There are so many positive stories about people starting their investment careers on here and online that aren't painting a completely accurate picture.
Most people are living paycheck to paycheck. The statistics on people even having a savings account, let alone 10-20k to put into real estate, are abysmal at best. Most people don't have a parent that can lend them the money either. And if there is a relative or friend with that money willing to take that kind of risk you need to be able to sit on that money long enough so the bank doesn't question it and then be able to find the right deal for it after that. The stories of college kids buying houses is great, but let's not pretend you made that money working in the student book store. And if so how?! My point is there's a big piece missing from these "rags to riches" stories.
I think it'd be much more helpful to share how folks honestly and actually got to a point where they could make that first decision. Did your parents help? Was college free? Did you work three jobs and save for 2 years? Were your job earnings large to start with? How did you actually get there?
It's all about the Hustle. I believe that's why so many folks use the house hacking strategy to get started. Most Americans have the ability to qualify for some type of a low money down loan (USDA, VA, or FHA), which makes getting into their first property as an owner-occ and then converting to a rental pretty easy. I spent a year in Iraq to make the cash to get started in Real Estate; it sucked being away from family, but if you want it, you will find a way.
You spent a year in Iraq and saved up. That's what I'm saying. Wow that's amazing.
I feel like folks gloss over that fact too much. The word hustle gets thrown around too much. Sacrifice and patience need to be included in that hustle statement as well.
I have by no means created any wealth yet, but I have gotten started. We moved to a rural town in Az from Austin Texas in 2014. I was not thrilled but agreed to be closer to my husband's family in Vegas without actually moving to Vegas.
We purchased our first home using all of our retirement money. We rolled it over to an IRA to avoid being penalized.
Realized life in rural Az on one income was not possible because of the horrible pay. We were going to stick it out but my health crashed. I couldn't dress myself due to severe pain and swelling in every joint. We planned to move to Phoenix to be near my holistic doctor and for better pay. I am doing way better. Thanks to ozone and chelation therapy (health plug).
We decided to rent our home in Az, which lead me to BP, while doing research. I was hooked and reading real estate books and staying up all night on BP. I got idealistic and wanted to hustle big time but with three small children, I am not there yet. I have my plans that work for my family and lifestyle to keep us purchasing.
We refinanced our home and pulled out about 30% of our equity for new multi-family purchase. Closing in two weeks. We took what we had and decided to use it to create a business instead of allowing it just
sit there, hoping it would be enough one day. My personal retirement would have not been much in the long run, as I have chosen to stay home with my kids.
Now, I can be home and help my family create wealth, as oppose to just the small side jobs I use to do to get by.
I'm 26. I have a primary residence, that my wife and I live in, and a duplex that we rent out. We got to the point we are now through a ton of hard work, and a little bit of luck. I got my first job when I was 11, as a paperboy, and have never been unemployed since. I was able to save up a good chunk of money by delivering papers, washing dishes once I turned 14, working as a crewmember at Wendy's for 3 years, and then cleaning operating rooms for the last year of high school, and all throughout college. I then had trouble getting a decent job out of college, which led me to pursue going into real estate as an agent/investor. I realized I didn't want to be stuck in an office for the rest of my life, and was willing to do whatever it took to make real estate work. The last 2 years have been great to me, and I feel blessed everyday to be where I am.
Heres where luck comes in. My parents paid for my education. This was a huge weight off my shoulder, as having what is essentially a mortgage (student loans) is a huge hindrance to investing in real estate. Its a large payment, and it messes up your debt/income ratio. I am also very lucky to be married to my highschool sweetheart, who now works in Big Pharma. Now that we have one investment property, 2 good incomes, and no debt, our investing portfolio should hpefully become considerably larger than it is now in the next couple years.
The biggest problem I find that most people face is managing their expenses. Most families spend way too much money going out to eat, buying new cars, going on vacations etc. I have not been on a vacation in 2 years, I go out to eat maybe once a month (I cook all my meals), and I drive a 2004 Toyota Corolla. I know that my wife and I make more money than a lot of people, but honestly anyone can save up if they manage their expenses.
Amen to managing expenses. My last vacation was our honeymoon 3 years ago. I drive a 2001 Toyota Tacoma that I have hit many deer with.
We now have 4 SFHs and closing on another in next week or so. Our friends all say they wish they could buy real estate but they also drive new vehicles and go on vacation all the time, so naturally, "they can't afford it."
My process to starting REI was pretty simple. I graduated college in may of last year, got a good job, and started saving. Read about REI casually over the next 8 months or so and then got serious and ended up listening to all the BP podcasts. Got my first property under contract in April, closed on that and am now onto my second. Rinse and repeat until I'm at 5 or 6 properties. That's my short term goal, and then just go from there.
I appreciate this thread and the purpose behind it. I haven't started my investment yet, but am eager to read more of these kinds of stories.
Kudos to you for posting this because you are SO on-point. So many podcasts with rags to riches stories.. but they never tell you the whole story. So thank YOU for being real. That is a rare trait these days. A glimpse into my story-- zero money. Racked up a credit card learning about real estate from a guru. A friend of mine did the same. He found a deal, wholesaled it to me. I had no money. I went to an investor I knew that was flipping in my area and asked him if he would joint venture with me and split profit. He agreed. He brought the money, we brought the deal. Made 20k each. Took that money, paid off some debt and put some aside. Found another deal, did another joint venture with a money partner. Paid off some debt and put some aside. Worked full time for years upon years while learning and getting a marketing machine up and running. My full time job paid my bills, my flipping paid off debt and allowed me to set money aside to have "skin in the game" for HML and PML. Once I was flipping 3-5 houses a year (3 was enough to replace my full time income) for 3 years in a row, I "retired" from my job to flip full time and buy rentals full time. BUT... my husband is also a realtor, so we have income from that too. AND.. now we are both self employed... with no health insurance.. bc despite being healthy it is more expensive than my mortgage payment on my house... LOL! I bring that up because people are also so pumped up about leaving their W2 jobs.. and I like to let them know.. that's great.. just know that once you do, you don't fit into anyone's box. Not the government for health insurance, not your bank, no one. So BE PREPARED to show you have been flipping for several years before bailing out so you can do things like cash out refinances on rental properties, etc.
I don't think it's cheating or "skipping a step" to find out that someone got started by working and saving for a down payment on property #1 and worked it from there.
I worked hard at my "real" job. Did well. And lived super modestly. Used those funds to help buy a small 8 unit. Sold it for a profit and bought a bigger one. Kept doing that.
10 years later: 1000 units
Zero of what I did was anything that anyone else couldn't do. Just a lot of hard work and risk tolerance.
I worked dam hard all my life starting at age 13 working on a farm 48 hours a week for 50 cents an hr. all summer. My fist full time job at 21 paid $3/hour and I saved every penny I could. I worked every hour of overtime I could get. I lived a very frugal life style and invested every spare penny. No help from others. Credit cards were only used if I had the cash to pay them off every month.
You are correct in suggesting many people live pay check to pay check today. They do it by choice, totally self inflicted. They live beyond their means wasting money on unnecessary luxuries.. Cell phones, cable TV, restaurants, car payments, lottery tickets and booze...all irresponsible luxury expenses.
Stayed with my career for 35 years and now collect a pension plus about 4K per month positive cash flow from rentals. Not a lot but all I need. Net worth 2M.
I don't have a "rags to riches" story yet, but what has helped us is we worked outside of the US for about 7 years. The tax benefit of doing this (foreign earned income exclusion) made us debt free and in a much better position to do something. Also, our wages were much higher outside of the US so we could bank more money. If I had to do it over again, I would have been an expat at a much younger age and for a longer time-frame. Then I would already own a huge multi-family somewhere.
I started out 4 years ago, bought my first home as a foreclosure (FHA 3.5% down) for $190k. Spent the next 4 years slowly fixing and rehabbing. Decided to do a HELOC and house appraised for $75k more than we paid. Used that money to purchase a second home and we will be renting out are first house. Bought and rehab second home using HELOC and loan from my Dad who is charging me 10% interest. House is almost finished, we are in it for $210k and AVR is $280-$300k. Doing a cash out refi, pay HELOC back, pay Dad back and repeat.
I have been working towards this for over 5 years. Reading, planning and saving.
Frugal lifestyles and saving money. That's what I assumed. I feel like this needs to be made more clear in some of the posts and podcasts. So let me explain my personal story that gave way to the post.
As a single father since 19, who's always worked 50-60hrs/wk, it's been very realistic that paycheck to paycheck living is not as easy to escape as some might think. My son is a sophomore in college now and I've finally been able to start saving money while paying his tuition. I've been a renter forever. No family to borrow from and finding an investor willing to season my bank account with no deal in tow is not realistic. No IRA to pull from so it's straight savings. Hustle, sacrifice and patience.
I've been reading a couple real estate/business books a week and been listening to all the BP podcasts (and a couple others) to and from work from the beginning. I've made some great contacts with some folks and plan on getting my RE license this winter. Barring anything crazy happening I should have enough saved by next summer to acquire my first place or at least invest with others. I'm 38 and my plan is 60 units by 50.
Ideally all within a small radius to have a direct effect on property values that translate into bigger school budgets.
Keep up the hustle Dustin! I was worked my tail off during college/flight training to remain debt free, and even though my first flying job pay was poor, I lived with my parents and saved up close to $40k in two years. Around that time I became interested in real estate and called a gentlemen I knew who owned rentals. I asked if he was interested in selling a few, and he was. I bought two duplexes and two single families from him at $250k on a 15yr. 6% mortgage. Not a great deal, but a good start. That was 15 months ago and since then I've had a pay raise and purchased another duplex and currently have two BRRRR homes under contract. Live frugally, and network!
I love this thread! Thank you so much everyone for sharing your stories! I am just starting to read up on everything and to form a semi-solid plan. After listening to the podcasts 229 and 215 it hit me like a ton of bricks: multi-tenant student rentals + airbnb vacation rentals it is for me. I've really enjoyed listening to the bigger pockets podcasts so far, I just wish that there'd be more people featured from places outside the U.S., Europe in particular. I think minimal and frugal living is key, no matter what venture one wants to take on in my opinion. On top of that a low-footprint lifestyle is also kinder to the environment. I've personally moved so much the last 3-4 years (Vienna, Berlin, London, New York City) that I don't have a credit history in a single country. I would love to hear more from people who move around a lot as well yet still manage to build up their business as I could personally relate to that a lot more (than to someone who's been living in the same place all his life). Anyway, I am looking forward to more posts in this thread, such a great topic Dustin!
I'm nowhere near where I want to be but I did start from almost nothing and finally got my first deal. I hustled, and sacrificed all my free time for 8 months. Not going out with friends, and working overtime so I can start a mailing campaign with only 600 yellow letters a month. I told myself "this is what is going to take" and pursued my dreams. BAM, I landed a deal and now I've been doing 1000 yellow letters a month and been building my pipeline with motivated sellers. I won't stop until I achieve all my goals my friends. Hope and wish you guys all best of luck!
I took an overseas job for 6 months in a less than ideal location that came with a sizeable salary premium. I was able to save up about 80k over, pay off my wife's student loans, my credit card bills, etc and in the end had about 55k for investing.
If you sit down with a spreadsheet, you quickly realize it'll be decades before you have enough for a down payment if you're only putting away a hundred dollars here and there. I had to think outside the box, and I had a pretty solid salary to begin with.
This is why the rich get richer and the poor often go nowhere. Just have to get creative to get yourself up to that first rung of the ladder. From there it's much easier. I've turned that initial 50k into 750+ in just over 3 years.
Getting started is the hardest thing for sure, how you do it is your choice because there are many way to get started. With that being said, I got started by just taking action and getting lucky. If someone tells you they are where they are by purely skill and hard work, they are not only lying to you but themselves too. Everyone has to get at least a little lucky in order to be on the top. Being at the right place at the right time, and I was, and I am very grateful for it. With that being said, I started about 10 months ago with wholesaling and getting deals under contract was not that easy especially since not many people trust an 18 year old with buying a house and closing a deal. But I did and after closing the first deal, the other ways were easy because I gained lots of experience with the first deal. Finding the deals was the hardest thing out there, especially in NJ, there was lots of competition and as a beginner my rehab estimating skills were not too advance like they are now and my negotiating skills were terrible too. But after 4-5 whole sales I decided that sometimes in wholesaling you can work on a lead for 2-3 months and not getting anything out of it because they are wasting time. Wholesaling was and still is the hardest thing in this business , so that's why I decided flipping....
I started my first flip in December of last year, I started small with rehabs and now doing add a levels and developments. In 10 months time I grew from a single flip to 8 flips. (6 being done.) I have been blessed and am lucky to be in the position I am in and have learned at a rate that no one else has. I know how to estimate rehabs, what's a good investment in a home and what is not, I've learned to talk to people especially contractors, I've learned who the snakes of this business are, I've learned to connect with the right people, I've learned to grow my company and business, and most importantly I've learned to take risk and it will pay off.
I am just now starting to allocate about 10% of my funds back into marketing and advertising and growing my company sending out mailers and doing door knockers. I am looking forward to connecting with everyone I possibly can in the business and growing my company and branding myself. I try my hardest to get something from nothing. Literally multiply $500 in the very beginning to now starting to grow a company that I will eventually be on top of the world. The saying goes, if your mind can conceive it, then the body can achieve it.
If anyone has any questions about anything, please reach out to me. I will be glad to give my advice. I appreciate the support
...But the question is not only how to get funds to start?
I have worked all my life and was able to save enough to purchase a few properties. So, when i finally decided to invest into RE, it took me a year to finally acquire my first duplex for rent about a month ago. Listening to webinars, i feel comfortable with buy and hold and rent strategy and the idea of getting 200/400 per unit is attractive. But, i am quickly realizing that buying properties the conventional way (with RE and your own down payment) will not take you too far. The problem is that i still cannot figure out the alternative ways to find good properties and to finance them with someone else's money. Because if i invest all my money into "buy and hold" then it is the end of the game for me.
Your observations are solid and your plan for house hacking a small multi is a good goal. As you know, small multis are in short supply in the Treasure Valley and get swallowed up very quickly.
Give me a shout sometime and I would be happy to discuss how to implement your strategy in the real world in Ada County.
Hard work, managing expenses and drive.
My head start was an $18000 accident settlement that I used as a Dp on my first condo many years ago. The market in Calgary boomed and we sold at the right time and moved to a more affordable city, bought low sold high, moved to a small town and bought a few houses and a business when prices were low. Building businesses and trying to push forward and seizing opportunities has lead to a fairly successful life for our early 30's. Wish I had found BP sooner as I think I would have taken more risks and used equity and leverage more efficiently. I am grateful for where I am and will continue to work towards my goals yet have fun enjoying the present.
Luck doesn't happen by accident, create your own opportunities.
Worked FT while in college, and had a small college fund from my parents (not even enough for 1Y in state). Went to a local school and lived at home, then transferred for the lats 2y and graduated a year early. Had ~30k student loan debt and ~15k auto loan (nothing but regret in hindsight). I didn't use the college fund in school, and instead took out deferred loans. The fund would have been enough to pay about half of them off upon graduation.
Purchased my first home (2/2 townhouse) a month after graduating with 5% down & PMI. Lived alone for a year and have been house hacking since. It's a win-win for everyone at Denver rent rates. We've also updated the house and cash out refi'd to get the capital back out for when we 'move on to the next one' in the next year.
Met my wife a year after I finished college and we're just very frugal and save more than 50% of our incomes. We may make more than most, but that doesn't change the basics: be frugal, work hard, and hustle. Hate paying contractors or handymen? Learn a new skill and DIY!
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