Everyone has a beginning story to real estate - what is yours????
Cleveland, OH · Member since 2019 · 10 posts · 16 votes
Everyone has a beginning story to real estate - what is yours????
Most Popular Reply
Hi @Melanie Kent - For us, the concept was incredibly simple - spend less than you earn and invest the difference in cash flowing assets - but the execution required planning, patience and determination.
We spent years preparing to invest in real estate by always trying to grow that gap between our income and expenses. My wife and I had decent incomes, but there was definitely a limit to what these W2 jobs would pay us. However, there are so many things you can do on the expense side that a median US income is sufficient to save enough money for your first property in a few short years.
Your biggest expenses are housing, transportation and food. I highly recommend this site as well as all the personal finance blogs and podcasts out there for more on how to master these expenses. Housing is huge, and there are ways to house hack and live for free even when YOU are the one paying the rent. Just ask @Brandon Turner. Transportation is also very big, and Mr. Money Mustache has a blog about the economics of an automobile relative to your commuting distance to work. I believe @Scott Trench is pretty big on biking to work. If these things sound like big sacrifices, they are. Acquiring wealth is not easy, nothing worthwhile is.
It's also important to know that you don't necessarily need a huge pile of cash to start investing. I like to recommend house hacking a well priced 4-plex with a 3.5% down FHA loan to young people considering their first real estate investment. Great way to get your feet wet and kill your biggest expense.
You are right. Successful real estate investing does not require a degree. But it does require education. Listen to the podcasts, read books, network. Most importantly: take action, fail, and take action again - that's likely the one thing most of us have in common.
35 Replies
- 7yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
for me easy.. get a real estate license sell real estate and get paid to learn.. instead of what seems to be common these days with people that invest in their small business with no experience.. that's a pretty tough way to go about it.
I was young I got my license at 18 and was focused on making sales to earn income .. with this income I bought homes in the Bay Area.
Be surprised were working in the industry instead of on the fringes of it.. the benefits that come with networking with those actually doing deals.
The brokers are set up to assist their agents to succeed ( for free) were as with other types of real estate you have all these Gurus selling how to class that are short term and very low probability of success.. but real estate is hard in any niche.. most fail that's just a fact.
Hi @Melanie Kent - For us, the concept was incredibly simple - spend less than you earn and invest the difference in cash flowing assets - but the execution required planning, patience and determination.
We spent years preparing to invest in real estate by always trying to grow that gap between our income and expenses. My wife and I had decent incomes, but there was definitely a limit to what these W2 jobs would pay us. However, there are so many things you can do on the expense side that a median US income is sufficient to save enough money for your first property in a few short years.
Your biggest expenses are housing, transportation and food. I highly recommend this site as well as all the personal finance blogs and podcasts out there for more on how to master these expenses. Housing is huge, and there are ways to house hack and live for free even when YOU are the one paying the rent. Just ask @Brandon Turner. Transportation is also very big, and Mr. Money Mustache has a blog about the economics of an automobile relative to your commuting distance to work. I believe @Scott Trench is pretty big on biking to work. If these things sound like big sacrifices, they are. Acquiring wealth is not easy, nothing worthwhile is.
It's also important to know that you don't necessarily need a huge pile of cash to start investing. I like to recommend house hacking a well priced 4-plex with a 3.5% down FHA loan to young people considering their first real estate investment. Great way to get your feet wet and kill your biggest expense.
You are right. Successful real estate investing does not require a degree. But it does require education. Listen to the podcasts, read books, network. Most importantly: take action, fail, and take action again - that's likely the one thing most of us have in common.
- Cleveland, OH · Member since 2019 · 10 posts · 16 votes7y
Originally posted by @Mike Roy:
Hi @Melanie Kent - For us, the concept was incredibly simple - spend less than you earn and invest the difference in cash flowing assets - but the execution required planning, patience and determination.
We spent years preparing to invest in real estate by always trying to grow that gap between our income and expenses. My wife and I had decent incomes, but there was definitely a limit to what these W2 jobs would pay us. However, there are so many things you can do on the expense side that a median US income is sufficient to save enough money for your first property in a few short years.
Your biggest expenses are housing, transportation and food. I highly recommend this site as well as all the personal finance blogs and podcasts out there for more on how to master these expenses. Housing is huge, and there are ways to house hack and live for free even when YOU are the one paying the rent. Just ask @Brandon Turner. Transportation is also very big, and Mr. Money Mustache has a blog about the economics of an automobile relative to your commuting distance to work. I believe @Scott Trench is pretty big on biking to work. If these things sound like big sacrifices, they are. Acquiring wealth is not easy, nothing worthwhile is.
It's also important to know that you don't necessarily need a huge pile of cash to start investing. I like to recommend house hacking a well priced 4-plex with a 3.5% down FHA loan to young people considering their first real estate investment. Great way to get your feet wet and kill your biggest expense.
You are right. Successful real estate investing does not require a degree. But it does require education. Listen to the podcasts, read books, network. Most importantly: take action, fail, and take action again - that's likely the one thing most of us have in common.
WOW!! Thank you for sharing!!! It is refreshing to hear that there is and will be a light at the end of the tunnel. I been reading, researching and networking the last 4 years. I had a few distractions but for the last 6 or 7 months I have been on track. I have cut all unnecessary spending, started cleaning up debt and working side jobs to help. I am also huge on cutting expenses. I am a single parent of 3 well 2 kids if you don't count 18 yrs olds lol so it is hard and to know it doesn't happen overnight helps. Really appreciate you sharing!!
- Rental Property Investor · Orlando, FL · Member since 2015 · 353 posts · 269 votes7y
@Melanie Kent my wife and I wanted to start out buying our own place to live right out of college and getting married. We had the mindset that we didn’t want to be throwing money out the window paying rent to someone else. We found a starter home in a great area in 2016 and moved forward to purchase it. We knew we wanted to make it a rental one day so we made sure the numbers would work from that standpoint. We still live in it (househacking one bedroom to a friend of mine), but it would be a great performing rental if we decided to move. The rental metrics have improved even further in the past few years. The mortgage payment we have is low, much lower than if we were renting somewhere comparable. We have also seen a lot of appreciation with the area becoming better and a hot residential area in Orlando.
We would go on to acquire 4 more rental properties (6 doors) in the next 2.5 years. This has largely been possible because we save roughly one of our two incomes for investing in real estate. Each rental has kicked a bit more into our savings rate each month. We have also increased our W2 incomes quite a bit since we were new in our careers. For the most part, we have been able to avoid lifestyle inflation and keep our cost of living low.
- Rental Property Investor · Levittown, PA · Member since 2016 · 109 posts · 97 votes7y
@Melanie Kent congratulations on taking the steps to get closer to your first real estate investment.
I personally find House Hacking (renting out units) to be a very effective way for beginners to get into the game. If you are able to get a multi-family unit and live in one as an owner occupant, you will have the benefit of little money down and also the beauty of an income producing asset on your primary residence. This can allow you to save money on living expenses while also saving money for your next opportunity.
I used house hacking and the BRRR (buy, rent, refinance, repeat) strategies to help get me started with little money.
I would suggest digging into properties that you're interested in within your market. Put together the numbers and start determining what could be a great deal. BP has calculators to help.
Best of luck!
- Specialist · Huntsville, UT · Member since 2015 · 458 posts · 249 votes7y
Even though my first deals were wholesaling deals because they required no money to start out, my first real experience in real estate was building a house.
When I met my husband and moved in with him 25 years ago, he lived in a tiny 500 sq ft, 1 bedroom house he was renting. It was ok for just the 2 of us, but then after we had kids and his mom moved in with us it was unbearable.
Luckily by then, a house cleaning business I had started shortly after moving in with him had grown into a large enough business that allowed us to build a house. We were literally starving for space so we decided to go big.
We found the lot we wanted, 40 acres with a spectacular panoramic view and no neighbors for $100k. The problem was that the secluded canyon the property was in had no phones or utilities and the entry to the property was a steep cliff!
Everyone we talked to everywhere we went said it would be impossible to build a house there.
The realtor said the owner would never accept our intended offer of $70k. The loan officer said we wouldn't qualify for a construction loan. The planning commission said we wouldn't pass a perc test for a septic tank or be able to find water drilling a well because others had failed or be able to get utilities up that canyon or be able to cut a driveway through that cliff. And worst of all they said they wouldn't give us a building permit.
But we are the kind of people who don't take no for an answer because we know that if you are creative enough, there is always a way and we were determined to find it. So we started chipping away at every obstacle.
It took about 6 months but we did end up overcoming all of it. The owner did accept our offer after several negotiations. We did qualify for the loan. We did get a perc test to pass. We did find an excavator who said he could cut that driveway. We did drill a well and after a few tries coming up dry, we tapped into a gushing underground river! We did finally get the building permit and we built a 7,500 sq ft house that we designed ourselves to quench our thirst for space.
That was our first taste of real estate and it turned out to be a great experience because we didn't give up.
A few years later, after I sold the house cleaning business, I tried my hand at wholesaling and then later various other strategies with my sister who is now my partner in our online comps service. And we've had fun with real estate ever since.
It just goes to show what you can accomplish if you are determined to do it. So don't take no for an answer. Find creative solutions instead.
- Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes7y
@Melanie Kent. I save 40-50 percent of my after tax income. Everything I’ve done to this point, started with that 3 years ago. I don’t see that changing anytime soon. If anything it’ll probably just go up.
From there I just learned on BP, listened to podcasts and networked. At this point, I have people who come to me for advice. I can’t always help them, but I can just tell them what I’ve done and what has worked and what hasn’t for me.
- Specialist · Huntsville, UT · Member since 2015 · 458 posts · 249 votes7y
@Melanie Kent Thanks for following me Melanie. It's great to meet you here on BiggerPockets.
- Investor · USA · Member since 2015 · 325 posts · 447 votes7y
@Melanie Kent
I started out by swinging a hammer on my dads rentals at 14. My dad paid .50/ hour but would take me out to lunch everyday and tell me about investing in real estate. By the time I was 18 it was all I could think about. I bought my first property with him at 18 and never looked back. That was my one and only partnership I have ever had.
Not everyone has a landlord dad. You can find people who are already doing what you want to do. Take them out to lunch. Live the way they live, try to replicate. I have taken that approach with multi family. One of my buddies owns apartments and has taught me tons.
Just like anything else. It’s super hard in the beginning. Then it gets easier.
- Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes7y
Tired of the cubicle in Denver and wanted to move back to the NW, closer to extended family.
I'd always been interested in freedom and residual (now passive) income.
Found a smaller town in WA where the rent/price ratios made sense at the time.
Bought a doublewide for $14k and lived in a trailer park ($240/mo) for 5 years while we saved and built our portfolio.
Nothing worthwhile is easy...
- Rental Property Investor · Lenexa, KS · Member since 2017 · 76 posts · 63 votes7y
I knocked on the door of a vacant A class property. A neighbor came out and provided the contact information of the grandchildren. I bought the house for 45K and didn't own any tools. I fixed it up and leased it for $1450 - I was hooked. The property appraised for 190K.
- Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes7y
@Steve Vaughan. I gotta ask, how’d you get the custom title by your name?
10X napper I love it. What age did you officially “retire”? Not sure if you’d even call it that. I’m shooting for 45 myself, or thereabouts
- Investor · Wichita, KS · Member since 2017 · 584 posts · 813 votes7y
I got my real estate license the year of the Great Recession as a senior in college. Never sold a ton in the 5 years I had a license (a few deals a year maybe) but what I did do was pour over the mls while sitting for people to walk in daily (they never did). I searched high to low and low to high. I realized real estate is not expensive on the low end, that was a game changer. I let the license go and moved back to my home city because the college town I lived in had way too many educated people willing to work for $10 an hour. I worked a couple crappy jobs until landing with the electric utility about 3 years later. My wife had to live in an A area, my parents pushed that too since we had a child, we bought our first home. Two years later we saved 8k and borrowed on my 401k to buy a rental property in a rough area, we rented Section 8. I started getting creative after that. Borrowed some equity from our primary on a heloc. Used lines of credit from Home Depot and Lowe’s. Played around with 401k even more, used rental income, drastically cut spending. 5 units later (mostly single family homes) and pushing hard as ever.
I've known I wanted to buy a 2 family and have the other person pay my mortgage for quite some time. In the year 2016 I got fed up with renting because the second rent increase was substantially more than it was in the prior year. So I started searching for a house and just knew I was going to be moving when my lease was up....that didn't go as planned so I contacted my property management company and put myself on a month to month lease while I continued the search. In the year 2017 I closed on my first property and didn't find biggerpockets until a year later and found out I didn't buy right but it's cool. I was able to pay for the down payment because I've been paying myself ever since I was a freshman in college and borrowed a bit from my 401k.
- Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes7y
Originally posted by @Caleb Heimsoth:
@Steve Vaughan. I gotta ask, how’d you get the custom title by your name?
10X napper I love it. What age did you officially “retire”? Not sure if you’d even call it that. I’m shooting for 45 myself, or thereabouts
Thanks, Caleb. Out of the blue the BP brass offered me an individual title. Maybe for people that spend way too much time on here. LOL
I semi-retired at 31. Haven't had a w-2 since '02. Gettin' old!
- Rental Property Investor · Torrance, CA · Member since 2016 · 724 posts · 1k+ votes7y
@Mike Roy I like your response. I believe the first step to financial freedom isn’t any piece of knowledge or skill. It’s getting your finances in order, and building healthy money habits. If someone can’t figure out how to save money there is no point of trying to achieve anything. It is the foundation of wealth.
- Lewisville, TX · Member since 2015 · 344 posts · 264 votes7y
I leveraged a lawn business & some retirement accounts to house hack a class a single family a mile from campus at 18 with roommates. Had a roommate who did contracting & bought & fixed up more. After college self managed, networked a lot in Big D (Dallas) & managed the properties remotely. Eventually hired & fired a property manager after interviewing 3. The service started off good & later declined as guy was overworked with 800 campus properties & his high school daughter doing accounting & statements. Eventually sold them all to my brother for a county filing fee of like $30 & started trying to master the syndication game. Today I’m an LP in 7 deals & co-own 2 companies. We do everything from owner finance to apartments to our big focus this year which is mobile home parks. Took a lot to find a partner & meet that first minimum but now it’s all worthwhile.
- Real Estate Broker · Bay Area · Member since 2018 · 1k+ posts · 3k+ votes7y
Read Rich Dad Poor Dad in college and open up my mind to investing in real estate. Worked at the restaurant waiting tables to pay for my first investment property. It wasn't easy and it was a lot of work, I always stayed late taking on extra tables. I already knew in my mind I had to make it work.
- Real Estate Agent · Renton, WA · Member since 2017 · 204 posts · 151 votes7y
@Melanie Kent when I was single I moved up from the Bay Area afrer being laid off to Seattle, and was staying with my sister for a few months. I knew I didn't want to waste my money on rent so without a job I bought a bank own property using my severance money (back in the days it was easier to get a loan) I renovated my self learned as I went along mostly costmetics stuff. I rented out all the spare rooms paying 2/3 of my mortgage. I took the equity and rolled it over to another property a year later and did that until I accummulated over 10 rentals. Keep in mind it's not all roses I've learned many lessons along the way and am in the process of rebuilding my porfolio again. Happy Investing!
- Real Estate Agent · West Hartford, CT · Member since 2016 · 449 posts · 476 votes7y
@Melanie Kent bought my first duplex at 23- and house hacked (2017). Friends thought I was dumb/stupid and throwing away my money. Saved though my W2 job, read a ton, learned a lot, asked questions, networked all of 2018. Closed on my second duplex (Jan 2019), plan to close in April first on my first BRRR (3rd duplex).
House hacking has 100% been the best way to grow and save my income. Network and read like crazy, and just take action. I've learned more by doing than any 4 years of college undergrad has taught.
Originally posted by @Account Closed:
@Mike Roy I like your response. I believe the first step to financial freedom isn’t any piece of knowledge or skill. It’s getting your finances in order, and building healthy money habits. If someone can’t figure out how to save money there is no point of trying to achieve anything. It is the foundation of wealth.
Account Closed Thanks very much!
- Real Estate Broker · Cleveland, OH · Member since 2017 · 719 posts · 658 votes7y
Originally posted by @Melanie Kent:
In real estate the hardest part appears to be the beginning. The first deal, the first sale, buy, flip, hold, mistake, approval, and so forth.... As a beginner, I am learning that even though this game doesn't require a degree, it still requires a resume. To start from the bottom, with a 9-5 to financial freedom one thing everyone has in common is how they started out.
What are some of the things you did to save money, find a deal and get approved for financing etc?
Everyone started somewhere right?
If anyone doesn't mind to share....would love to hear!!!
It's not always 9-5 jobs to financial freedom.
I'm only 15 years in this country and as soon as I've got my SSN, I started working on my credit - open my first secured credit card. I'm still not fundable by conventional ways (DTI, type of properties etc) but I know people who trust me and it's much easier now than when from start I was buying properties only with credit cards.
Now, it's HELOC, credit cards, private money. Didn't try HML $$ - you pay arm and leg for these. My highest is 5.75% on my HELOC, so I try to keep it low and only use when I need POF to buy next property.
There are plenty of resources online to educate myself and I do it 24/7......when I'm not sleeping...lol
Feel free to PM me if you want to talk. I started with no W-2 jobs, savings from $3.65/h job, no savings from previous life and with teen daughter. Now it's much better and getting even easier with each year.
@Melanie Kent - It doesn't happen overnight, and I imagine it is incredibly difficult as a single parent. The fact that you're here is an awesome start. If it were me starting from scratch in your position, I would try to get the big things in my life structured to my advantage and not worry so much about the small things.
Cutting out a morning coffee will save you $1,000 per year, but you'd have to do that for 25-50 years to save enough money for a down payment on a rental property. I say, have your coffee and enjoy it!
I would focus very heavily on housing, childcare, food and transportation. Even if this meant moving back in with family for a couple of years to save money that I would eventually use to purchase a 3 or 4 unit to house hack, I'd do it. I'm not sure if you're in a position to do this or not, but I do know that living for free with family for two years can save you $20k - $40k depending on your market, plenty for an FHA down payment on a small multifamily.
Once I got my housing in order, I would try to find a good job as close to my housing as possible. If I could find something that enabled me to work from home, I would do that. Short of that, I would try to get a job I could at least bike to. Side hustles are okay if you can earn decent money, but I would also keep in mind that working 80 hours a week may get me to financial freedom faster, but it also represents family time that I can never get back.
You didn't mention if your kids are in school yet, but I would offer money to family or friends to watch the kids while I worked if I needed daycare, something much cheaper than a daycare center. Heck, maybe I would start a daycare center and bring my kids to work with me.
Next, I would tackle my grocery spending by planning my meals a week in advance and shop one time. If you live in an area where you can do this online, it prevents a lot of spontaneous purchases that come with kids asking for everything they see (I was a kid once, I know...)
I would also focus on eliminating high-interest consumer debt. All of my savings would go to that before putting money away for a rental property. Paying off a 20% credit card provides some of the best returns you'll every see.
Finally, I'd remind myself that I'm only 10 years away from financial freedom. There are so many stories of people going from $100k in debt to millionaire status in this time frame simply by executing these fundamentals. If you want it bad enough and are willing to do what it takes, you'll get there!
- Cleveland, OH · Member since 2019 · 10 posts · 16 votes7y
Originally posted by @Mike Roy:
@Melanie Kent - It doesn't happen overnight, and I imagine it is incredibly difficult as a single parent. The fact that you're here is an awesome start. If it were me starting from scratch in your position, I would try to get the big things in my life structured to my advantage and not worry so much about the small things.
Cutting out a morning coffee will save you $1,000 per year, but you'd have to do that for 25-50 years to save enough money for a down payment on a rental property. I say, have your coffee and enjoy it!
I would focus very heavily on housing, childcare, food and transportation. Even if this meant moving back in with family for a couple of years to save money that I would eventually use to purchase a 3 or 4 unit to house hack, I'd do it. I'm not sure if you're in a position to do this or not, but I do know that living for free with family for two years can save you $20k - $40k depending on your market, plenty for an FHA down payment on a small multifamily.
Once I got my housing in order, I would try to find a good job as close to my housing as possible. If I could find something that enabled me to work from home, I would do that. Short of that, I would try to get a job I could at least bike to. Side hustles are okay if you can earn decent money, but I would also keep in mind that working 80 hours a week may get me to financial freedom faster, but it also represents family time that I can never get back.
You didn't mention if your kids are in school yet, but I would offer money to family or friends to watch the kids while I worked if I needed daycare, something much cheaper than a daycare center. Heck, maybe I would start a daycare center and bring my kids to work with me.
Next, I would tackle my grocery spending by planning my meals a week in advance and shop one time. If you live in an area where you can do this online, it prevents a lot of spontaneous purchases that come with kids asking for everything they see (I was a kid once, I know...)
I would also focus on eliminating high-interest consumer debt. All of my savings would go to that before putting money away for a rental property. Paying off a 20% credit card provides some of the best returns you'll every see.
Finally, I'd remind myself that I'm only 10 years away from financial freedom. There are so many stories of people going from $100k in debt to millionaire status in this time frame simply by executing these fundamentals. If you want it bad enough and are willing to do what it takes, you'll get there!
Thanks for taking the time out to provide guidance. It's a little late to house hack but I did buy my first home conventional with only using 1K out of pocket at 3.6% interest and it came out cheaper than renting. I may have built some equity here I am looking into that now. I am not able to stay with family. However, I do work from home full time (worked very hard at my company for this privilege) & I have been able to cut the daycare cost & be more flexible. I cut my bills pretty low that I can cover them all under 1 paycheck (I just got this far). I been doing delivery on the side making like $350 a week on average. Possibly a few more hustles where I can make hopefully double that to use all towards debt and investment savings on top of the 401K hack and money from my job. I can also take my kids with me they love going for rides so that's a plus. I wake up everyday write goals and replay the plan or adjust as needed.
My thing is I am SOOO hungry for real estate investing and passive income. Esp after rich dad poor dad lol. I always wanted passive income but ended up choosing a career thinking that was the way to go in America - WRONG lol. I have a very strong desire for passive income because I am a single mom - I think..... how can I make money while I wrestle on the living room floor with my toddler. We always have to kill 2 birds with one stone.
What helps me is to see all the sacrificing you guys have done to get where you need to be. My friends are not into this type of stuff they all think I'm nuts. So it really is refreshing to know I am not the only one sacrificing to make my dreams come true. I am 35 - my kids are 18, 12 and 2. I do not miss a beat with my family but I miss a lot of beats with friends, gatherings etc....They are on vacations I am working/saving....etc.
It really helps to see how everyone that shared has a unique story in how they got started. I really admire everyone on here. I really really enjoy hearing these stories it helps in so many ways :)
Thanks for sharing!!
- Developer · Cincinnati, OH · Member since 2018 · 1k+ posts · 3k+ votes7y
Originally posted by @Melanie Kent:
In real estate the hardest part appears to be the beginning. The first deal, the first sale, buy, flip, hold, mistake, approval, and so forth.... As a beginner, I am learning that even though this game doesn't require a degree, it still requires a resume. To start from the bottom, with a 9-5 to financial freedom one thing everyone has in common is how they started out.
What are some of the things you did to save money, find a deal and get approved for financing etc?
Everyone started somewhere right?
If anyone doesn't mind to share....would love to hear!!!
Great question.
For me, I started out with a duplex . Then I became bankrupt and lost it all.
But didn't give up. Learned the lessons, licked my wounds and moved on.
In the course of doing deals again, I was blessed to have found a partner who is more adept at construction and construction management than I am.
This allowed me to focus on raising capital and negotiating deals and building a team.
The result? I have acquired over 1,000 apartment units.
I will reveal the details on how I did it in a separate post.
But here's a sample of what I've done: (summarized it here on BP)
Turned around a Problem 48-unit Building and Then Sold it for over a $1M Profit!
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