5 Steps I Used to Launch My Real Estate Investing Career
Are you curious about investing but not sure if it’s right for you? I used real estate investing to pursue financial independence, but I had some doubts along the way. Personally, I have only done flips and buy and holds, but here’s what helped me figure out if real estate was the way to go:
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1. I Laid Out My Intended Role
A fantastic first question to ask yourself is: How much or how little do I want to be involved in my investments? Real estate can serve many purposes in many different ways. For example, real estate investment trusts are almost entirely passive. No middle-of-the-night phone calls, no managing, no nothing. You can also hire (competent) property management companies to take care of your properties. This way, you can stay as involved or uninvolved as you prefer.
If you prefer to manage yourself, you absolutely can. I personally invest in three different markets, and I manage about half of my portfolio right now. A company manages the other half, and I keep tabs on them. Prior companies I’ve trusted my properties and money with have made accounting errors and placed poor tenants in my property without my consent. That was a costly mistake that only I was responsible for. As a result, I tend to be really involved in my properties.
The major question is, how involved do you expect to be? To what extent can you trust and delegate to others? To what extent are you capable and confident of learning the laws regarding tenants and landlords? Many people invest and realize it’s more intensive than they want it to be. For me, it’s really not a bother to manage my properties. I’ve had a few late phone calls over the years, but I have an amazing team that helps tenants whenever they need it — and that’s key.
Not only that, but what is your temperament like? Are you able to provide a customer-oriented service that is also stern when necessary? I tend to be softer than I should be. For example, we just had vacating tenants who had things nailed into every surface of the wall they could find. They asked for the paint color so they could pass the move-out checklist. I gave them a paint color I knew to be close but not exact, advised them as much, and told them they needed to be sure it matched before proceeding. Well, they didn’t, and I had a cheetah-print light gray on slightly-lighter-gray condo when they moved out. I charged them minimally from their security deposit because I felt bad for not providing the correct paint color. A week or so later, I woke up and realized, hey—that’s not my fault! Please feel free to give me a tough time over that. My point is, even a few years in, I still find myself being a little too soft. I’ve successfully put my foot down on a number of items (such as lease breaks) without problem, though.
2. I Determined My Goals & Priorities
What purpose is investing in real estate going to serve you? I figured out my financial blueprint from Secrets of the Millionaire Mind and found a way for rental properties to serve it. My goal? Financial security and financial freedom. Funny how those two words work together when we talk about money, eh? If your priorities are set and you are driven to work toward them and real estate can serve them, you’re likely going to be able to tolerate the ups and downs associated with real estate.
3. I Learned to Let Go
Give yourself room to grow! Not everything will go your way. I'm a very type-A person, unfortunately. This works to my advantage in many ways, but it has also allowed me to become more stressed than needed in some cases. I've grown into a much more relaxed person when things go wrong. Like when someone in your condo building accidentally sets their condo on fire. Or when a contractor suddenly gets arrested and goes to jail. I laugh at these two items now, because they have legitimately happened to me, and it makes it look like I run a circus of a business. I promise, I don't. But there are always lessons learned along the way.
You can plan, and vet, and plan, and vet, and things still may not go your way. I am a very active person, and I usually have quite a few things going on in my life. Major appliances and other big repairs tend to need attention the moment I arrive in a faraway country half a world away. But that’s OK! That’s life. And things work out one way or another if you have a good system set up.
4. I Taste-Tested It
No one is going to force you to become a legitimate real estate investor. Once I started blogging about this on my personal page and whatnot, I became the point person for friends and friends of friends regarding real estate, financial independence, etc. A friend of mine recently relocated for work and decided to try renting his house out rather than selling it. Sure, the market can fluctuate during that time should he decide against landlording, but it’s a risk he’s willing and able to take (key word: able).
5. I Learned More & Built More
Lazy people are the best, right? They think efficiently. I wouldn’t say I’m lazy, per se, but I definitely don’t like to spend time doing menial or pointless tasks. Neither do other successful business owners, which is why the Pareto principle is a thing! If you think spending time on whatever real estate task is too much, is there a way to bring that down so it’s tolerable? If it’s worth paying someone else to do it, can you delegate it to someone else? Do the numbers work on these properties you’re considering? Learn more before diving in, and take a calculated risk if you’re willing and able.
Once I started gaining more properties, my initial investment was paid back and profits were being rolled into new properties. I enjoy finding properties that give me a 30 percent ROI. That’s quite a bit more than the average of 7 percent over the stock market’s lifespan. I like being in control of the company’s decisions and installing environmentally-friendly showerheads and other low-flow appliances to save water.
I’m not saying that you absolutely should invest in real estate, but you definitely need to consider what you want from these investments and what you’re willing to do in order to reach your goals. You may have a bad experience here and there. It happens. And it has happened to me and many others. But for me, any time I need to do something real estate related, my average hourly rate is well above anything I’d make in another highly skilled job. I’m not working 40 hours a week, but I’ve cut my spending drastically (lower than Mr. Money Mustache even!) to a point where my properties can fund my way of life. That’s the dream I set out for myself, and as I sit at home during the day petting my dog and writing blog posts every now and then, I think I made the right choice.
What steps have you taken to lay the foundation for your real estate career?
Share them below!