Many of America’s landlords are accidental landlords, meaning it was not their original intention to invest in real estate or managing a property. These people did not study or decide that this is what they wanted to do. Instead, they inherited property, outgrew their primary residence or moved for their job. They became landlords out of circumstance.Why do I share this?
If tens of thousands of people can become landlords on accident, then you certainly can become an investor on purpose!
In fact, many people think of real estate investing as grabbing an extra few hundred thousand dollars laying around and buying an high-priced property to make money. There are simpler and more practical methods for the every day investor to use to get started.
I will tell you how I got started.
It was 2016, my wife and I had just relocated back to Melbourne, FL, where we had once lived, but would now call home. I had accepted a job and after years of renting in apartments, we wondered if it was time to buy our first home. I knew three years earlier that I would invest in real estate, so I wanted to make this next move a double-win: a great primary residence for my wife and two children, and a great rental for the next family.Back in 2016 in Florida, a first time home buyer could benefit from a program where there are nearly zero dollars out of pocket, so I knew we could not lose. The next thing to do would be to find a house that makes both a great primary residence and eventual rental. As I would put it, it would be the Robinson house for a few years, but later would belong to another family.Fast forward three years. Although I ended up buying a second house to be the first actual rental, we decided to move just a few months ago to a new primary residence, a place better fitting and more spacious for our now family of six. It was then that we were able to market and successfully rent out our first house. While it is confusing for me to call it my first rental (since technically it is my second rental), the decision to buy that house was a special one.
While our friends were buying bigger and nicer houses, we stayed in a price range that would allow for a great cash flowing rental.
This decision paid dividends, or should I say hundreds of dollars in rent checks. There was nothing fancy about this strategy and the only ingredients for its success was intent and discipline.
If you are serious about building wealth in real estate, and you do not yet own your own home, my strong suggestion is this:
- Find a modest home in a great area. This is not your dream home.-Ensure that you will obtain a reasonable and low mortgage.
- Validate current and future market rates by checking sites such as rentometer.com and craigslist.-Buy the house!-Live in it for a few years and fix it up over time.
- Find another house and rent out your current house (see my #1 tip for renting).
- Repeat as many times as you’d like.
Nothing fancy here, and it works!
This small decision to buy a house, one you would make any way, will allow you to take that first major step in reaching financial freedom without reaching for large amounts of funds to get started in real este.
Oh, one more thing….
When you buy your ”rental” as a primary residence, you often avoid the requirement for a 20% down payment since the property is not considered to be purchased for investment purposes. This means entry into the game and one without much sweat!
It worked for me and could work for you!
