Many first-time investors make the mistake of thinking that high-priced areas are the place to buy. They really aren't the best locations for somebody to start in. You have to find an area where there's the potential for growth and fight it for a few years until the upward trend takes you out of the woods. 

Since neighborhoods tend to go in cycles, there is always some place you can go that has already experienced phenomenal growth where you can look hack and see where your position would have been 20 years ago. This type of exercise gives you incentive. It's a way of learning without doing. It's a way of visualizing how you can pyramid yourself to the position you want to be in.

It's harder for people to buy property today than it was 20 years ago. To be sure, wages have not kept pace with housing costs. In 1975, the average 30-year-old could buy a typical house with 21 percent of his gross earnings going to mortgage payments. By 1984, he had to devote 44 percent of his income to make his mortgage payments. Today, that amount has decreased, but not by much. In my opinion, buying a house is well worth the sacrifice because houses are becoming like dinosaurce and they're getting scarce. 

And if you think it's hard to own property now, just think about the next 10 or 20 years. Everything is anticipated. You're never certain what your need will be even tomorrow. That's what's so exciting about life. No one is willing to take a chance if they don't think they will succeed. You must have some incentive and insurance that it's going to work out for you.

Buy in an area with growth potential where you can afford the prices. As long as you can hold on to the property for the long term, I can guarantee you're going to get rich. I like to be close to my properties so I can see what's going on.

You have to be attuned to the community. I wouldn't buy a place just because I thought I was going to make some money on it, although a lot of speculators do. To succeed in the long run, you have to know the neighborhood to really understand what's going on.

When you buy income property and have a negative cash flow, you can take depreciation write-offs on the improvements for tax purposes. The IRS allows deductions for interest, repairs, and other expenses, which helps offset your losses at the end of the year.

You want to structure a real estate transaction so you have as low a negative cash flow as possible. Say you buy a property and the owner takes back a second mortgage. You want to do what you can with that second so you don't have to make any payments on it. Take advantage and try to write favorable terms on the second because the institutional lender won't allow you to alter the first.

When I was buying my first properties, I lived with an awful lot of negative. But I had a good full time job, so if I worked real hard, I could make my payments. Even so, many times I didn't know where the money was coming from to pay the taxes. I scraped the bottom of the barrel more than once.

It takes knowledge to accumulate real estate and the guts to put your self on the line. You have to be disciplined and careful not to overextend yourself. But there is no way in the world you can succeed without taking a chance. You have to get on the bandwagon and you have to participate; otherwise it isn't going to work. 

A lot of people talk about what they could have done, but they aren't willing to put themselves at risk to take advantage of what is within their reach.