The real estate investor shows how to build wealth through real estate

• Ludomir Wanot used real estate investing to build wealth and achieve financial independence.
• He started his career from scratch and believes that anyone can achieve what he has.
• He advised that you start with self-education, connect with the right people, and take advantage of an FHA loan.

Ludomir Wanot, 30, knew early on that he wanted to invest in real estate.

When he was in high school, he researched how to earn more money. “I found out online that 90% of all millionaires become so through owning real estate,” he told Insider. This Google search was enough to convince him that investing in real estate would be a viable path to wealth.

After saving $2,000 on construction work he started in college, Wanot bought his first investment property in 2016 when he was 24 years old. It was a $138,000 single-family home that he bought in the Seattle area with his brother. After fixing it up and renting it out, Wanott and his brother tested his first taste of passive income through real estate investing. Both brothers were earning about $600 a month in cash flow from their rents after deducting utilities and other running expenses.

Over the past seven years, Wanott has expanded his real estate portfolio to 13 units throughout Central and Western Washington. While he earns about $50,000 a year from rentals, the bulk of his income comes from the real estate wholesale business. In 2021, Wanot and his partner took nearly $1 million in profits from their real estate business, according to documents seen by Insider.

The investor and wholesaler believes that anyone can use real estate as a tool to build wealth and achieve financial independence like themselves. Here’s how to do it in seven steps.

1. Use free books and resources to get education

“There is a very direct correlation between learning and earning,” said Wanott, who has spent a year reading books on personal finance and real estate, including Rich Dad Poor Dad, Millionaire Real Estate Investor and Atomic. habits.”

He also listened to podcasts such as “BiggerPockets”, “Best Real Estate Investing Advice Ever” and “Cash Flow Guys”.

Wanot learned everything from how to apply for and secure an FHA loan—which he and his brother used to purchase their first property—to the importance of buying “cash-flow-positive” properties.

This is a step any potential real estate investor can take. If you do not have enough savings for

The first batch

Educate yourself about the process so that when it’s time to actually make an offer, you’re all set to do so.

2. Learn the ins and outs of your market

When you’re ready to start researching real estate, it’s important to know everything about your market, from your county’s current and future plans to zoning rules in your neighborhood.

Wanot explained that major cities and counties usually have strategic plans that outline 10-year growth goals that you can look up online. Before investing in a particular area, you should consider its plans for infrastructure, employment growth, and community growth. Is there a plan to implement new berths? Is a light rail coming in the next couple of years? These types of plans can enhance the value of your home over time.

Courtesy of Ludomir Wanot

If you can’t find a comprehensive plan online, he recommends emailing or meeting your local planning and development department: “Most urban areas have a planning department, you can actually go to and get all your questions answered, which is super valuable for investors and homeowners.” “.

You also want to understand zoning code and the laws in your area. “It’s one of the most important secrets of successful real estate investors,” Wanott said. “They really know about zoning, and zoning is what makes fortune.” For example, if the property you are looking for is a single-family home but is located in a multi-family area, this means that you can split the plot into two or more plots and own multiple rental units.

Wanott said zoning maps for your county should be freely available online. “Spend 5 to 10 minutes looking at zoning in your area: Is it a single family area? Multiple beds? Is it industrial? Is it mixed use? This is what I’m dealing with: My family’s single home, I could literally build a commercial space on the bottom.” And the apartments are on top.”

If you cannot find a zoning map online, contact your local planning and development office, he advised.

3. Connect with successful investors in your area

Wanott started from scratch: he had neither a background in real estate, nor anyone from his family. Nor did he inherit money. He and his two brothers were raised by a single mother and all he saved came from the jobs he worked and the businesses he started throughout his teens and twenties.

In his intensive real estate course, he builds on learning from investors who have already had success in the industry. Join a Facebook group called WA Real Estate Investing (WAREI) to meet local investors. He advised doing a quick Google search to find a real estate community in your area – if there isn’t any, build one yourself.

Wanot has also benefited from local real estate meetups. This is where he found mentors and asked established investors exactly how they got started and expanded their investment portfolios. “Surround yourself with people who know more than you, ask questions, and build relationships with all the different types of people you meet because you never know when you can work with them in the future,” Wanot said. One useful resource is Meetup, which anyone can use to connect with real estate investors and find events to attend.

Connecting with the right people will help you tremendously when it comes time to actually invest in real estate. For example, you’ll want to work with a knowledgeable real estate agent, a reputable loan officer, and a CPA who can help you increase your tax credits. Local investors can help you connect with these types of people.

4. Take advantage of an FHA loan or an FHA loan if possible

There is a misconception, Wanot said, that you need to cut 20% and save tens of thousands of dollars to buy a property. “This is not the case at all. You can get your foot in the door without a lot of money up front by using an FHA loan.”

FHA loans are government-backed home loans that give people the opportunity to purchase a home with a low credit score and down payments as low as 3.5%. She let Wanot and his brother buy their first property for less than $10,000 up front.

Courtesy of Ludomir Wanot

Note that the requirement to use an FHA loan is that you must purchase and live in a primary residence for at least a year before renting it out. You’ll want to understand all of the FHA loan requirements before using one, but overall, it can be a very useful tool if you’re trying to get into the real estate game.

If you are a veteran, active duty member, or surviving spouse of a veteran, you may qualify for a VA loan. This is a type of mortgage loan that is guaranteed by the US Department of Veterans Affairs and requires no down payment, no private mortgage insurance (PMI), and offers the lowest average fixed mortgage rates.

Understand the resources available to you. Wanot added that you may qualify for down payment assistance, which may allow you to purchase a property with little or no money out of your pocket, as long as you can provide proof of

good credit

calendar.

“What I’ve realized over the years with buying real estate is that cash is king,” he said. “The less cash I can have on a property, the more properties I can continue to buy.”

5. Buying a multi-family home

The advantage of buying a multi-family property is that you can live in one of the units and rent out the others to help offset the cost of your mortgage. Supporting your living expenses will create more cash to continue saving and investing in real estate.

This is what Wanot did with his second investment property, a quadrangle compound that he bought with his brother in 2017. Wanot moved into one of the units and rented out the other three brothers. The rental income covered more than the monthly mortgage, which meant that Wannot lived for free and even earned a profit each month.

Purchasing multi-family properties was a major component of Wanot’s strategy. “Almost all of the properties I bought were in some form of opportunity area or multi-family area,” he said. Of course, not all markets have an abundance of multi-family properties. If you’re buying a single-family home, try buying in a multi-family area, he advised. This way, you can divide the property and build at least two units. Or you can “hack the house” and rent a room (or several) in your single-family home. It may require finding a roommate, but it can help lower the cost of living significantly.

6. Hold your property for 10 years

Wanot emphasized that real estate investing is a long-term game. He pointed out in this regard that “real estate investing is not different from investing in stocks.” “Although we may have different volatility in the market, in the long run, prices keep going up, so buying and holding is key.”

Combined with long-term property appreciation, buying and holding is smart from a tax perspective.

If you sell your property within a year of buying it, you will owe it in the short term

capital gains tax

which is usually equal to your normal

Income tax

an average. “Once you reach the one-year mark, you move on from the short run

capital gains

The tax on any profit you make for a long-term category, Wanott explained, is much cheaper.”

Courtesy of Ludomir Wanot

If you buy property and decide the area isn’t right for you or you need to move, “holding the property for at least two years is essential for tax purposes,” said Wanott, who learned this tax lesson the hard way. “I lost a lot of money by selling early. The capital gains tax took 35% of my profits from the house I sold after six months of living there. If I had waited another year and a half, the tax rate would have been down to 15%.”

To understand how to maximize tax deductions, Wanot recommends reading the “Book of Tax Strategies for the Distinguished Real Estate Investor” or meeting with a local real estate buying agent.

7. Take action

If you want to use real estate as a wealth-building tool, take action now, Wanot assured. After all, “information without benefit is worthless.”

Reading this article is a great start. Next, join a real estate community or go to a local meet and start building your network.

“These are things that anyone can do and anyone has access to, but very few people do because they put them off until the next day,” he said. “Immediately implement what you learn. Not tomorrow, but today.”