Everyone has their own investing journey. Here’s how I went from sleeping in my car to having over $1 million in real estate investments, with some ups and downs along the way.
How I Learned to Be Frugal Early on
I grew up in the Midwest, in Minnesota. My mom was a garage sale mom, which means we’d go shopping or garage-saling every Saturday morning. So early on, I learned to always buy the cheapest thing and try to negotiate lower. It all started there.
Then in college, I got an apartment, rented out all the bedrooms in it, and I was living for free. I slept on the couch. Basically I was homeless.
Later, I slept in a car, which was weird. It was just because I had an overnight job and felt like, “Well, I don’t even need a place to live. I’ll just live in my car.” And I had a bad apartment to store my crap, but I just slept in my car every day. That was actually really fun.
When I Bought My First House
Then, I bought a house. I didn’t know anything about real estate, but it was cheaper than renting to buy a little fixer-upper.
And that was 2007. So all the lenders were like, “Oh, you’ve got no credit, no job (or at least not a good job). You’ve got nothing going for you. Yeah! You’re approved for whatever you want.”
They were just crazy with lending, so I bought a house. I fixed it up and sold it and made like $20,000.
I thought, “Dang! That was more money than I made all year at my crappy job.”
And so I decided I was going to become a real estate investor—specifically, a house-flipper.
As I was on my first flip, the market crashed—like right when I bought it. I’d also bought a duplex at the same time. I lived in half of it, and I rented the other half out.
I’m writing a book on multifamily (but it won’t be out for another year from now). The beginning of the book is a story about this.
I remember standing in the driveway, thinking all my neighbors are going think I’m a drug dealer because I’m taking cash from this other guy in this shady part of town and walked back to my house. But I remember holding this $650, going, “Shoot, this is more than my entire mortgage payment.”
Anyway, that was the “aha!” moment. Like, I can have a lot of these. What if I had 10 of these or 20 of these? That’s a lot of money coming in. I wouldn’t have to have a job, and I could travel and watch my kids grow up.
So, I just kept buying, even as the market was on the way down, because I just was too stupid not to, I guess.
I didn’t realize how markets worked and that I had no idea what the market was going to do. I figured, “It’s gotta be the bottom now.” And so I’d buy a property.
I mean, I wasn’t going crazy—I wasn’t buying hundreds of properties. I bought two my first year and probably an average of two a year for the first four years (maybe three sometimes). And I was flipping a house a year and then had a rental or two each year.
But I would buy these houses to flip, and then I’d do most of my own work. At the end of the day I’d clear like $0. I guess on a couple of them I made like $10-20,000. On a couple others, I lost money!
So I finally decided it wasn’t fun.
But at the same time, I’d read a lot of real estate books, and so I trusted the philosophy—or the foundational fact—that if I just hold long enough, we’re going to come out of this. This is how the economy works: up and down and up and down.
I knew we were down. I obviously didn’t know where the bottom was. But I knew eventually if I owned all these properties, all of them were going be lifted together with the rising tide. That’s what was going to help me get out of all of this.
But I never felt like I was making money. I never took any cash flow. I spent most of it on rehab stuff.
When I Started Making Money as a Real Estate Investor
Fast forward seven or nine years. And I’m sitting in a coffee shop, and I’m working on my personal financial statement for a bank because I’m trying to refinance. I had just turned 30 at that point.
I’m filling out the financial statement, and I get to the bottom where it adds up all your assets, all your liabilities. And it says I have a million dollars—$1.03 million or something.
I was like, “Well, shoot! I became a millionaire, and I didn’t even realize it.”
I thought there’d be something cool, like bombs going off or fireworks. But all it was, was just that you own property. And then the markets go up and your loans go down and you magically become wealthy.
And that was the other kind of “aha!” moment. Like, I want to do more of that! I just want to own more property.
So, I just kind of started buying more and larger stuff at that point.
How far have you come in your investing journey?
Share your experience in the comments.
Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.