Real estate investors come in all shapes, sizes, and financial backgrounds. There are so many ways to invest in real estate. You can flip houses, buy notes, invest in delinquent property tax, become a foreclosure expert, buy and hold property, invest in single family or multifamily homes, buy into mobile home parks, become a developer or a real estate agent, and much more.
There is one thing all of these types of investors have in common, and that is a quest for high returns on their investments — and a willingness to be thought of as a huckster, fool, and risk taker. Some investors do indeed go broke, but the ones who succeed can often look back and wonder why people thought that they were a bit crazy.
How to Invest in Real Estate While Working a Full-Time Job
Many investors think that they need to quit their job to get started in real estate. Not true! Many investors successfully build large portfolios over the years while enjoying the stability of their full-time job. If that’s something you are interested in, then this investor’s story of how he built a real estate business while keeping his 9-5 might be helpful.
You Might Be a Real Estate Investor If…
- You have driven by a property with an overgrown lawn and shrubs, and rather than think a lazy homeowner lives there, you wondered if there was an opportunity to make money there.
- You have ever looked at the Empire State Building and put together a rough analysis of the rate of return you could get — if only you could get the financing.
- Someone’s offer to sell you the Brooklyn Bridge was taken seriously — but only if they can guarantee you clear title.
- You have investigated several different ways to get more property financing and more mortgages, even though you currently only have a single mortgage — on your primary residence.
- You understand that every property could be a bargain, but only at the right price.
- You understand that cash flow is king, and any other so-called return (depreciation, appreciation, equity gains, etc.) is not a factor in the investment formula — regardless of what any real estate agent says.
- You factor in the cost of a property manager — even if you plan on managing the property yourself.
- You understand that real estate is the way to riches and also one of the fastest ways to the poor house.
- You can look at a prospect in the eye and decline them for a tenancy in your rental — even if they told you, “My credit is bad, but I always pay my rent.”
- You know that bad renters often lie on their tenancy application and let their relatives be their past landlord references.
- You understand the need for a full deposit for your rental and that a renter who does not have enough to pay it is a renter to be passed on.
- You understand that a bad tenant can ruin your rental returns for several years — even though your plan says you cash flow.
- You realize a 5% cash-on-cash return is not an investment; it is an opportunity to go broke.
- Terms like “return on investment,” “gross rent multiplier,” “cap rate,” “cash-on-cash return,” and “vacancy expense” actually start to sound meaningful.
- You make an offer on a property that makes your real estate agent feel embarrassed to submit — and you make a similar offer on a different property later that same day.
- You already have plans to quit your job as soon as you have a certain “number of doors,” and you have yet to acquire your first one.
- Everyone thinks you are crazy to buy that “run down property on the side street” and thinks you are a genius when you make six months’ worth of their salary in three months with that same property.
- People tell you, “I looked at that property too, but I could not make the numbers work,” and then they ask you, “How did you get the property that cheap?”
- People think you are crazy spending so much on a property, and then a few months later, they want to give you their money to invest.
- You look at a property that needs a new kitchen, bathroom, painting, new floors, landscaping, a new roof, and you think, “This is a gem.”
- You look at a weekend of painting as an opportunity — not a dreaded assignment.
- You are in the business to make yourself money, not the seller of the property.
- You know the cost of a 40-yard roll-off dumpster without actually getting a quote.
- Roaches, bed bugs, ants, mice, and rats are just non-paying residents to be evicted — not something to be afraid of.
- Your neighbors think you do not have a job and always wonder how you get all your money.
- The employees at your local home improvement store know you by name — and you are on their list to call when they have a closeout appliance deal.
- You not only own a toilet plunger, but a toilet auger — and you know how to use it.
- The house you just flipped looked like a million bucks — and your own house needs as much (or more) work.
- You are about to sign a mortgage — and it makes you just as nervous as the first time.
- You actually want to borrow a million dollars, but only if that same million gets you two million in property.
- People think you are a pauper, and you are actually a multi-millionaire (on paper).
- You understand that real estate is just an opportunity, and there will always be opportunities. You just need to find them.
[Editor’s Note: We are republishing this article for the reading pleasure of those investors newer to BiggerPockets.]
Do any of these things ring true for your world? What would you add to my list!
Let me know which of the above traits you can relate to in the comments section below!