I always tell people that real estate can be a big investment. But getting started can be daunting.
As an eight-year real estate investor, I realized that it was important to take a small step. When I first started investing at the age of 23, I set a conservative goal of making a little extra money in addition to my engineering salary on one or two rental properties.
Today I own 61 rental units and last year’s rental income was $ 431,000. I am also a real estate coach at the Roofstock Academy. I mainly work with my wife in the modified van where I live. When we’re not traveling to the United States in a van, we’ll stay at a duplex home in California.
After paying mortgages, property taxes, real estate management and maintenance costs, I earn about $ 6,000 a month in passive income from my real estate portfolio.
Since 2019, I’ve been investing that money in redevelopment projects, converting 8 units to 17 units and living on a full-time coaching salary.
Immediately after graduating from college in 2013, I worked as a fire protection engineer and earned $ 73,000 a year.
Saving for investment real estate was my goal, so I lived well below my average. I paid $ 800 a month to rent an apartment with my roommate.My employer incurred significant costs like my car And cell phone bills, I can save even more every month.
In 2014, I used my cash savings of $ 40,000 to sell $ 20,000 worth of stock and make my first real estate purchase. A $ 295,000 home in Southern California. I didn’t have to borrow from the bank because I borrowed the rest of the expenses from my family.
I was free for two months before renting a house, but it didn’t need any renovation. With a monthly rent of $ 1,810 from the tenant, we were able to cover the monthly loan payments for the house as well as the operating costs of managing the house.
By 2016, I was the owner of three homes. I funded my second purchase with a traditional bank loan, and the third purchase was from my family with a 4% 30-year fixed rate loan of $ 250,000.
That year, I earned $ 51,404 in total rental income from all three properties. Most of that money went to mortgages, maintenance, and property management, but I was able to bring home about $ 1,800 a month.
In 2017, I decided to increase my savings to buy additional real estate. I found cheaper apartments to share with my roommates and invested the money I earned from real estate in the stock market and my investment account in addition to those savings.
I started looking out of California when I knew how far a dollar could go in an opportunity market with high cash flow and low purchase prices. I bought and repaired the cheapest multi-unit properties I’ve found in the Midwest, mainly Ohio and Kentucky.
To do this from a distance, I have built relationships with agents and property management professionals in those markets. So I knew there was a team on site to identify the best properties and take care of the tenants.
I work with a small family-owned management company. The average rent per property is 7%, but can reach up to 20%.
I feel very fortunate to get a regular 9 to 5 job as a coach from Van and to explore new regions of the country while at the same time earning passive income through real estate investment.
I believe that if you save enough money and look at the right place, you can reach out by investing in real estate, even in times of high house prices.
This is my best advice:
1. Start with a well-studied strategy
My investment strategy is the “BRRRR” method: buy, rehabilitate, rent, refinance, repeat.
I buy a home in a market where the unit rents much more than a monthly mortgage payment. I rent them to repair them, to cover the cost of the house, and to invest in other real estate.
To learn which strategy is best for you, I encourage you to study the basics. Podcasts (including mine, Remote real estate investor) Go to the online course.
You can also contact other investors in forums such as: Bigger PocketsTo learn their strategy, where the BRRRR method has become widespread.
Many people are also wondering what the return on investment target should be. I always find that people can get the total income they can get from real estate (calculating this with cash flow, gratitude, loan payments and tax incentives) by other means of investment. Say it should be compared with.
Choose the number that suits you. And most importantly, don’t compare yourself to others.
2. In my method, the goal is to do as little work as possible
I know it’s easy to buy and outsource to a management company.
Even if this means low profit margins in advance, this simplifies my life and allows me to use most of my real estate portfolio as a passive source of income. You work once to buy and repair a home, and you can get paid as long as you own the property.
The main goal of my real estate portfolio is to be 100% financially independent, or to cover all costs without having to work, even considering future costs.
3. No complete refurbishment required to increase asset value
There are two ways to increase the value of a property: to maximize revenue or profit, and to minimize cost.
So far, we’ve spent about $ 2.5 million on refurbishment of our entire portfolio, trying to take all the money into account. Simply add upgrades such as laundry rooms and stainless steel appliances to your ready-to-rent property to increase the rental value of your property.
Buying in an opportunity market, or where a home is expected to value over time, and making small adjustments to those properties can also increase the long-term value of the purchase.
4. Rely on a local real estate expert
I’m always working with local moms and pop property management businesses in the markets I’m investing in.
This allowed me to build a portfolio in the Midwest while living in California, and now I can travel while generating income through my assets. I can see the house through FaceTime with an agent and the remodeling can rely on a trusted contractor and leave it to the real estate manager to procure a responsible tenant.
Use an online platform such as All property management Connect with field experts in your target market and look for recommendations from peers and networks.
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