I am a huge advocate for investing in real estate when it is done the right way. Real estate can bring incredible returns through monthly income, buying below market value, tax advantages, and more. There are many people who make a lot of money in real estate, but there are also many people who want to invest in real estate and never do it. Investing in real estate is not for everyone. It takes time to educate yourself and find an awesome deal. It can also take money and financial discipline to save up enough money to invest with. I think real estate is a much better way to invest your money than the stock market, but investing in the stock market is much easier.
How much money have I made investing in rental properties?
Real estate has many advantages over other investment vehicles. You can make returns of 15 percent or higher on the cash you invest just from money you make off rent. Not only can you make money by renting homes (rent minus all expenses including vacancies, maintenance, mortgage payments, taxes, and insurance), but houses will typically go up in value. If you take the time to learn how to buy houses below market value, you can build $20,000 or more of instant equity. The tax advantages of rentals can save you thousands of dollars a year thanks to depreciation. When you get a mortgage on an investment property you are also paying down the loan every month. I have purchased 16 rentals since 2010, and because I managed to refinance properties and sell others, I have almost none of my own cash invested into them. Those properties have increased my net worth by over one million dollars and provide $7,000 a month in cash flow.
How hard was it for me to buy 16 rentals?
It was not easy getting great deals on properties, saving the money to invest in rentals, or convincing myself it was a good idea to put all my eggs in one basket. It has worked out great because I took the time to learn everything I could about rentals and the best ways to invest. From when I decided I wanted to invest in rentals for sure, it took me almost two years to buy my first rental. It was not a fast or easy process.
It took me a very long time to save enough money to buy a rental property. Eventually I was able to refinance my personal property to come up with the down payment for my first rental. After buying my first rental it took me almost another year to buy my second. Once I had a couple of rentals they started to make me money that I could save to buy more, I started making more money by flipping houses, and I refinanced some of my rentals to take cash out.
While it was not easy investing in rentals, it was well worth the time and effort. Because I concentrated on getting great deals, I could take more cash out of my properties when I refinanced them, which allowed me to buy even more houses. Being a real estate agent also helped, but was not necessary. Because I was a real estate agent I had time to see houses right away, and make offers on homes the same day they came up for sale.
Why would real estate investing not be right for everyone?
If you want to invest in rentals or even flip houses, it will not happen overnight. You will have to dedicate time to educating yourself, learning the market, running the numbers, and developing a plan. If you are the type of person who wants instant results and gives up easy, real estate is not for you, at least the way I invest. You can invest in real estate buying properties at full retail value, with little cash flow, and hoping they increase in value. The less time and effort you put into the business the riskier it will become and the smaller your returns will be.
People ask me questions about if a property is a good deal all the time. Usually I have to tell them I know nothing about their market and I do not know if the property is a good investment. I also have no idea what that person’s goals are or how much risk they want to take. If you do not have the time to learn what a good investment is for you, you may not want to be investing in real estate. My complete blueprint program was created to teach people what a good investment property was for them, how to find it, and how to finance it. However, even with that program it still takes work.
Why you have to get out of your comfort zone to invest in real estate
We are all taught the stock market is the best way to invest our money. Many people invest their money in the stock market without doing any research or having any idea what they are doing. Many people blindly trust others to invest their money for them in the stock market. People feel comfortable doing this because it is what everyone else does. On the other hand, many people will tell you how horrible investing in real estate is. When I started investing in rentals, I had real estate agents asking me why I was throwing my money away on them! People naturally fear and put down what they do not understand. You have to be willing to step out of your comfort zone to invest in real estate, and go against the grain of what society tells us to invest in.
If you are easily discouraged by what other people say or think, investing in real estate may not be right for you. If you are afraid of change or breaking routines, real estate may not be right for you. If you cannot handle the ups and downs that real estate sometimes brings, it mat not be right for you (the stock market is not any better). I love real estate because it is always different and exciting.
Can you still invest in real estate even if you do not have extra time?
The time you have to dedicate to education, the better you will do investing in real estate. However, not everyone has the time to learn what they need to learn. There are ways to invest in real estate without spending the time I do in the business. If you want an easier way to invest, do not expect the higher returns. Here are a few ideas:
- Buy turn-key rental properties: Turn-key rental properties are already rented, managed, and repaired. They provide cash flow from the time you purchase them, but they are usually sold at full retail value.
- Invest in real estate with crowd funding: You can invest in real estate projects using crowd funding sites. You invest a small or large amount of money, and the crowd funding site will pay you an interest rate on that money. This is more like being a bank and lending money than investing in real estate.
- Lend money to other investors: Another way to make money in real estate is to lend private money. Many flippers like myself will pay interest rates of 10 percent or more for their financing.
It is not easy to invest in real estate, but most things worth while are not easy. If you want to take the time to learn to invest in rentals or how to flip houses, you can make a lot of money. You have to take the time to educate yourself and be willing to take risks as well as get out of your comfort zone. If you want to start your education, I have written quite a few books on real estate that could help you get started: Mark Ferguson Amazon Author Page.