What Real Estate Creates 90% of Millionaires (2024)

FAQs

Are 90% of millionaires made through real estate? ›

The claim that 90% of millionaires are made through real estate is a myth.

90% of millionaires made their money in Real Estate. I became a millionaire without owning a single property. But I own 6 small businesses that make me $725k/year. Here's why I prefer buying businesses over Real Estate: -- 1) Cash Flow The average rental property in the U.S. cash flows ~$300-$500 (some even less).

“Ninety percent of all millionaires become so through owning real estate. More money has been made in real estate than in all industrial investments combined. The wise young man or wage earner of today invests his money in real estate.” - Andrew Carnegie, billionaire industrialist.

Federal tax benefits

Because of the many tax benefits, real estate investors often end up paying less taxes overall even as they are bringing in more income. This is why many millionaires invest in real estate. Not only does it make you money, but it allows you to keep a lot more of the money you make.

Instead, 79% of millionaires in the U.S. today identify as self-made, according to the Ramsey Solutions National Study of Millionaires. The study showed that five careers produced the most millionaires: engineers, accountants, management, attorneys and teachers.

Build Equity and Wealth

As you pay down a property mortgage, you build equity—an asset that's part of your net worth. And as you build equity, you have the leverage to buy more properties and increase cash flow and wealth even more.

The top 1% of household net worth in the U.S. was just shy of $13.7 million in 2023. An individual would have to earn an average of $407,500 per year to join the top 1%. A household would need an income of $591,550. The median household income was $74,580 in 2023 and $45,440 for individuals.

California: 44% New York State: 24% Florida: 7% Massachusetts: 6%

Can investing in real estate make you rich? ›

While there are plenty of places you can put your money when looking for investment opportunities, real estate is regarded as one of the best ways to build wealth over time.

Many wealthy would-be buyers can afford to wait to buy their dream home — so they're choosing to rent instead. Some may be waiting for lower rates and more homes on the market. Others may believe the housing market is overvalued, according to Realtor.com, and want to avoid overpaying for a property that may lose value.

1. Commercial Real Estate: Investing in commercial properties such as office buildings, retail spaces, and industrial facilities can be lucrative. Lease agreements with businesses tend to be longer-term and can provide a stable income.

California: 44% New York State: 24% Florida: 7% Massachusetts: 6%

“Only 31% averaged $100,000 a year over the course of their career,” the study found, “and one-third never made six figures in any single working year of their career.”

How do you align your real estate allocation with your financial goals and risk tolerance? The need for addressing these questions becomes even more crucial when considering that, according to some reports, the average percentage of net worth allocated to real estate for Americans is around 70%.

While cities across the country have seen property values plummet due to vacant office buildings and closed retail stores, America's richest landlords have gotten richer. According to Forbes' 2023 list, there are 25 billionaires whose massive wealth comes primarily from real estate.