There’s a tremendous amount of interest in real estate investing. I personally think everyone should own at least a few rental properties to provide passive retirement income. Of course, owning real estate can also be used to generate income before retirement.
Because investing in real estate is something we do full-time, I receive a lot of questions about how to get started in this business. There are so many possible answers to that question, but what I can share with great confidence is the story of how and why we got started.
To begin with, I wanted to find a way to generate income for our retirement. Our savings was “low” (to non-existent) and I certainly never want to count on Social Security or Medicare. So I began researching. Over and over I read about having monthly income from owning rental properties. As I’d owned two homes in my adult lifetime, I knew something about owning houses and thought this was a doable venture worth pursuing. So, we did.
My first goal was to own five rental properties for passive retirement income. It seemed to me that, by the time we retired, we should have all five paid off and that they could each be generating about $1000 per month rental income. That would mean and additional $5000 per month income whether we worked or not. How sweet is that?!?
And so we began. We acquired those first five properties the traditional way, either talking to for-sale-by-owners or finding properties and making offers through real estate agents, then working with banks to obtain 30 year financing.
Our goal at the time was that each property could rent for enough to have at least $200 per month additional cash flow after ALL of our expenses on that property were covered. We calculated $200 extra to be break even – necessary to cover things like a new water heater, carpet replacement, painting when tenants moved out, etc.
We both had Sundays off, so we’d scour the Sunday newspaper (pre-internet obsession) for for-sale-by owners and/or properties in neighborhoods we knew. Then we’d drive by and, with our best evaluation completed, make offers – often to the owner or, if listed, through a real estate agent.
It took us three years to buy five rental properties and we financed them all with traditional 30 year loans through financial institutions (banks). Those five properties worked so well that we decided more of a good thing would be even better. Not too many properties later, our first major roadblock – the banks laughed when we applied for financing (our debt to income ratio was way off) so we then had to learn creative financing strategies and began studying real estate investing as a full-time profession.
Truly, our first goals were to (1) financially secure our retirement and (2) do something more with our time than we could in a w2 job. Our retirement was basically secure after only two years. Beating our w2 job happened from the beginning. How? To begin with, we loved what we were doing and couldn’t wait to get up and get started every morning. Beyond that, the lives we were touching, the people we were helping and, ultimately, the income we were creating all blew our w2 jobs out of the water.
So tell me, how did you enter the real estate investing game and when? And if you haven’t started yet, what are you waiting for?