Real Estate Investing Basics

I Desperately Wish I Knew THIS Before Investing in Real Estate

Expertise: Real Estate Investing Basics, Personal Development, Landlording & Rental Properties, Real Estate News & Commentary, Business Management, Flipping Houses, Real Estate Deal Analysis & Advice, Personal Finance, Real Estate Marketing
247 Articles Written
Small model home on green grass with sunlight abstract background. Vintage tone filter effect color style.

Looking back, everything is so clear, right?

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Let’s talk about the number one thing I wish I knew before I started investing in real estate. Here we go.

Guys, I think it's very important that you know exactly what you want from investing in real estate before you ever start. What I mean by that is, why are you actually doing it?

What Do You Want From Investing in Real Estate?

I’m going to make an assumption and say that it’s passive income and financial freedom. That is what most investors are usually looking for. Then, my next question is how much passive income do you need to live the life that you want to live? How much is enough?

Once you have estimated these things, then you can start your real estate investment journey. Then, you can go down a path where every transaction that you do can get you a step closer to achieving your goals or financial freedom through passive income.

When I started my journey, I made a lot of mistakes. Like we all do, right? You don’t know what you’re doing, or how you’re doing it. And you don’t really know why you’re doing it!

So, you make mistakes. But eventually, you figure things out. For example, I was accumulating a lot of properties without having a purpose for doing it. I guess it was cool when I was 21 or 22 years old and started investing to call myself a “real estate investor.” Even though I had a lot of quantity in my portfolio with all of these assets, they weren’t making me that much money. What I did was just a mistake.

Once again, I think it’s very important to figure out these things before you begin on your investment journey.

So, the number one thing that I wish I knew before I started my real estate investment journey was how much of a monster it would actually become. Like a lot of you out there, it started off in a pretty simple way: Find a house, fix it, sell it, or hold it—and keep doing that over and over again. Keep doing that until I reach a certain point from a passive income standpoint.

Close up of woman hands making frame gesture with sunlight outdoors

Well, as with anything in business, you kind of get sucked into the wonderful world of real estate. One thing leads to another. Then before you know it, you hire your first person, then you hire another one, then you have five people. Then, you have to set up in-house property management because you want to keep the customer in the entire cycle of the business operation.

All of a sudden, you have property management, and then you want to have a real estate brokerage and agents to help with the sales of some of these homes. Then, you start having a maintenance company and a construction crew. The monster starts to have a lot of heads, and it’s very hard to tame a monster.

I got carried away a couple of years ago, where we started building a very big monster with a lot of heads. Luckily, we were very quick to nip that in the bud and hold our horses—because it wasn’t fun anymore. It was overwhelming; then, we became burnt out. And that’s not why you ultimately invest in real estate.

It’s supposed to make your life happier, easier, and better. That’s why it’s very important that you know up front exactly what you’re getting yourself into. Why are you starting your journey, and how much is enough? How much do you need?

The Bottom Line

There is a beautiful saying out there: “Less is more.” Focus on your needs, and forget about your wants.

When you think about it, as human beings, we don’t really need that much. We need food, shelter, a bed, a good night’s sleep, family, and love. We don’t really need a fancy car, a mansion, a boat, or a holiday home… right?

So, some things to consider (coming from someone who’s had it all and done a lot of deals) are: if I could turn back time, I would be a little more controlled in my growth aspirations. I would not create a conglomerate company with so many moving parts. I wouldn’t expand into another market. A lot of these things were not necessary.

We’re in a good place now. We’re in one market. We’re limited to how much business we want to do, and things are pretty good now.

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Do you have any questions for me about this advice?

Leave your comments and questions below!

Engelo Rumora, a.k.a."the Real Estate Dingo," quit school at the age of 14 and played professional soccer at the age of 18. From there, he began to invest in real estate. He now owns real estate al...
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    Mark JOhnson Investor
    Replied about 1 year ago
    I fight with growth and expanding into related markets all the time. Each company much run separately and independently. With that, you can always sell that entity if needed. Great article and not one that is often talked about.
    Engelo Rumora Specialist from Toledo, OH
    Replied about 1 year ago
    Thanks for your comment Mark, I wish you continued success.
    Kevin McGuire Rental Property Investor from Seattle, WA
    Replied about 1 year ago
    Great post Engelo. I have a busy day job which isn’t real estate and that’s forced me to keep these two goals in mind: 1: Passive income. 2: Design for scale ahead of need. In the first case, it has to be truly passive, the less work the better; my vision is in the future I’ll be sitting on a beach somewhere and money just shows up in my account. Designing for scale supports the first goal; I’ve tried to put systems in place which could scale to 3x my business, not because I intend to 3x it, but to create resiliency in the system.
    Engelo Rumora Specialist from Toledo, OH
    Replied about 1 year ago
    Thanks Kevin, Keep the dream alive mate
    Barry H. Investor from Scottsdale, AZ
    Replied about 1 year ago
    Excellent short article to get a newbie or intermediate RE investor focused. I love the quoted "saying:" “...Less is more.” Focus on your needs, and forget about your wants...." Though I did not dive deep as quickly as Engelo, because I follow a cash purchase only model, I did not find myself dreading my days and the machine / monster I had created for awhile. It was a slower build - but because cash only buys Class C/D properties, the acquisition / rehab and managing of only 4-6 properties became equally as frustrating. BUT.....to the point of the "saying," as I was managing the monster, I was also becoming a minimalist, trying to match my NEEDS to my cashflow so I could give the middle finger to the "Man." I flipped off the "Man" after 4 years, living comfortably off $2K / Mo "Net" income and choosing to go without health insurance or applying for Medicaid if I really needed it. With a $20/Mo gym membership and living in a brand new 200SF fully furnished add on to one or my rentals with complete privacy (2 people could live in it as well), I found that freedom and working as an option became a dream reality. Dreaming is a critical part of the Real Estate investment journey, but having short and mid term goals with cushions is even more critical. Combine that with a concerted effort to live below your means and you will get there - and learn a lot along the way . :-)
    Engelo Rumora Specialist from Toledo, OH
    Replied about 1 year ago
    Thanks for the great comment Barry, I figured the "less is more" philosophy the hard way hehe I've been in the process of selling all of my $#@$ that I've accumulated over the years and living the minimalist life. It makes life so much clearer and easier and allows one to focus on personal growth. Personal growth from a spiritual, physical and intellectual way and not just a making money way. Much success mate
    Wenda Kennedy JD from Nikiski, Alaska
    Replied about 1 year ago
    Your story sounds SO familiar. Your right. More is not always better. Elegantly simple is more than a goal. It will save your sanity and your pocketbook.
    Dale Rhoades
    Replied about 1 year ago
    Thanks for the article. I have put myself in a point to make or break. So the end goal is when I focus on my needs the rest will fall into the mix and my accomplishments will succeed. I've stood on the side lines with fear to step out there. I stepped out there and put myself into debt. The properties I've carried for a year are now in a emerging maket. I was in Daytona in 2015 and paid attention to the market and surroundings, then I was in St Petersburg in 2016 and seen the same trend in the market there, and how it responded. I'm in Magazine Arkansas now and the same trend has cycled through here. In my opinion wholesaling is a joke. And end buyers are the real buyers to seek out not other investors. I don't network, because I know real estate is the same as construction industry, it's a cut throat world. The locals and most investors use deceitful tactics to shut out newbies, so that they can control the marker area and the inventory. So to me the end buyer is what I seek,
    Shaun Stephens Investor from Chillicothe, OH
    Replied about 1 year ago
    I've gotta say I wholeheartedly disagree with part of your comment. I spend a ton of time(along with many of my colleagues) developing new investors. There's so much opportunity out there that is untapped, more than enough to go around. I run our local REIA and it's all about helping add new faces to our group! When I got started, a few older investors helped me along and offered private money loans and informal coaching. They made a ton of money off of me, and i've done pretty well myself from it. So now that i'm a little farther along i'm looking for my opportunity to do the same. I want to teach someone to go out and do all the hard work that i've done, and hopefully make some mutually beneficial relationships in the process!
    Ed Uyesugi
    Replied about 1 year ago
    Engelo. Thank you so much for the article. This is so refreshing to hear. I'm in Ohio investing. Christ changed my life during the middle of 8 flips going on simultaneously that a partner and I were doing in another state. Though i worked very very hard, My personal life was spinning out of control and i got burnt out and was very unhappy. I was on 5th avenue in Columbus and prayed a simple prayer to God through Jesus Christ. Suddenly, peace came and replaced the depression and I experienced a joy that's indescribable. I strive to not do it for the money anymore but the glory of God
    Adrian Ayub
    Replied about 1 year ago
    Thanks alot Engelo, As a 22 year old long distance investor I got overzealous with wanting to scale into different facets of the business and now that I have sold some properties off and lazer beamed my focus to the activities that bring me energy Im much more fresh and motivated.
    Allyson Edwards Rental Property Investor from Goleta, CA
    Replied about 1 year ago
    Great post Engelo. Excellent advice coming from the dingo of RE. I've learned in the 2 years I've been investing to slow down and enjoy the journey and not compare myself to others who are scaling too quickly creating another full time monster.
    Shaun Stephens Investor from Chillicothe, OH
    Replied about 1 year ago
    Engelo, I'm in a similar situation, also in Ohio (Chilicothe to be exact). I am up to about 78 doors, and several flips at a time, mostly sfr, or small multis. I've been buying and building a team of contractors, agents, property management, etc. I love what I do, but I ask myself on a regular basis, when do I stop? When is enough, enough? 15 or 20 nice homes paid off would support a very nice lifestyle. But then what would I do with my day to day? So far i've been keeping my nose down and doing what i'm good at, but it sounds like you'd have preferred to stop before getting burned out. Suggestions?
    Robert Heydenreich
    Replied about 1 year ago
    True words of wisdom, we really need to focus on the smaller thing first. Thanks for the advice!
    Philip Jansen Rental Property Investor from Lubbock, TX
    Replied 12 months ago
    Engelo I’m new to BiggerPockets but I’m pretty seasoned in the business department. I’ve began building service contracting company when I was still a junior in high school and built that company into something I’m quite proud of. It’s very systems based (we currently employ about 170 people) and the best thing is I really own my time. I’m not completely divorced from what is going on in the company as I find it important to not ignore maintaining the Golden goose so to say. That being said I’m quite eager for a new challenge and I’m working on a strategy for that. I like everything that I’ve been reading from you as it seems to make solid business since from what I know. Currently my plan is to stay local as I really have built a good network here. Also I don’t want to over leverage either. I definitely have some of my own capitol (approx 150 to 200 k). But I would like to work out strategies that would allow me to keep that capitol preserved and liquid and try not to tie all of that up in 6 or 7 properties... I’d eventually like to scale this venture into something short of an empire for sure .. but building teams and working with people is definitely in my wheelhouse .... so not actually even posting a question ... I just identified with your articles and also in the fact that I, like you never attended a day of college or university and have actually never regretted it. (Although i’m a rabid believer in self education!). Thanks again for your articles