How big is the enthusiasm around real estate investing? Very big. According to a recent Gallup poll, real estate beat out gold, stocks, and other investment vehicles as a solid winner for the best long-term investment. And why wouldn’t it be? Investing in real estate carries a host of potential upsides, including the opportunity to earn significant returns, and potentially an earlier retirement.
On average, real estate investment deals net return on investment (ROI) is around 8.6%. However, depending on the type of real estate involved, the ROI could climb significantly higher. According to Yahoo Finance, private equity real estate funds have generated average returns ranging from 17.4% to 25.6% over the past decade.
That’s attractive, especially for people who want to become financially free. We’re talking about people like Dave Allred, the uber-successful real estate investor and lifestyle freedom expert.
Thanks to Allred’s savvy real estate investing decisions, he’s set himself up to enjoy retirement in his mid-30s. By creating a series of passive income streams driven by real estate investment returns, he’s paved the way for a self-sustaining retirement funding machine. Let’s explore how Allred worked to establish a reliable and impressive stream of investment earnings to support himself and his family.
How to Gain Control of Your Finances for a Less Stressful Future
While not every real estate investor will achieve the extraordinary success that Dave Allred has experienced, his journey offers valuable insights. He shares five of his best practices and tips to help investors enhance their real estate investing strategies and increase their chances of success at an earlier retirement.
1. Educate yourself on the real estate market
Real estate is much more than meets the eye. From differing asset classes to fluctuating interest rates, you must know your stuff before taking the investment plunge. This means putting some time into boosting your real estate knowledge.
To get a quick but thorough education on real estate, make it a habit to read some of the most prominent real estate investing sites. Some great starting points include the American Real Estate Society, BiggerPockets, The New York Times, and, of course, the Wall Street Journal.
Reports and whitepapers are other terrific sources, such as a 2024 report published by PwC showing a huge upswing in apartment complex construction. As a budding real estate investor, being on top of everything from the hottest housing markets to impending real estate laws and regulations will help keep you informed.
Remember that Allred didn’t start in real estate. He began his career as a direct-to-home salesman selling smart home security solutions. To grow from there to being a master at real estate investing, he had to learn along the way. He often says “The very best ROI you can make is in the six inches between your ears.”
But you want to stumble as little as possible on your real estate journey. Ultimately, having a working knowledge of real estate and investing strategies will set you on a path to more successful investing, as well as realize your wealth mindset objectives.
2. Seek out opportunities during market turbulence
No doubt about it: Real estate is undergoing a rocky period. Take mortgage interest rates as an example. Mortgage interest levels have been on a rollercoaster ride since the pandemic.
After plummeting into the 2% range, they skyrocketed into the 8% range. In 2024, most investors expect a slight decline in rates through the second half of the year. However, they’re currently still hovering around the 7% range.
This head-spinning turbulence causes many novice real estate investors to hesitate. Yet turbulence isn’t necessarily a bad thing in real estate. Allred has gone on record to say that he sees tougher times as opportunities for smart investors to build their wealth. This doesn’t mean you shouldn’t be pragmatic—you should. But as the great investor Warren Buffet says, “Be greedy when others are fearful and fearful when others are greedy.”
Real estate is one of the only investments that historically has always retained intrinsic value. People need places to live. Companies need places to grow their businesses and house their merchandise. The list goes on and on. The key is to figure out where the best opportunities are and then jump on the ones that are right for you.
That’s why Allred’s investment strategy focuses on investing in multifamily apartments, storage units, and industrial warehouse space. Not only are these asset classes necessary for our daily lives, but they are also considered recession-resilient and have performed well during challenging times.
3. Embrace the practice of sweat equity
There’s nothing wrong with putting a little sweat equity into your real estate investments, particularly if you’re a cash-strapped newbie just getting into the game. You might be able to snag some terrific deals on properties that just need some TLC to get them rental or resale-ready.
Whether you’re aiming to become a professional house flipper or you’re interested in becoming a landlord, one effective strategy is to acquire mismanaged or distressed properties in desirable locations. These properties often come at a lower purchase price due to their condition, offering significant potential for value appreciation once they are rehabilitated or managed properly.
Before signing any contracts, it’s important to conduct due diligence and focus on anticipated gains and losses. You want your sweat equity to pay off, not just enable you to break even. You also want your efforts to produce an appealing outcome, including positive cash flow. Consequently, consider making the upgrades and renovations that are designed to give you the highest achievable ROI.
If you’re flipping a home or apartment building, some high ROI sweat equity targets could be renovating the kitchen and bathroom, adding a master bathroom, or constructing another living space. These simple improvements can be a great way to maximize your return per dollar.
4. Surround yourself with supportive colleagues and mentors
Entering the real estate investing marketplace can be exciting, but it can be overwhelming, too. Rather than going at it alone, start developing your network immediately. Develop relationships with people who are already making money in real estate and can share some of their “secret sauce” insider tips. You may be inspired by the way they operate in the real estate world and have made it work for them.
For example, The New York Times wrote about women entering real estate investing as a way of finding empowerment after traumatic life events like divorce. Their stories are riveting, not to mention inspiring. When you learn from someone with a few scars, you can avoid those scars yourself.
Allred credits his real estate investment achievements to being willing to listen and learn from others’ experiences. You shouldn’t have to reinvent the wheel. When you’re surrounding yourself with other real estate investors, advisors, and related players, you won’t. There is power in proximity. Therefore, ignore the premise that a real estate app is all you need. “Going it alone” is unlikely to turn your real estate ventures into sizable passive income for you and your loved ones, let alone for retirement funds.
5. Invest in the strongest geographic locations
Are you tempted to invest your dollars into real estate assets based on price alone? Hold on.
You need to consider geographic location. Specifically, take a look at whether a region is attracting or losing population. If it’s losing people and companies, it’s probably not going to be a great investment. Sure, you could get a property for a low rate. But you might have difficulty getting a fair value for it later, securing financing, or finding private or commercial tenants to occupy your real estate.
To make sure he’s moving in the right direction, Allred keeps close tabs on the migratory patterns of communities countrywide. He’s quick to recommend looking at states like Texas, Florida, North Carolina, and Georgia, all of which have nabbed high relocation rates.
With that being said, Allred doesn’t only factor in population gains and losses when determining where to invest next. He also considers the historical political leanings of states, which can affect how landlord-friendly or heavily regulated they are.
In other words, do some deep dives. By investigating markets regularly, you’ll start to see trends. This will allow you to choose properties that align with your real estate investing goals.
Retiring in Your 30s or 40s is Achievable
For most people, retirement seems like something they can’t enjoy until their 60s or 70s. However, if you have dreams of an earlier retirement, real estate could be your ticket out of the so-called “rat race.”
You don’t have to stop working if you retire early, of course. Allred hasn’t. But he’s not worried about how he’s going to cover his bills. Instead, he’s able to put his energies into creating true lifestyle freedom focusing on areas that give him purpose, passion, and fulfillment.
Your retirement might not happen tomorrow, but it could happen much sooner than you might have thought was possible. You just need a strategy to get a nest egg built faster, and for Allred, his golden ticket answer was real estate.
