How do you define a real estate investor? Someone with tons of money and skills, a pick up truck, maybe their own show on HGTV?
Or could it be a regular person you work with, someone in your family, your next door neighbor, a lifelong friend?
Can YOU be a real estate investor?
I’m going to show you how I did it (and how I’m still doing it).
I want you to know that you don’t need a college degree, a six-figure income, a spouse or even a lot of money to get started.
It started in 2009, when I was 22. I bought a condo. By myself.
I’ll give you the quick story since I wrote about it in more detail in an earlier version of this article.
I bought a condo in Mukilteo. I lived in it for 4 years. The value went down for 3 years then started creeping back up. I didn’t really care about the value because I had no plans to sell.
Then in 2013, my husband and I bought a very modest home.
It was what we could afford. A little starter home in Lake Stevens. But it was bigger than the condo and it was comfortable. Move-in ready. We knew it would be a good rental once we saved up enough to buy another home.
We put 20% down. We didn’t have to but we wanted to keep the payment really low for maximum cash flow later on. It was a very low purchase price but still, it was not easy coming up with 20% down. Lots of sacrificing and saving led up to that purchase.
The difference between the condo payment and the rent I got each month was about $150. Not much, but a good start! That helped us afford our new home and it helped us save for the next down payment.
Fast forward to 2015. We bought another home. 10% down.
It’s a good time to mention we didn’t qualify for all of these mortgages. We were able to use market rent as income (for the home we planned to move out of and then rent) even though the home we were living in wasn’t rented YET. We had to show a signed lease to our lender before closing in order to get our loan approved and funded.
The difference between the payment and the rent for the one we bought in 2013 was about $400. Oh, and we had raised the condo rent by this point in time. Total monthly rental income was about $600 by this point in time. Enough to help, for sure! Kept on saving for the next home.
In 2018, we bought another. 10% down.
Rent from the previous home was about $300 higher than our payment each month. At this point, our total rental income was about $900 per month.
Each time we bought, the home got a little bigger, which worked well for us since our family has grown in this time. We moved into all of them as we bought, so we could get an owner-occupied interest rate and so we didn’t have to put 20% down. When you buy a home and immediately rent it, rather than move into it, you’ll get a higher interest rate and most of the time you’ll be required to put at least 20% down. Living in the homes at first creates some flexibility.
Note: We didn’t sell any of these homes along the way.
We didn’t use the equity in the homes as a down payment for the next.
We just never stopped saving.
Immediately after buying that condo in 2009, I was saving for the next home. Some months it was only $10 added to my savings account and some months I may have gone the wrong direction but I kept a close eye on that savings account balance. It was my down payment for the next home.
In 2021, we bought a condo.
In Post Falls, ID. Diversifying a little with this one. And, didn’t move into it. We just had some extra money and wanted to do something smart with it. The rent is about $300 higher than the payment.
Before I had ever met him, my husband bought a couple of homes in Wisconsin. We still own those as well and between all of these homes, our rental income is currently a little over $2000 per month. We can’t live off of that, but it covers a huge chunk of our monthly expenses.
Something else that is worth noting is how much equity we have earned in this amount of time. It’s hundreds of thousands of dollars, which represents options to me.
And the best part of the appreciation is that I’m not even paying these mortgages anymore. My tenants are.
BTW, they are all wonderful. They all pay below-market rent. I treat my tenants well because they enable me to do this. I also encourage them to buy their own homes. It is so satisfying when they do!
Whether you have one rental property, or 7 like me, (or 100+): real estate investments will add to your monthly income, your net worth, and your future opportunities!!
I didn't even touch on tax benefits or principal paydown, but those are two other things that are working for you while you sleep.
Highlighting the key behaviors/mindsets for pulling this off:
- Live below your means (to save for your down payments)
- Buy a home that is below your means. Do not be pressured to max out your budget. Similarly, don’t be discouraged if your budget won’t allow for a home you’d really love. Whether it’s your dream home or not, you need to get in the game!!
What You Can Do Next:
1. Read the original article I wrote 4 years ago on this for more details: https://www.persingergroup.com/blog/be-a-real-estate-investor-too/
2. Contact me with any questions you have about getting started with real estate investing
3. Message us at m.me/persingergroup to get a FREE GUIDE - 8 Simple Money Hacks That Will Help You Get Ahead With Real Estate.
Just type "8" we'll know what you mean and send the guide.