5 Proven Steps to Become a Real Estate Millionaire, According to an Investor Here's my formula to hit the ground running with your first real estate deal and project your ROI quickly.

Instead of spending all of your time to earn money, you have to start making your money work for you. If you don't start making strategic investments, you will never generate passive income. Passive income means that you can invest your money from savings into assets that will generate a risk adjusted return, without spending your time to earn it.

Real estate is one of the best investments you can make because you can earn double-digit returns with the right deal. Once you find the right deal, you'll have a superior asset compared to stocks and other alternative investments. There are many segments of real estate you can invest in, but one popular segment that has seen a massive shift in popularity is multifamily real estate.

Times have changed with fewer people wanting to purchase homes and take care of maintenance, especially with the rising interest rates. Seniors are also opting for apartments and senior housing to have less to worry about.

I took advantage of real estate investing by strategically finding deals that I could purchase below market value. This enabled me to make money on day one of purchasing the property. When I look for real estate deals, I search for apartment buildings and vacant land for development. These assets are low-risk investments that can be recession resistant if you choose the right locations.

Your investment goal in real estate should be to replace all of your earned income from the job that you work with passive income from your real estate investments. Real estate is a powerful tool to multiply your money.

Related: 5 Reasons Every Entrepreneur Should Invest in Real Estate

1. Finding assets below market value

When I look at new real estate deals, I focus on purchasing them below market value. This means you should find deals off-market with less competition bidding on the property, or it could mean that the current owner of the property is charging lower rents than the market. You can achieve this by reaching out to property owners and real estate brokers within your market.

Relationships are a massive key to achieving success in real estate. Research what companies own real estate in your market, drive around the areas in your hometown with the most traffic and see what opportunities are available. There are dozens of opportunities available to place your money into real estate.

The assets you purchase should be well located. The location of the property will determine the value. If you go under contract to acquire a building, make sure you do a thorough due diligence. Make sure the property's capital expenditures (sidewalks, roofs, exterior) have not been neglected or delayed in replacement.

2. Increase the value of the property

Once you acquire the property, the first thing you need to do is implement your investment strategy. If you purchased a piece of land, determine how you will add value to it. Will you rezone it, construct a building on it, flip it or all three? Maybe you're purchasing an existing building and your goal should be to increase rents or spend money on the property to increase its value.

Before you purchase a property you have to see an opportunity and have a gut instinct on what you're going to do very quickly. Search for ways to add value to your investment that will return your money with a profit. Determine how much money you have to spend to improve the value and what the return on investment looks like.

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3. Optimize expenses to increase profit

One trick to quickly increasing the value of your property is reviewing third-party contracts for vendors that service the property. Depending on who the prior owner used, you could find a better-priced vendor that produces the same value for your property. When you take over a property quote other people so you can compare pricing.

Find other options that can do the work for a better price. If you can shave down your expenses and make them more efficient, while still achieving the same value, you will increase your return on investment.

Look at your maintenance costs and determine what the largest repair costs are. When you have the right information, you can use it to your advantage and improve the performance of your investments. Find out what is costing the most money to maintain the property and try to value-engineer it.

4. Review the upside potential

This is my favorite part about investing in real estate. After you purchase an asset, you have to put together an investment plan for how much money you will spend to improve it. You have to carefully review the costs and compare them to the upside.

Say, for example, you are renovating an apartment complex. Your renovation plan can include new kitchen cabinets, granite countertops, modern paint colors, new appliances and new flooring. This may cost you anywhere between $10,000 to $20,000 per unit, but you could potentially increase rent by $400 per month. If you can do this at scale, you will generate massive returns.

Before you start this process, you should develop a budget to determine how much your improvements will cost. Your rent or increase in property value should pay back your costs within a three- to four-year timeline or generate at least $80,000 if you spent $20,000.

Related: How to Start Investing in Rental Properties — Your Step-by-Step Guide

5. Maintain the property

Once you have assets under management, make sure you take care of your tenants to increase your retention rates. After you create an attractive place to rent, keeping your tenants happy is your final priority for long-term success. The less turnover you have the fewer new tenants you have to find to occupy your property each year.

Make sure capital improvements are kept up to date including roofs, sidewalks, parking lots and common areas. Property maintenance is often an overlooked aspect of investing. If you don't keep up with the maintenance, you may take a price cut when you decide to sell in the future.

Conclusion

Maximizing your earning potential by investing in real estate is one of the best paths to take. Your money will be useless if you spend it on things that don't generate a return or if you don't let it work for you. When you focus on these five steps I've outlined and stay on track, it will only be a matter of time until you see success!