I recently read a book confirming what I have known for quite some time; owning income producing real estate is critical to building wealth.

Get Rich, Stay Rich, Pass It On written by Catherine McBreen and George Walper Jr. is an in-depth study into the investment habits of the wealthiest people in America. The findings of which are very intriguing and boil down to just two simple secrets:

1. Own income-producing real estate. This is real estate outside of your primary residence which earns money for you today, provides tax benefits and can be passed to your heirs.
2. Be a continually innovative entrepreneur. Be actively involved in and/or invest in an innovative company, product or service.

The survey consisting of people with more than $5 million in assets shows an average portfolio allocation of 23% to 29% in real estate. This percentage includes income producing property, undeveloped land, REITs and vacation homes.

If you desire to be really rich, you will need to actively invest in real estate. “Building up a nest egg with the equity in your home is a fine thing. But what distinguishes the model for getting rich, staying rich and passing it on is its emphasis on investing in current and future income-producing real estate,” they write. Look for opportunities initially in areas you know, they advise.

According to these experts the second secret is to constantly be looking for entrepreneurial opportunities around you and have another 25% of your investment dollars in these enterprises. These could be existing businesses or better yet a new or improved product or service.

These two elements are integral parts of the wealth machine and apply to virtually all millionaires and mega-millionaires.

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