The Wealth Plan or How to become a Millionaire

First of all, I need to give credit to other Real Estate gurus out there, The Wealth Plan is not my original ideal. It's a plan that many people have use over the years and it has proven to work.

There are many people out there who are millionaires, simply by using a plan, very similar to this. So here is the Small Income Property Investment Strategy version to how to become a millionaire:

1. Buy your first property. Generally buying a fourplex works best and fastest due to the cash flow. But a duplex will work just as well.

2. Fix up the property and increase the rents as explained in the increasing the value section of this web site.

3. After 1 year refinance the property and pull money out of the property. You need to wait 1 year before refinancing, as this generally is a requirement of most lenders in order to pull cash out. That's TAX FREE MONEY you are pulling out of this property.

4. With the cash you pulled out, buy a second property.

5. Again fixing up the second property allows you to increase the rents, which in turns increases the value of the property.

6. Now after 1 year of owning property number 2, you refinance the second property and pull money out.

7. At this point the first property has now also increased in value as your rents are continuing to increase on an annual basis, plus most likely you have some market appreciation added to the value of the first property after 2 years. To pull the extra equity out of property number 1, you take out an equity line of credit (cheaper than refinancing). You may need to weight the difference of using an equity line of credit on this property or just use refinancing again.

8. With the money you pulled out of property number 2 and the new line of credit on property number 1, you buy a third property.

9. Once again you fix up the third property to increase the rents which in turns increases the value.

10. Wait 1 year and refinance the third property.

OK, you can see where the Real Estate gurus are going with this. In a matter of ten years or less, you could have a total equity position in all the properties (8-10 properties) that exceeds 1 million dollars.

This is a simple, but very effective way of becoming a Millionaire by investing in Small Residential Income properties. Also the taxes benefits derived from this strategy are fantastic.

Other possibilities (like in years 9 or 10) would be you take some of the 1 million in equity and payoff the mortgages on properties 1 and 2, thus the monthly rental income is ALL yours to keep, since you have no monthly mortgage payments and you can then live on "Tax Free Income" (as the other properties will shelter the taxable income from properties 1 and 2). Now you can, Quit your day job and enjoy life!