Language used to describe Investment levels

1 Reply

Being fairly new to real estate investing I have an odd question...

Are there certain terms or jargon used to describe the steps/levels/scenarios below?

1. Paying for your own mortgage on primary residence and your own living expenses.

2. Owning a rental/s that pay for themselves but still paying your primary residence mortgage and living expenses.

3. Rentals pay for themselves and your primary residence mortgage but not enough to pay your living expenses.

4. Rentals pay all expenses making you even steven.

5. Rentals pay everything and put money in your pocket.

6. All properties paid off and all money coming in is passive income.

How do you describe where you are in this process? Are there certain terms used to describe where you are in your investing journey?

@Mike Young I hope to answer as best I can based on my many years experience as an investor/realtor:

1. Paying for your own mortgage on primary residence and your own living expenses.

You have a J.O.B. (Just Over Broke) and are in the 65.8% of all Americans that own a home. 

2. Owning a rental/s that pay for themselves but still paying your primary residence mortgage and living expenses.

Congrats, your a REI (Real Estate Investor) and own a Buy & Hold Property (an exit strategy term you need to know). 67% of all REI's own only investment property. Mostly because of an inheritance or relocation and couldn't sell the property.

3. Rentals pay for themselves and your primary residence mortgage but not enough to pay your living expenses.

Congrats, your still REI. Hope you get to 2 buy & hold (rentals) properties. Then your in rarefied air. of the 33% of all investors that own more than one door.

4. Rentals pay all expenses making you even steven.

Your still an REI, but a smarter one.....

5. Rentals pay everything and put money in your pocket.

Your goal per investment property. Yes, your still an REI.

6. All properties paid off and all money coming in is passive income.

Congrats, your still an REI. But you have reached the ultimate goal of financial freedom and you can quit your J.O.B. This is what we all strive for. So go and get debt free. Drive a beat up used vehicle (2006 Ford F-150) because it still gets you from point A to B, and keep buying rentals. Because just like the Lays potato chips you can't have just one.

But in seriousness if your worried about the jargon join a local REI club, and check out more content on BP. You will get the lingo in no time.