The Beginning: How We Got Started in Real Estate Investing!

I'm a Real Estate Investor...?

I have always considered myself a real estate investor of some sorts. I grew up with aunts and uncles that were rental property owners, and my grandparents renovated houses in the 70's and 80's. I had a basic understanding of construction, home repair, and real estate finance. I was your typical DIY'er. We currently own a rental property in Colorado Springs, Colorado, that we purchased in 2004 as a primary residence. We bought this house near the height of the market, and have rented it (at a loss for several years might I add) like clockwork ever since. We also had recently moved out of our former primary residence in Sanford, North Carolina, and chose to rent it to a family member at a $400 a month discount off the mortgage payment. Can you see where all of this is going? I had two rental properties, so that made me an investor right? These homes were "assets" right? Everyone in my inner circle seemed to think so, or at least none of them have stepped forward and said "You're a fool Kerry!" In reality - we were hemorrhaging cash on a monthly basis!

Here is our rental in Colorado Springs:

Our rental property in Sanford, North Carolina:

The Mindset Shift – Buy Cash Flowing Assets and Reduce Liabilities

There I was – hanging out in my friends room. Watching the latest epic episode of Game of Thrones. We were about 1/2 way through the show, and we started discussing real estate. He asked home many properties I own, and I proudly stated "Two!" Naturally, I returned the question, and he said....

"Sixteen."

I openly admit - I was stunned

I immediately began to back peddle, and stammer for words. I felt ashamed. What had I missed that he hadn't? What did he know that I didn't?

My friend began to elaborate on how he got his start in real estat investing, and suggested I read Rich Dad, Poor Dad by Robert Kiyosaki. He went on to explain his theory on buying cash flowing assets (properties) to cover the cost of his liabilities. I remember him saying "Capital is hard to come by - Never deploy capital to pay off debt, always find a way to buy another asset with that money." It was a new concept to me, and one that I'd been missing my entire life. I ordered the book immediately from Amazon, and waited in anticipation for it's arrival. The book finally came, simple paperback, not too thick. Now I am not a big reader, but when cracked open this book, it drew me in and single handedly changed my life forever.

If you've listened to the Bigger Pockets podcasts, you'll note that a lot of people mention this book when asked what their favorite real estate investing book is. While Rich Dad, Poor Dad does not truly provide any actionable information or real estate investing techniques. It does a good job of articulating the difference between an asset and liability for those of us that did not grow up with this knowledge instilled in to us. The book spells out how an investor views money and wield it's power. It also has three pictorial boxes that do a good job of laying out the cash flow pattern of poor, middle class, and wealthy people. I've used these same boxes to articulate these principles to my friends and family ever since. After reading the book, I knew exactly where I was sitting in life - "middle class", and honestly borderline poor. I didn't like it. In fact, I found myself looking back at all of the cash (capital) I had wasted on brand new cars, stereos, ATVs, and various other "toys." I was deeply embarrassed. I was happily married, with two amazing children, but I was really clueless when it came to personal finance and real estate. I knew that if I did not make some serious lifestyle and financial changes, I was destined to be stuck in the "rat race" forever!

Time For a Real Estate Investing Education

After reading the book, I began scouring the internet for any information on real estate investing, tips, books, etc. I stumbled upon Bigger Pockets and was simply blown away. After spending just a few short evenings scouring the BP forums, I realized that BP had the same profound effect on me that reading Rich Dad, Poor Dad had just a few weeks prior. I downloaded the podcasts, and consumed them on my daily commute. I found numerous free resources in the BP file section. Everything from business plans to deal analysis spreadsheets. I asked real estate investing questions, and received sincere answers from more experienced investors. The site simply is the world's best resource for real estate investing information.

Bigger Pockets has given us the information, actionable techniques and systems, and most importantly the confidence we need to "jump in" to real estate investing. We are now well on our way to purchasing our first real estate investing property. I will never be able to thank Josh Dorkin and Brandon Turner enough for everything that they've done for me and my family. Thank you guys!