financial security and, even, financial independence. It won’t happen overnight but, if you buy right and hold appropriately, it will happen just as it has happened for countless other investors.

            Look, there is nothing particularly complex about the formula that produces these results. It is a fact that certain markets produce the desired result faster than others but the opportunity to tap the market forces that drive real estate appreciation over the long-term exists all across the USA.

            Investing in real estate can take many different forms. An investor can invest in single family homes, multiple-unit buildings, commercial real estate, or undeveloped land to name just a few of the many segments of the market that exist. You will, eventually, need to pick your niche. But before you get to that point, you need to become a true believer in the power of real estate to create wealth because it is the faith of the true believer that will get you up and over the inevitable hurdles that you will encounter on your path to a fortune in real estate.

            If you understand how real estate fortunes are made, you will be able to keep those late night calls from problem tenants in their proper perspective. While you’re painting a vacancy or mowing a lawn, you will know with confidence that the sweat-equity is piling up in your favor.

            When you understand how real estate fortunes are made, you will understand that it is all a numbers game played over time; the only trick is to get those numbers working in your favor and let the market do the rest.

            If you are a big reader of real estate books, you will recognize this one as different. I stress the fundamentals of real estate investing. If I were a baseball coach, I would focus on hitting and catching. If I were a football coach, I would teach blocking and tackling; you know, the stuff that wins games.

            That is my same focus in real estate. Once you understand how real estate works, you will be able to grasp the big picture and proceed confidently. That is the purpose of this book—to show you how real estate works to generate wealth so that you will be able to tap into those forces.

            The truth is, if you have a regular job and a commitment to save, the first million is easy. Saving as little as ten percent of your income over the next forty years or so will get you there. Do the math and see for yourself. Growing wealth by saving a portion of your income over a long period of time is based on the power of compounded interest.

            The reason that it takes forty years or so is because of the interest rate that you are likely to realize on your savings. You must understand how compound interest works to generate wealth, it is the foundation principle of all wealth and how real estate fortunes are made.

            There is a core financial concept defined as The Rule of 72. The Rule is simply the name given to the fact that if you divide the number 72 by whatever interest rate you are receiving on your investment, the result will be the number of years it will take for your investment to double.

            For example, if you have money in the bank paying you two percent simple interest a year, the equation would look like this: 72/2 = 36. That means that if you had an initial deposit of $500, in 36 years you would have $1,000.

            If, on the other hand, you are earning a return of eight percent on your investment (72/8), your money would double every nine years. Why is this so important? Because it shows you the relationship between return on investment (ROI) and time.

            To make this point, consider that span of forty years that came up before. If your investment was earning two percent your money would double once in that time. If you were earning eight percent, your money would double four times in that same period. So, if we started with that same $500 in each account, in the account earning two percent you would have about $1,000. In the account earning eight percent, however, you would have over $8,000!

            The trick here is to think in terms of compounding periods and to understand how rate of return acts as a multiplying factor on time. Time can never be recouped and your opportunity to empower time to grow your investments once lost is gone forever.

            Think of an investment as a bucket into which you place your money. The money your money earns can then be thought of as a stream of additional funds into that bucket. In the case of money in the bank, the only source of additional money into your bucket is the interest that money earns. But, more importantly, it is the factor that will influence the rate at which your money is doubling.

            Now, think of that same money invested in real estate and think of that investment sitting in that same bucket. How many streams of income are pouring into that bucket and growing your net worth? You will have five streams of income pouring money into your bucket and each will be contributing to your return on investment. And that is how real estate fortunes are made.

            No other investment has even the possibility of generating that number of income streams. It is in real estate and real estate alone in which that power even exists.

            Let’s look at the stock market. What are the possible revenue streams? There are only two, price (asset) appreciation and dividends and not all stocks pay dividends.

            So, what are the revenue streams that you can tap to pour into your investment bucket? They are asset appreciation, rent, rent inflation, tax benefits, and scheduled mortgage pay-down.

            Those are the forces that produce real estate fortunes and make multi-millionaires out of people like my brother. All it takes is the execution of the fundamentals over time and a little faith in the market.