Become Financially Ready to Start Investing in Real Estate
I bought my first property in 2009; I was 24 years old.
It was actually an accident that I became an investor. You see, my wife and I wanted a home, not rentals. We were both full-time grad students and our one requirement was to be within walking distance of our school.
Well, there happens to be only 2-4 unit rental properties there.
I stumbled into it totally unprepared. I had no idea what I was doing; We had a lot of hard lessons those first two years.
I didn’t know about analyzing investment property, property management, or how to budget for my business.
I didn’t know how to write leases or pick good tenants.
I didn’t know anything and I made a lot of mistakes. But, made it through those hard years and came out on time. Now, I’m working to teach others how to invest so that you won’t make the same mistakes.
How To Prepare Financially For Investing
The basic strategy is to use a personal loan to buy a multi-family property that is also a primary residence. Then, spend the next year or two saving and paying down massive amounts of debt.
Just by taking those two simple steps, your credit score should skyrocket, you will naturally become “low risk” as defined by the banks, have the “experience” required, and have the cash you need to get your next multi-family.
Sounds easy, right?
If you aren’t there yet, don’t worry. Here are a few ideas to help you get there.
Adopt the Rich Mindset
We’ve all been raised in a materialistic and consumerist society. We’ve been trained since birth to acquire things we don’t really want or need.
The hardest part of the journey is letting go.
Once you stop buying things you don’t need, you suddenly have money to spend on paying debt, buying investments, and retiring early.
If you are in a big house or apartment, consider how much space you really need. Remember, it’s all short term. Could you live in a small apartment for a couple years if it meant quitting your job ten or twenty years early?
The average home size was 983 square feet back in 1950. Today, it’s over 2,500 square feet. Back then, the average family size was 3.54 while today it’s 2.54. Do we really need more space to live with our smaller families, or do we just need more space to store the junk we don’t need anyhow?
I challenge you to consider downsizing to help you save money. If you could save $500-1000 a month by down-sizing, do you think you could get all that debt paid off quickly?
Pick Up Side-Jobs In The Real Estate Field
If you need to make more money, consider side-jobs in real estate.
Becoming a handyman or real estate agent may help you a lot when you do start investing. The skills and knowledge you gain will definitely help you.
Even if you plan to hire sub-contractors for everything, being able to understand their jobs will help you to negotiate those contracts.
Financial Independence Requires Sacrifice
I know a lot of people are reading this and thinking how impossible this is.
Some people are already drowning in debt or have such established lives that it’s hard to change.
I can’t really tell you exactly what you need to do, as every situation is different. What I will say is that I was in massive debt, had 2 part time jobs, was a full-time grad student, and I was able to start building my little empire.
I was the last person you’d think could make it in real estate. But I did it.
You may need to get another job, give up a nice car, sell your big house, or do something else that’s painful. If there is no way out of your current situation without huge sacrifice, then you need to sacrifice.