When it comes to income properties, Scott McGillivray and Michael Sarracini practice what they preach. Two of the real estate industry’s most successful landlords, McGillivray and Sarracini together have had more than 10,000 tenants throughout the United States and Canada. Despite a struggling economy, the team has continued to build long-term wealth through income properties, and they’re teaching would-be investors to do the same.

Forget about flashy flips and big-figure deals — these gurus are focused on time-proven cash flow strategies.

“We don’t sell the thrill with our real estate program, and we don’t like to promise a short-term strategy,” McGillivray says. “We believe it does take hard work. It does take dedication. You can’t tell us that we’re giving people bad advice because we’re not. It’s been going on for thousands of years.”

Together, the pros have owned hundreds of income (or rental) properties. Fittingly, it was a stint as tenants more than a decade ago that gave them their start in real estate.

Subsidized Rent

McGillivray and Sarracini met as university students in Toronto, Canada. Rent was one of their largest expenses and, like many, they struggled to make ends meet. One month, while depositing their rent payment at a local bank, the teller erroneously gave them a slip of paper that detailed the mortgage on the property — instead of their rental deposit slip. When they did the math, they discovered their landlord was charging $900 a month more than the mortgage.

“We started asking a lot of questions,” McGillivray says. Against the advice of their families, the men decided to become their own landlords. They pooled their limited resources and ended up with just enough money to make a small mortgage on a “dumpy house” near the university.

“Everyone told us not to do it but we knew that it would work,” Sarracini says. “So against all advice we ended up buying a piece of real estate.”

McGillivray says they had a lot of people telling them they were crazy.

“And I still think maybe we were,” he says. “But it was probably the best thing we ever did.”

Now, more than a decade later, their combined portfolio includes rental properties in 20 different states and two Canadian provinces. McGillivray is host of several TV shows including “Income Property,” “All-American Handyman” and “All-Canadian Handyman.” Sarracini worked on camera as a project manager on “Income Property” for a time, but now he focuses on the duo’s Lifetime Wealth Academy and Leading Financial Seminar Series.

Buy and Hold

McGillivray and Sarracini are among the select real estate gurus whose portfolio has actually increased in value since the market collapse in 2007. Their secrets? Sticking with each other and with what works for them.

“In our seminar series, we always encourage people to partner up with someone,” Sarracini says. “With partners you can create such a great synergy.  If one plus one equals three then you’ve created a profitable partnership.”

McGillivray agrees.

“Michael and I are real estate partners in 75 percent of all the assets that I own, because working on a team is powerful,” he says.

Together they’ve developed a system for buying, improving and renting income properties — and they’ve stuck with what works. The two started in the trenches, spending summers fixing up the properties on their own, but now have a construction team of more than 45. In all of their years as landlords, they’ve only had to evict one tenant — and even that went pretty well, they say.

“There is risk in anything that you do, but if you can build a system or follow a system that someone else has developed that works, you’ll be a lot better off,” Sarracini says.

The team has dabbled in flips and other quick cash deals but far prefer long-term strategies. In fact, they typically employ a one-for-one strategy — meaning, for every quick-cash deal they complete, they purchase a cash-flow property.

“Too often, investors get stuck in quick cash deals,” Sarracini says. “Have the self-discipline to roll it into your cash-flow properties. It is very difficult for people to sacrifice the good to get the great. Cash flowing properties are where you create real wealth.”

McGillivray says he’d rather be the tortoise than the hare when it comes to real estate.

“We’ll stick with our buy-and-hold strategies,” he says. “Even if the value of our properties goes down we are still getting our cash flow each month.”

Pay It Forward

A major reason McGillivray and Sarracini first got into real estate was to make money. And while they definitely appreciate the value of a dollar, the gurus have also learned the importance of taking time off from work.

“Time is more valuable than any dollar,” Sarracini says. “At the end of the day, the only reason any of us want more money is because we want the advantages money can buy.”

To that end, the team has automated much of their business so that it can run without their 24-hour care. Now, McGillivray has time to vacation with his wife, even if it’s just a short trip to check out real estate. Sarracini likes to travel with his family, too, as well as ride motorbikes and do home improvement.

But both men agree the most rewarding part of their jobs is seeing their real estate students succeed.

“Seeing someone become successful because of what we’ve done for them is better than becoming successful yourself,” Sarracini says.

“As we teach more and more people to become real estate investors, we are building a bigger community,” McGillivray says. “We never abandon. The way we teach and what we teach is a long-term game. We are going to ride this out and come out on top, and the more people we can have together in this community, the more we can help others.”

In today’s market, it’s not hard to find a few lemons. The United States finished 2010 with a 9.4 percent national unemployment rate. Americans’ personal finances have turned sour as more people find themselves out of work. Companies are going out of business, and real estate prices are lower than they’ve been in decades.

But to make lemonade, all you need to add is a spoonful of sugar. In this case, the sweetness is the tasty opportunity that accompanies a struggling economy. People are reevaluating their careers. Companies that make it through the economic difficulties will be stronger in years to come. And rock-bottom real estate prices make now the perfect time to get involved in real estate investing.

As a whole, investors haven’t been gulping down opportunities lately, but real estate is one investment worth drinking to. This economic climate is perfectly conducive to creating positive cash flow off properties selling for rock-bottom prices. Granted, the overall economy is looking sour, but conversely, real estate opportunities are looking sweet.

Lemonade, anyone?

Real Estate Is an Opportunity

In all types of market conditions, real estate investing offers a stellar opportunity to generate wealth. One reason is that it doesn’t have to take a lot of time — you can invest in real estate without making it a full-time job or spending a lot of money.

Lynn Alder, a real estate investing specialist with over 30 years of experience, says this is one reason real estate investing is such an ideal opportunity for many different people.

“Real estate investing is an opportunity you can get involved in without quitting your job and investing a bunch of money,” Alder says. “You can do this in your spare time, and you can be successful. It offers the opportunity to gain wealth without spending your whole life’s savings in order to have control of your own life.”

Another reason real estate investing is such a real opportunity is that it will always fill a basic human need: shelter. No matter how bad the market is, people will always need a place to live. Real estate provides just that.

“It’s a really simple thing,” says Keith Sperry, a real estate specialist who has been involved in the business for 14 years. “Everyone needs a place to live. So in any market, that’s a constant. God isn’t making any more dirt, and there are 312 million Americans who need a place to live.”

Although real estate investing is always a great opportunity, today’s struggling economy presents investors with unique opportunities to make perhaps even more money than they could in a thriving economy. If you know how to go about it, now is a perfect time to capitalize on the unique circumstances that exist today in what Alder calls a “once-in-a-lifetime” opportunity.

Now Is the Time to Get Involved

As anyone who has researched real estate investing knows, the housing market experiences natural highs and lows over time. It’s a natural course for home prices to rise, then fall, then rise again and fall again.

During the housing boom a few years ago, housing prices were at an all-time high. But when the market crashed, people suddenly owed more on their homes than they were worth. Many fell behind on mortgage payments, and banks suddenly found themselves with more foreclosed properties than they could handle.

Cue the Real Estate Investors

“People are not buying right now because they think prices are so low that they won’t ever go back up again,” Alder says. “If they really understood the real estate cycle and what’s happened in this country forever, they would know now is when you want to be buying because prices won’t stay like this forever.”

It’s commonly understood that the key to successful real estate investing (or any type of investing) is to buy low and sell high. That’s easier said than done — especially when the economy is strong and home prices are high to begin with. But today’s market makes buying low easy. The trick is to find a way to make money off of a property, which people usually do by “flipping” the property — that is, buying it and then selling it a short time later for more than they paid — or by renting it out and creating cash flow. As it turns out, it’s easier to make money with both of these strategies when you’re buying properties for rock-bottom prices. And that opportunity isn’t as easy to find as lemonade on a menu.

“I’ve been investing in real estate for over 30 years, and I’ve never seen anything that even comes close to this as far as an opportunity to do deals,” Alder says. “I think it’s a once-in-a-lifetime thing. You always think things are going to stay the same as they are now, but that’s not how it works in real estate. If you don’t know that, you get hurt.”

‘Buy Low, Rent High’

“Buy low, sell high” is the mantra of anyone looking to make money in real estate investing. Obviously, you can’t make money if you sell properties for less than you buy them. It’s simple math. But mortgages are more difficult to come by now than they were a few years ago, and many people are choosing to rent instead of buy. This presents a perfect opportunity for real estate investors to make money.

“‘Buy low and sell high’ is always good, but in this market, ‘buy low and rent high’ is even better,” Sperry says. “The banks are tougher than ever on lending money for mortgages, so people have to rent.”

Owning property builds equity for an investor, and collecting rent from tenants creates positive cash flow. In a strong housing market, people usually prefer to keep the equity to themselves and pay a mortgage every month rather than a rent check. But in today’s economy, real estate investors benefit when people who can’t qualify for mortgages are forced to rent.

“Rent prices don’t generally go down,” Sperry says. “They stabilize or they go up. They’re like taxes. Right now you can buy for so low that it’s a great time to get involved in cash flow properties. If you buy low enough, properties create cash flow really well.”

This housing market also creates opportunities to generate wealth in areas of the United States where it has historically been much more difficult to find renters.

“You can create positive cash flow now in areas of the country where you never could before,” Lynn says. “The price and the interest rate determine your monthly payment. Your payment has been reduced to a point where you can buy a property and rent it out for enough to pay your expenses. In some areas, that was impossible to do before. Now, it isn’t.”

Do Your Homework

Ideal market conditions don’t guarantee profitable real estate investing. While circumstances in the market make now an excellent time to get involved, you’ll need tools to take advantage of these opportunities. One of the best tools is the ability to research.

Before you buy a property, do your homework. Buying properties for investment purposes is not just house hunting. Buying a home for your family is a largely emotional decision, but a different approach is required when it comes to real estate investing.

Take into consideration the factors that will make your property easy to sell or rent. Is it in a good neighborhood? Is the property in good condition? Is the home within the boundaries of a reputable school district? Are there multiple potential buyers or renters for this type of property?

It might take time to learn the tricks of the trade, but specialists say making sure you’re buying quality properties is a key to success in investing.

“First things first — do your homework,” Sperry says. “Make sure you’re looking at all appraisals and comps, and buy right. That’s the key. But how to do it? That’s the hard part. You need to be able to run proper analysis of properties. Look into the property and make sure it will make you money for years to come.”

It might sound intimidating to do such in-depth research on every property you buy, especially if you’re new to real estate investing. But with the right people on your side, you will have all the tools you need to be successful.

Put Your Team Together

Like any other field, it’s difficult — if not impossible — to succeed in real estate investing if you don’t have people helping you along the way.

“Don’t try to do this on your own,” Alder says. “Don’t try to go out and learn how to invest in real estate using trial and error.”

It isn’t that most people couldn’t figure things out along the way, but Alder says it’s better if you can learn from someone else who has already experienced real estate investing first-hand.

“It’s not hard, but people usually need someone to help them,” Alder says. “If you have someone you can go to who can answer your questions, it’s a totally different deal.”

Even after you have two feet solidly on the ground, there are still people who can make your job easier. If you invest in properties that you plan to rent out, hiring someone else to manage renters can be a smart way to regulate your workload.

“If you’re not into management, find a management company and let someone else manage the headaches and renters,” Sperry says. “Paying 8 or 9 percent for managers is more than worth it for your sanity. It lets you go on vacation without getting phone calls from your tenants. ”

There are still other people you can get to help you along the way — good real estate agents can be great resources, and members of local real estate clubs can give you the motivation and help you need.

But in the end, the best way to learn real estate investing is simply to get started.

“Get educated and have someone help you, and then go do it,” Alder says. “You can get educated and have someone help you, but if you never do it, you’ll never make any money.”

But those thrilling, cross-the-finish-line moments don’t come every day in the world of real estate. For each milestone, there are thousands of steps, sweaty moments and run-through-the-pain mental challenges that have to be overcome.

To keep you motivated when running the long miles of your to-dos, create a sense of accomplishment for yourself along the way. These five small benchmarks will keep you on course for the big victories.

1. Find (and Use) Your Secret Weapon

Examine your talents and find what sets you apart. Are you more productive during certain times of the day? Do you finish certain types of projects faster than your co-workers? Have you noticed you can establish trust with clients quickly?

Everyone has a unique set of talents and traits, and your capabilities are the secret to everyday success. Find something you excel at, and use it to add to your productivity. If you are more productive in the morning, get up a couple hours before the rest of your household and get a jump on the day. If an energy boost mid-afternoon gets your creative juices flowing, keep some snacks in your desk. If you can complete a client’s request faster than anyone else, take on more of those projects for yourself.

Whatever your “secret weapon” is, put it to use and let it become your greatest asset.

2. Network with Good People

In the business world, relationships are essential. But just as important as networking is networking with the right contacts. Knowing a lot of people in your industry will help you gain recognition and respect, but you have to develop positive relationships with the right people if you want to progress in your field. Quality trumps quantity.

Still, you should obviously be friendly to everyone you meet. But remember you ultimately become like the people you spend the most time with. Foster strong relationships with the most successful people you know. Learn from their business strategies and talk about what makes them successful. Over time, you will become more like them.

3. Meet One Milestone Every Day

You probably have a list of goals and to-dos long enough to keep you busy till your next birthday, but making progress on those goals every day can be a difficult — if not impossible — task. Everyone should dream big, but be careful not to overburden yourself with so many long-term goals that you get nothing done in the short term.

Instead of letting your dreams overwhelm you, do something small every day to make progress on one of them.  If you want to double your sales by the end of the year, contact a few potential clients today. If you want to write a book, draft an outline today. You might even want to set smaller goals that you can accomplish quickly. These baby steps don’t take much time, but they do a lot to help you feel more productive every day.

4. Reward Yourself for Success

In large corporations, executives motivate employees by offering incentives for performance. Motivation breeds success, and success breeds motivation. But when you’re your own boss (or when your boss is stingy with incentives), motivation can be more difficult to come by.

If you find yourself struggling to stay focused, reward yourself for a job well done. Treat yourself and a friend to dinner when you reach a long-term goal. For smaller successes, a soda might be enough of a celebration. But whatever your goals, you’ll meet them much faster if you have a little extra motivation.

5. Work Hard, Play Harder

An appropriate work-life balance is essential to success. If you spend 18 hours working every day, you’ll burn out quickly and hinder progress toward your goals. Instead, do what you can to make the time you spend working more productive. And when you’ve put in a full day’s work, relax.

Some of the happiest professionals are those who work hard and play harder. That doesn’t mean you have to blow your entire month’s profits on a cruise for your whole family, but making time to have fun will make you and everyone else in your life happier. And isn’t that the finish line?

Whenever we try something bold, we are bound to encounter problems. Obstacles are part of the landscape when you are out there on the cutting edge. Making a real estate investment, partcularly in this economy, may seem to some … well, just crazy. But to others with a pioneering mindset, it may offer rewards even while it invites headaches. What if adversity were not the enemy? What if it were the pathway?

Between eighth and ninth grade, I began losing the last traces of my sight. I could no longer see enough to walk around by myself, so my brothers and parents had to lead me. I’d reach out for the sleeves of their shirts with the terror of a small child being left behind in a department store. I hated what was happening because it represented utter helplessness. Everything I knew was ending. The loss was like a storm descending upon me with such force, such viciousness, that I thought I’d be crushed by it.

Late that fall, I was watching a TV show called, “That’s Incredible.” I could still see a little out of one eye and had to crane forward just a few inches away from the set. Being featured that night was an athlete named Terry Fox. Terry had lost a leg to cancer and, not yet discharged from the hospital, made a decision to run across Canada from east to west. Most would have retreated from such hardship and merely focused on survival, but Terry did the complete opposite. He faced the storm of adversity head-on and literally ran into its very midst. With my nose pressed up against the screen and with tears pouring down my face, I watched Terry run. The miles took a tremendous toll on his amputated leg and its primitive prosthetic. He hobbled along mile after mile, fighting the pain of blisters and raw skin.

What struck me most was the look on Terry’s face. It was a look of extreme contradiction: full of exhaustion yet radiant with exultation. In his thin face was the trace flicker of an intense internal light that burned power into his struggling frame. That light seemed to actually feed on frustration, setbacks and failures, to consume them like fuel. The bigger the challenge, the brighter that light burned. I hoped that light burned in me, and that I could use it to become more focused, more determined, more creative. Could I use that light to transcend my own limitations to give my life purpose? The image filled my sagging spirit and gave me a feeling of utter courage. It was while staring into Terry’s face with my one working eye that I first wondered how we could turn into the many storms which threaten us and emerge on the other side, not just unscathed, or damaged as little as possible, but actually stronger and better.

Since seeing Terry on TV, I’ve met many others like him. I call people like Terry “alchemists.” They take the lead that life continually piles on top of them and find a way to turn it into gold. An alchemist doesn’t avoid adversity. They don’t just deal well with it, or “overcome it” as we hear so often in popular culture. They take it many steps further, finding a way to seize hold of that storm of adversity that swirls around us, to harness its energy, and use its force to propel themselves to places they wouldn’t have gone in any other way. An alchemist can be plunged into a fierce competitive environment; their resources can be stripped away; roadblocks can be thrown in front of them, and they will still find a way to win, not despite adversity, but because of it. These people approach difficulties, not as a deterrent, but as a springboard to growth, innovation, stronger teams, profitable businesses and higher summits. While other teams and companies are digging in and trying to hold their ground, this is the most critical time to reach beyond. Imagine what you will achieve when obstacles are no longer the enemy, but the pathway to greatness.

What got you interested in educating people about home inspections?

So many problems homeowners face — the ones they call in a contractor like me to fix — could be identified with a home inspection done by a qualified, knowledgeable home inspector. I’ve seen firsthand the toll renovations and extensive home repairs take on families. I thought if I could teach homeowners the value of a home inspection and how it can help save thousands of dollars in future repairs, I could also help them avoid a lot of grief and stress.

How does someone know they’ve hired the right inspector?

First, you need to be asking the right questions before you hire a home inspector. Do they have a license? Do they have insurance? How long have they been doing home inspections? How many home inspections have they done? What are their qualifications? What were they doing before they started working as a home inspector?

These are all questions that will give you a better idea of a home inspector’s skills. You also need to ask for at least six references and follow up on them. Once you’ve hired a home inspector, you’ll know they’re good within the first few minutes of the inspection. A good home inspector will show up on time and with the right tools. That includes a ladder, flashlight, binoculars, and in some cases, a thermographic imaging camera. They’re also eager to answer questions, provide options and explain certain issues affecting your home.

What types of issues should a home inspector look for?

A home inspector should be looking for the clues and red flags that indicate the general condition of the home, and that starts the moment they arrive on the property. They should be scanning the outside of the home for telltale signs of potential water damage, looking at the roof, the foundation, trees and shrubbery around the home, and windows. They should also be looking for signs that renovations were made, and how well they’ve been done. And when a home inspector points out problems, they should be explaining why one problem might be safely overlooked for the time being but why another is serious and will need attention right away. They should show you the cheap fixes and the ones that will cost more to make right. And if they come across something they aren’t qualified to judge — maybe something related to the home’s structure, electrical, plumbing or HVAC system — they should advise you to bring in a licensed expert in that area.

Why should a homeowner (or home seller) get a home inspection?

When a home is inspected before listing, a homeowner/seller can get a good idea of urgent issues that should be corrected to increase the chances of a speedy sale. If one home inspector finds those problems, it’s likely the next one will, too. Once you know what the issues are, you can choose to fix them or leave them as is, knowing they might become negotiating points for prospective buyers. Either way, you’ll be better able to present all the facts to potential buyers, which speeds up the selling process.

Why should a potential buyer have an inspection done on a property?

A home inspection helps a buyer look beyond the surfaces of a house, see what the real issues are, and get a realistic idea of how much the house is actually going to cost. It helps prevent homebuyers from potentially purchasing a home that needs expensive repairs and/or upgrades. With all the facts, a buyer will have the negotiating power to buy a house for what it’s really worth. And if a buyer chooses to purchase the house, a good home inspection report can become the blueprint for a home maintenance plan. It can also be used to develop a realistic budget for repairs and future upgrades.

How do home inspections help real estate investors looking to buy a property?

Real estate investors have an easier time looking at a house as an investment rather than a home — and at the end of the day, that’s exactly what it is. Seeing a house as an investment makes it easier to stick to a budget that includes the cost of repairs and upgrades. We know all investments carry a risk, but a home inspection minimizes risk by helping a real estate investor make an informed decision about the house they’re investing in. I’ve seen too many situations go sour because of unexpected problems. A home inspection can tell an investor a property’s major deficiencies and set a realistic budget for repairs and upgrades. Knowing this is crucial when you know exactly how much you want to invest and how much you want to earn from a property.

What are the main reasons people don’t have inspections done?

Some people have trouble seeing the value of a home inspection when they’re on a budget. A good home inspection isn’t cheap, and when most turn up a list of problems that need to be fixed at a cost, some people prefer not to know. It’s the whole “ignorance is bliss” mentality. Also, most people are more interested in the surface finishes of a home, the eye candy or what I like to call the lipstick and mascara, than in fixing a leak or adding more insulation. But if we neglect regular maintenance issues in favor of granite countertops, crown molding, and stainless steel appliances, a relatively small repair can grow to become a major renovation project. What good are surface finishes if you have to rip them out later?

What are common problems found in inspections?

A lot of the problems home inspectors find have to do with regular maintenance that’s been neglected. A home’s age also plays a huge role in the kinds of problems an inspector will find. This includes insufficient insulation and electrical issues, such as the potential for overloaded circuits. Also a lot of the new homes today are built to minimum code, and to me that’s just not good enough.

What you don’t do now can be held against you later in a court of law

The main reason people go into real estate investing is the same reason people fail to protect their assets in real estate investing – money.

“There’s an assumption out there that it’s going to be extremely expensive,” says Bud Lethbridge, managing member of Utah-based asset protection program Veil Corporate. “People also think it’s going to be complicated — paperwork and an accounting nightmare — and even if they know they should do it, they don’t know what to do.”

Organizations like Veil Corporate walk investors through the ins and outs of setting up an entity, protecting their assets, developing a tax strategy and doing comprehensive estate planning.

When investors get educated about protecting their assets, all of a sudden, what previously seemed expensive and complex becomes doable. They find the costs, which are actually simple and minimal, are worth the benefits.

The Pros of Protection

Lethbridge, who is not an attorney but contracts with the finest attorneys in the U.S. and Canada, says “we live in a super litigious society. People are just suing everybody left and right. The problem you see in the courts today is that there are bogus lawsuits that are won. You would think reason would prevail in the courts, but reason doesn’t always prevail. We have to make sure we’re protected.”

Peace of mind and financial safety are the two main reasons people establish an entity, but the side benefits are good and plenty.

“The way the structure comes together can provide some great tax write-offs,” Lethbridge says. “It’s a huge side benefit and another important reason to dig in.”

Tax benefits are a significant bonus of entity establishment, but not the only bonus. Proper asset protection will protect all that investors own – cars, paintings, jewelry, stocks, bonds and other items of value.

“Many people don’t realize that personal property would be vulnerable in a lawsuit,” says Blair Jackson, partner at Invictus Law, PC.

Establishing an entity is also a great way to transfer or share ownership with family members, to build credibility and to separate your personal life and personal assets from your business life and business assets for tax and profit-tracking purposes.

Don’t Wait

One of the most important things people need to know from the start is that protecting yourself in the beginning is infinitely more effective than trying to protect yourself later on.

“Most people think about asset protection when its too late,” says Carl Thurgood from Veil Corporate. “If you’re already being sued, it’s too late. Put yourself in a protected position beforehand.”

Entities created after properties have already been purchased might not be recognized in court if a 1-3 year “seasoning period” has not yet passed since the property was protected. But if investors have purchased properties within already established entities, there is no seasoning period of vulnerability to endure. Protecting before purchasing means protecting completely.

That’s where Property Direct steps in. The Utah-based company is a resource to investors who are looking for turnkey, income-producing properties that already have tenants and are property managed.

“We are a great match for someone who is actually looking to invest their money with less headache and complications,” says Lars Johnson, property specialist with Property Direct.

Many first-time real estate investors lack confidence in their abilities, even after they’ve completed extensive training.

Working with Property Direct allows them to get into their first deal (or add to deals they’ve already done) without the risk of plunking $50,000 down on a potentially bad deal.

Returns Are Up

Property Direct purchases real estate across the country, often in areas that are known for their rental communities, such as Birmingham, Ala.; Memphis, Tenn.; Buffalo, N.Y.; and Detroit, Mich. Some of the areas are economically depressed, but many are doing well, Johnson says. These areas are ideal for real estate investors because home prices are low but returns are high.

“Most of the people who have cash to invest are living in markets and in locations where the return on investment doesn’t work for them,” Johnson says. “We help them put their money to work where the return on investment is higher.”

For instance, an investor living in California who wants to purchase a 1,000-square-foot home for $100,000 may end up with a negative return because he or she can’t charge enough rent to cover costs.

“You go negative when you rent that property, after insurance and property taxes,” Johnson says. “It make sense for them to put their money to work where the return on investment is actually more.”

Now in his 60s, Leonard is seeing the fruits of working hard with family. His sons are partners in his real estate business and have offices in Canada and Tennessee.

“Working with family enhances the way we do business,” Leonard says. “We’re professional investors, but our family values and relationships enable us to communicate effectively.”

In fact, Leonard believes starting a business with family can remove some of the traditional challenges because of built-in trust and shared values.

“The synergy of starting a business with players you can count on is really helpful,” he says. “You know the people well and share goals.”

Hugo appreciates working with his father, but he also understands the importance of separating business from his personal life.

“Family always comes before business, and I don’t have any trouble separating business from family,” he says.

Education is key

In addition to strong family ties, the Rodgers know education is also a key factor in success. They get a large part of their information from Michael Sarracini and Scott McGillivray’s Lifetime Wealth Academy.

“There’s always risk in real estate, but we minimize risk with tools learned from the Lifetime Wealth Academy program and other acquired knowledge from leading real estate experts like Michael and Scott,” Hugo says.

Leonard believes the secrets to real estate success are available to anyone ready to listen.

“Michael and Scott share information and secrets on how to create wealth,” he says. “The masses aren’t listening, but my ears are open.”

One of the keys for the father-son business has been the “cash flow for life” principle taught by McGillivray and Sarracini, allowing them to continually make money from the properties they buy.

While education is the ideal foundation, Hugo points out that it’s what you do with knowledge that makes the difference.

“My first few investments came from enrolling in the Lifetime Wealth Academy program, acquiring knowledge from the program and then taking action,” Hugo says.

Real estate in today’s economy

Despite the gloomy headlines, Leonard and Hugo believe now is a great time to be in real estate based on the tremendous real estate values available — especially in the United States.

“I will never see such a great opportunity as this one,” Leonard says. “The United States is having a clear-out sale.”

For real estate buyers — especially those looking for life-long earning potential for those properties — now is a great time to buy quality real estate.

Wealth is a state of mind

A lifetime of earning potential brings a lifetime of quality of life. However, the Rodgers both point out that money doesn’t bring happiness.

“Money is a tool, but wealth comes from happiness in all aspects of life,” Hugo says.

Leonard believes wealth is what you leave as a legacy.

“Lifestyles are affected by one’s mindset, and success in real estate allows an investor’s freedom to pursue dreams,” Leonard says.

Advice for others

Many ask how they can gain lifetime wealth like this father-son duo. Their suggestion?

“The best advice anyone can give is to get an education,” Leonard says. “That doesn’t just mean getting a degree, but it means using the acquired knowledge of people who are living their dreams.”

Hugo agrees.

“Knowledge is power. Acquire it from any and all aspects of your life,” he says.

The thrill of posting profits from your first real estate deal is priceless. But paying taxes on that deal come April — well, that’s not so priceless. Taxes can end up costing you big time, especially if you don’t have a plan in place. That’s when it pays (literally) to develop a tax strategy.

“For most businesses, taxes are one of the largest — if not the largest — expenses,” says Gary Milkwick, vice-president of operations with The Tax Club, based in New York. “If investors make money, they need to have a tax strategy to minimize the tax burden. If they are losing money on an investment, they can decrease their income from other areas.”

Even though paying taxes may be the last thing on an investor’s mind, it should be one of the first things they plan for, Milkwick says.

Expert Advice

The first step to developing a solid tax strategy is simple: hire a professional to help.

“There are some general strategies you can employ, but to really come up with something that is going to be effective, you have to meet with an expert,” Milkwick says.

Forget about sifting though the tax code yourself or taking advice from a “buddy” who does his own taxes. Tax law changes daily, and specialists get regular updates with code changes that are most applicable to their client base. Do-it-yourselfers tend to miss important deductions and credits that really add up.

“People don’t take advantage of everything they’re entitled to and often end up paying more in taxes,” Milkwick says. “The worst-case scenario is that they do something wrong and get in trouble with the IRS.”

A tax professional will create a customized plan to minimize your tax burden and maximize the money in your pocket. And you don’t have to be netting six figures to benefit.

Don’t Wait

Often, people will put off hiring an accountant because money is tight or time is short. But, Milkwick says, if you go too long without a good accountant, you could be leaving money on the table.

“It’s really common for accountants to say, ‘If only you would’ve come to me three years ago …’ ” he says. There isn’t much that can be done after-the-fact (or filing). “The good thing about real estate is you can be cash flow positive but for tax purposes actually have a loss.”

After you’ve hired an accountant, be sure to meet with him or her in the fourth quarter of the year. Don’t wait until the New Year (or later) for a bookkeeping sit-down.

“We call our clients in October and November to talk about where they are at,” Milkwick says. “We look at purchases they may be making or need to make and see if they can purchase something by December to get a tax deduction in the current year.”

Structured Right

Setting up the appropriate entity is one of the most crucial parts of a tax strategy. Having the right entity structure can mean the difference between ordinary income taxed in a standard tax bracket and capital gains taxed at 15 percent.

So what is the “right” entity? Well, that depends. Investors may have one LLC, multiple LLCs, an S-Corp or a C-Corp.

“A person might choose an LLC and that might make the most sense for somebody who is flipping houses,” Milkwick says. “An S-Corp could save other people a lot of money. It depends on the situation and the investor.”

The right entity could save an investor thousands of dollars. A licensed tax professional will be able to assess the type of entity that is the best fit and do the legwork in its creation.

On Track

Once you’ve set up your tax system, don’t forget to use it.

“It is super important to make sure you have some kind of system to keep track of everything,” Milkwick says. “A lot of people don’t even think about tax stuff from the prior year until April 14 and then they’re doing all of this crazy stuff to make the deadline.”

People miss deductions all the time simply because they forgot to document what they did, he says.

“If you set up a separate entity for your business activities, get a separate checking account, get a business credit card and be consistent in using those,” Milkwick recommends.

Then, all that is necessary come tax time is to print and itemize statements, not search through stacks of files for the right receipt.

Now that’s priceless.

With the “Boots on the Ground” training program, application is the name of the game. This three-day workshop is recommended by Scott and Michael and taught by real, active real estate investors for eager learners in their local markets. Workshops are held every week in various locations from Alaska to the Virgin Islands and everywhere in between, including throughout Canada. “Boots on the Ground” takes a step-by-step approach to teaching everything new investors need to know — how to find an agent, how to place ads, how to create a buyers list, how to locate and secure bank-owned properties, and most importantly, how to use other people’s money effectively.

Everything is presented in small classes with excellent instructor-student ratios, and every workshop includes a field trip on the second day to actually walk through properties with the workshop’s gurus. It’s called “Boots on the Ground” for a reason.