Table of Contents
- Ludomir Wanot has used real estate investing to build wealth and achieve financial independence.
- He started his career from scratch and believes anyone can achieve what he has.
- Start by self-educating, networking with the right people, and leveraging an FHA loan, he advised.
Ludomir Wanot, 30, knew early on that he wanted to invest in properties.
When he was in high school, he researched how to earn more money. “I found online that 90% of all millionaires became so through owning real estate,” he told Insider. That Google search was enough to convince him that real estate investing would be a viable path to wealth.
After saving up a couple thousand dollars from a construction business he started in college, Wanot bought his first investment property in 2016 when he was 24. It was a $138,000 single-family home that he purchased in the Seattle area with his brother. After fixing it up and renting it out, Wanot and his brother experienced their first taste of passive income through real estate investing. The brothers were each earning about $600 per month in cash flow from their rental after deducting utilities and other ongoing expenses.
Over the past seven years, Wanot has expanded his real estate portfolio to 13 units throughout central and western Washington. While he profits about $50,000 each year in rents, the bulk of his income comes from his real estate wholesaling business. In 2021, Wanot and his partner earned nearly $1 million in profit from their real estate business, according to documents viewed by Insider.
The investor and wholesaler believes that anyone can use real estate as a tool to build wealth and achieve financial independence like he has. Here’s how to do so in seven steps.
1. Use books and free resources to get educated
“There is absolutely a direct correlation between learning and earning,” said Wanot, who spent a year reading personal finance- and real estate-related books, including “Rich Dad Poor Dad,” “The Millionaire Real Estate Investor,” and “Atomic Habits.”
Wanot learned everything from how to apply for and secure an FHA loan — which is what he and his brother leveraged to buy their first property — to the importance of buying “cash-flow positive” properties.
This is a step any prospective real estate investor can take. If you don’t yet have enough savings for a
, educate yourself on the process so that when it comes time to actually make an offer, you’re fully prepared to do so.
2. Learn the ins and outs of your specific market
When you’re ready to start looking at properties, it’s important to know everything there is about your market, from the current and future plans of your county to the zoning rules in your area.
Major cities and counties typically have strategic plans that outline their 10-year growth goals that you can look up online, explained Wanot. Before investing in a particular area, you want to look into its plans for infrastructure, employment growth, and community growth. Is there a plan to implement new sidewalks? Is a light rail coming in the next couple of years? Those types of plans could boost the value of your home over time.
If you can’t find a comprehensive plan online, he recommends emailing or meeting with the local planning and development department: “Most urban areas have a planning department, which you can actually physically go to and get any and all of your questions answered, which is super valuable for investors and homeowners.”
You also want to understand the zoning code and laws in your area. “It’s one of the top secrets of successful real estate investors,” said Wanot. “They are really knowledgeable about zoning, and zoning is what creates wealth.” For example, if the property you’re looking at is a single-family home but sits in a multi-family zone, that means you could subdivide the lot into two or more parcels and own multiple rental units.
Zoning maps for your county should be available for free online, said Wanot. “Spend five to 10 minutes looking at the zoning in your area: Is it a single-family zone? Multi-family? Is it industrial? Is it mixed-use? That’s what I’m getting into: My single family home, I can literally build commercial space on the bottom and condos on top.”
If you can’t find a zoning map online, contact your local planning and development office, he advised.
3. Network with successful investors in your area
Wanot started from scratch: He didn’t have a background in real estate, nor did anyone in his family. He also didn’t inherit money. He and his two brothers were raised by a single mother and everything he saved came from jobs he worked and businesses he started throughout his teens and 20s.
For his crash course on real estate, he relied on learning from investors who had already found success in the industry. He joined a Facebook group called WA Real Estate Investing (WAREI) to meet local investors. Do a quick Google search to find a real estate community in your area — if there aren’t any, build one yourself, he advised.
Wanot also took advantage of local real estate meet-ups. That’s where he found mentors and asked established investors exactly how they got started and expanded their portfolios. “Surround yourself with people who know more than you, ask questions, and build relationships with all different kinds of people you meet because you never know when you can work with them down the road,” said Wanot. A helpful resource is Meetup, which anyone can use to connect with real estate investors and find events to attend.
Networking with the right people will help you tremendously when it comes time to actually invest in property. For example, you’ll want to work with a knowledgeable real estate agent, a loan officer with a good reputation, and a CPA who can help you maximize tax breaks. Local investors can help connect you with these types of people.
4. Leverage an FHA or VA loan if possible
There’s a misconception that you need to put down 20% and save up tens of thousands of dollars to purchase a property, said Wanot. “That’s not the case whatsoever. You can get your foot in the door without too much upfront cash by using an FHA loan.”
FHA loans are government-backed mortgages that give people the opportunity to buy a home with lower credit scores and down payments as low as 3.5%. It allowed Wanot and his brother to purchase their first property with less than $10,000 upfront.
Note that a requirement of using an FHA loan is that you have to purchase a primary residence and live in it for at least a year before renting it out. You’ll want to understand all of the requirements of an FHA loan before using one but, in general, it can be an extremely helpful tool if you’re trying to get into the game of real estate.
If you’re a Veteran, active-duty service member, or a surviving spouse of a Veteran, you may be eligible for a VA loan. This is a type of mortgage loan guaranteed by the U.S. Department of Veterans Affairs that requires no down payment, no private mortgage insurance (PMI), and offers the lowest average fixed mortgage rates.
Understand the resources available to you. You may qualify for down payment assistance, Wanot added, which could allow you to purchase a property with little to no money out of pocket, as long as you can provide proof of a
“What I’ve realized over the years with buying properties is that cash is king,” he said. “The less cash I can come into a property with, the more properties I can continue to buy.”
5. Buy 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. Subsidizing your living expenses will then free up more cash to continue saving and investing in real estate.
That’s what Wanot did with his second investment property, a fourplex that he purchased with his brother in 2017. Wanot moved into one of the units and the brothers rented the other three. Rental income covered more than their monthly mortgage, meaning Wanot lived for free and even earned a profit each month.
Buying multi-family properties has been a key component of Wanot’s strategy. “Almost every property that I’ve purchased has been in some form of opportunity zone or multi-family zone,” he said. Of course, not all markets have an abundance of multi-family properties. If you’re buying a single-family home, try to buy in a multi-family zone, he advised. That way, you can subdivide the property and build at least two units. Or, you can “house hack” and rent out a room (or multiple rooms) in your single-family home. It would require finding a roommate, but could help lower your cost of living significantly.
6. Hold your property for 10 years
Real estate investing is a long-term game, emphasized Wanot. In that regard, “real estate investing is no different than stock investing,” he said. “Even though we may have different swings in the market, over the long-term, prices continue rising, so buying and holding is key.”
Besides 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’ll owe short-term
, which typically equals your ordinary
rate. “Once you hit the one-year mark, you transition from short-term
tax on any profit you make to a long-term bracket, which is significantly cheaper,” Wanot explained.
If you buy a property and decide the area isn’t right for you or you need to move, “holding a property for a minimum of two years is essential for tax purposes,” said Wanot, who learned this tax lesson the hard way. “I lost so much money by selling early. Capital gains tax took 35% of my profit from a house I sold after six months of living there. If I had waited another year and a half, the tax rate would have gone down to 15%.”
To better understand how to maximize your tax deductions, Wanot recommends reading “The Book on Tax Strategies for the Savvy Real Estate Investor” or meeting with a local real estate CPA.
7. Take action
If you want to use real estate as a tool to build wealth, take action now, emphasized Wanot. After all, “information without utilization is worthless.”
Reading this article is a great start. Next, join a real estate community or go to a local meet up and start building your network.
“These are things that anyone can do and anyone has access to, but very few people do because they just put it off to the next day,” he said. “Implement what you learn immediately. Not tomorrow, but today.”