I get emails and calls all the time about people wanting advice on how to invest in real estate. People want to be a Real Estate Investor, and do not know where to begin.
It is sort of flattering, like I have some sort of insider knowledge of the markets or what property or type of asset is the best investment today. But I am always willing to share my knowledge. Even more interesting are the investors who say something like, “If you find a property that I can make a quick $50K on, call me. I have the money to invest.”
If I see a property with a $50K potential, it’s mine — and no one else’s if I can help it.
I get people who contact me with things like this. “I have a goal to have 100 rental properties within 10 years. I have $10K to invest now. How should I start?” I admire the goal setting, and I appreciate the fact that someone can think big. Unfortunately, if that is your way to riches in real estate, your bubble will soon be popped.
Do You Have What it Takes?
There are many different ways to invest in real estate. I personally do rentals and have done a flip. I have also sold real estate. All my rentals had to be 100% remodeled after I purchased them, so I know a lot about rehabbing. If you are thinking about any self-managed real estate, you also need to know a bit about rehabbing. Once you can rehab a property, the world of real estate can get very interesting and more financially rewarding.
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I’ve heard similar things before too, like I have a few thousand and I want to own X amount of rental properties within the next 10 years. That’s a fine goal, if they have a plan to earn 50x what they have know. lol. Heading over to BP to read the rest…
Thank you Kalen!
There are no free lunches in life, and it takes a lot of work to be successful. There are a lot of avenues to be successful, you just need to pick one.
Good read man!
I’ve owned a rental before and dealt with other rentals to help family out. No such thing as a free lunch for sure. I think the biggest misconception about real estate investing (or being a landlord) is that it’s easy money or passive money. Even if you outsource everything, you still have to focus on quality control and ensuring your people are doing the job you are paying for.
Which requires those skills you mention – RE knowledge, contractor knowledge, etc. I picked up most of those from engineering and law school (which was way more expensive than the $1000 you mentioned the RE and GC classes cost! 🙂 ). I guess if making tons of money in RE was so easy, everyone would do it.
Thank you for the comment Justin!
Before anyone embarks on a RE journey, they should have a basic knowledge. Hard work returns great rewards. You are so right, if it was that easy, everyone would be doing it.
I wouldn’t really call myself a real estate investor but I do have tenants (who rent out rooms in my house). At some point I don’t want to keep playing landlord but after 8 years of having renters they are paying about 80% of my monthly payments now (making my portion of the mortgage very cheap).
But in the future I don’t think I would really want to invest the time into real estate, I think the closest I will ever be to a real estate investor is a couple of solid REITs or something 🙂
Thank you for the comment!
Having roommates is a great idea to ave money and start a real estate investing career. It gives you the chance to see the potential, and then determine if it is for you. The main thing, it is with minimal risk. I wrote a post about starting with that technique.
It’s not uncommon for people to turn away from the rental business. In fact customer service is one of the hardest skill to obtain, especially among who are a bit introverted, and one with a degree and money decent money, they don’t want to “lower” themselves by dealing with people are less fortunate. I know because I get it a lot. But for me, as long as I make an honest living to support myself, and I don’t hurt anyone, it’s a good thing.
There is also another set of people who implement strictly dividend income and call it “kiss = keep it simple stupid”. Well, good for them, but rental can give higher return consistently.
It comes down to choices, we all have to learn as we go. I like your style, some in the stock, some in housing, either way, it will keep you busy enough in retirement. 🙂
Thank you for the comment! Rental income will generally beat dividend income, every time.
I enjoy interacting with my customers, and it is much more enjoyable interacting with people that pay rent and understand I am there to provide housing and make money while doing it. Tenants that feel they are entitled to housing, and resent the fact you are making money off of them, I do not need.
It sounds like you have a lot going on. I am glad I just have my 25 renters…
An HOA can be a blessing or a curse. Stay on as the Board president, as I am in my HOA, and life is a lot easier.
Real estate investing definitely takes time and forces you to learn how to manage situations. Potential renters will drop out, things will go wrong, and you’ll need to deal with problems. I think the biggest thing I’ve learned with our first rental is that you need to find good tenants. Beyond that I think rehabbing a property as much as possible is a good move. I want to allow the smallest chance possible of something going wrong.