Newbies: Wonder if You’re Ready to Buy a Rental? Examine These 4 Factors.

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Is now a good time to purchase buy and hold investment real estate?

When most people ask this question, what they are wondering is this:

Is real estate going to go up in value in the next few years?

This is a terrible question to be asking. When you ask this question, you are playing a game of chance with outcomes that you can’t possibly predict accurately, and that speaks to a gambler’s mindset.

Instead, ask yourself this question:

Is now a good time for *me personally* to purchase buy and hold investment real estate, and will buy and hold investment real estate help me achieve my financial goals regardless of short-term future market conditions?

If you came here looking for real estate advice, you are going to be disappointed. Instead, this article will provide personal advice. Because the truth of the matter is that real estate investment advice IS personal advice.

Now, please also keep in mind that this advice is relevant only for the middle-class W2 salaried employee looking to build wealth on the side. Remember, I don’t write for the real estate entrepreneur who is looking to go all out in his/her pursuit of real estate wealth. They play by a different set of rules than us folk who are employed and intend to remain employed for the foreseeable future.

For us, the answer to the question “Is now a good time to buy real estate?” is decided by personal conditions, not market conditions. Regardless of what the market is doing, the real question is whether now is a good time for you to invest.

Whether or not you are ready to invest in real estate depends upon a number of factors going on in your life. And these aren’t just financial factors. See, real estate is what I like to think of as a “semi-passive” business. Think of it as a hobby that takes a couple of hours a week, but a lot more time/effort/money up front. If you pay high up front and are prepared to cover consistent, long-term cost, you might create an incredible positive effect in your life. If you don’t, you are setting yourself up to get royally screwed.

With that, let’s talk about the factors in your life that determine whether or not you prepared to benefit from the purchase of investment real estate.


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Factor #1: Your Personal Financial Position

You are setting yourself up for tragedy if you do not have a strong personal financial position prior to purchasing investment real estate.

We invest in real estate to improve our financial positions. Plain and simple. But the irony of it all is that you are not ready to invest in real estate if you don’t already have a strong personal financial statement prior to going in!

So what is a strong personal financial position as it pertains to real estate investing?

Related: Blogger Roundup: 21 Reasons Newbies Struggle to Close Their First Deal (& How to Overcome Them!)

A strong personal financial position is comprised of several key factors:

A Strong Balance Sheet

Put simply, the investor who is prepared to buy real estate will have few bad debts and have not only the down payment for the next real estate property saved up (in cash!), but tens of thousands of additional dollars (also in cash!) ready to go to pay for unexpected things like repairs, maintenance, and six months of mortgage payments when the tenants don’t pay.

The investor who is prepared to buy investment real estate carries good debts only (or no debts!) on his personal balance sheet. He/she might have a mortgage and maybe a car payment, but does not have things like credit card balances, large student loan debts, or other personal, non-asset backed debts. It goes without saying that he/she has an excellent credit score as a result of this long-term behavior.

Further, the investor who is prepared to buy investment real estate will have a substantial amount of cash/liquid funds and does NOT count things like home equity and retirement accounts as part of this. Sorry, the $50K you have in your 401(k) does not count (unless you are investing solely in your self-directed account, but that’s a different story).

Real estate investing for most of us W2 folks requires cash, plain and simple.

If you have no cash or other assets that you can readily liquidate available to you but have substantial home equity and/or retirement savings, you are not in a position to buy real estate currently, and now is a BAD time for you to invest.

The reason that you are not prepared to invest is because your balance sheet indicates a long-term failure to accumulate wealth anywhere but the forced savings plans that are home equity and retirement accounts.

It means that you have systematically failed to preserve your cash and use it to buy assets. It means you spend everything that comes in — and that you can’t get your hands on — immediately.

It means that you are unprepared for expenses like a $15,000 roof repair/replacement, a $5,000 HVAC replacement, or the new kitchen that will help you increase rents by 30%. Real estate investors with strong balance sheets call these expenses “capital expenditures.” Those with weak balance sheets call these expenses “disasters” and lose everything.

A would-be investor with this kind of balance sheet is at significant risk entering the real estate investing world. If you do buy property, you are highly likely to become one of those “motivated sellers” who gives guys like me a great deal by having to sell off your assets in a hurry when the next unexpected “disaster” comes along.

A Long History of Positive Life Cash Flow

It should come as no surprise that the personal statement of cash flow and personal balance sheet are closely linked. A long history of positive cash flow is likely to be reflected by a balance sheet with large and growing cash positions and real wealth that you can spend today.

The investor who is prepared to buy investment real estate spends significantly less than he/she earns and has done so for years in a row, without any significant interruptions.

Keep in mind that we aren’t talking about a few hundred bucks a month over a few years. The middle-class earner who is prepared to purchase investment real estate saves at least $1,000 (cash!) per month, not including retirement contributions and home equity, as stated previously. Hopefully, you are saving much more than that if you are earning $50,000+ per year.

This eliminates about 95% of Americans right here.

If you are breaking even and struggling to bring in more than you spend on a monthly basis, you are in a poor position to begin investing in real estate. Many new investors find that properties do not produce the cash flow expected by their projections, especially in the short-term. A property that bleeds (loses money every month) is a HUGE detriment to your personal financial position if you have no positive cash flow.

Related: The #1 Reason Newbies Go Broke in Real Estate (& How to Avoid It!)

But a loss of a few hundred dollars per month on a first deal, while not ideal, is not life-altering to the guy who comfortably saves $1,000, $2,000, or $5,000 per month. He can weather the storm for a few years and come out smiling on the other side with a strong cash flowing portfolio, after the hiccups of those first few properties and the school of hard knocks has taught him a few lessons.

To conclude this section about the prepared investor’s financial position, it basically boils down to three questions:

  • Do you make a solid, stable income that you can rely on?
  • Do you spend way less than you earn, and have you done this for several years in a row?
  • Do you have a large amount of liquid cash that you can use for a down payment AND repairs/big expenses that might come with a new real estate purchase?

If you can’t say yes to these questions, then real estate is a highly risky investment for you at this time, regardless of your predictions for future market conditions.


Factor #2: Knowledge and Commitment to Learning

Real estate is a business that requires continuous learning. It is literally a lifetime commitment to knowledge accumulation as it pertains to general business practices and the specifics of real estate in your target market.

Listening to all the episodes of the BiggerPockets podcast, reading a dozen books on real estate investing, and reading a few hundred blog articles is a pretty good start to your real estate education as you get your act together financially, but it will never be enough.

You need to make it a habit. A habitual process of continuously studying your market, your properties, your contractors, your network, general business acumen, and your overall financial plan.

There is always more to learn and always ways to improve. There is no such thing as “set it and forget it” when it comes to investing in real estate while working a full-time job. You have to be prepared for every problem that comes up and continuously increase that preparedness with each passing month and year.

Perhaps one day, you can train up others to run your business for you and watch it grow from a distance. But if you go in with the expectation of rapidly achieving that end goal, especially while working a full-time job, you are in for some nasty surprises. Plus, even if you do manage to build a passively managed business as a hobby, then at that point you’ll have to just make a commitment to continuously learning about how to manage managers and run an effective organization.

If you aren’t prepared to put in a huge upfront effort in self-education and then continuously stay sharp on the fundamentals of business and real estate, you are setting yourself up for failure. You are just as likely to end up a “motivated seller” as the guy who is buying rental properties with his HELOC because he can never seem to make it through the month with anything left to spare.

If you have a full-time job and aren’t dedicated to self-education in this business, then now is a very bad time to buy investment real estate.


Factor #3: Commitment to the Area You Are Investing in

Remember how I said that investing is personal? It is.

When you buy investment real estate, you are tying yourself to a physical location. You are tying yourself to a block, a neighborhood, a city, and a state — and you had better be comfortable making a long-term commitment to having that physical location remain a significant part of your life.

You are also tying yourself to the people and network that you must set up in that physical location. You will have to find an agent in your area — likely a lender, a property manager, handymen, contractors, a lawyer, and the like. And you are going to have to manage these folks.

Yes, you’re going to have to manage them personally.

Because let me tell you that nobody is going to look after your property like you. Nobody.

If you work a full-time job, are a new investor, and have no ability to conveniently, physically visit your property and the people that you depend on, you are missing out on a tremendous amount of opportunity, and you are likely setting yourself up for a whole host of problems that a local investor can avoid.

There is no replacement for being able to see a property that you own. There is no replacement for understanding the little problems that go with rental properties. There is no replacement for having at least a basic understanding of what goes into routine maintenance and contractor projects in real estate investing.

There is also no replacement for physically meeting with the folks you do business with. I know — there are folks out there who can look me in the eye and screw me over with no qualms. But I believe that when I meet with someone face to face and tell them exactly how I want our relationship to go, the results are dramatically better.

Call me old fashioned if you want.

I don’t care how great technology gets or how much you trust that property manager. You need to be able to visit your first properties if you want to build a real estate business. It’s that old saying that you’ll see countless times over this site:

Trust, but verify.

Sure, there are some reputable firms that can let you invest turnkey in the podunk Midwest and basically match the returns of the stock market if you want to, but if you are looking to actually buy real estate that will produce excellent returns for you, you need to be present and need to run a business.

And when you do things yourself, you have no idea going into your first investment just how long and how often you will need to be present. Problems you think will take forever take just a phone call to the right guy. Problems that you think will take 10 minutes turn into a five-hour ordeal, complete with three trips to and from Home Depot.

That’s real estate investing. Get over it.

It all boils down to this — real estate is local.

Plan to either invest locally or to be doing a lot of travel to your chosen location if you want to get into this business and make a real go of it.

Just make sure that you are comfortable with the location you choose. Forever.

If you can’t make that commitment, I’d suggest that you aren’t ready to purchase buy and hold real estate just yet.


Factor #4: Personal Life Conditions

Real estate requires not just upfront cash, upfront learning, and a commitment to the area that you are investing in. It also requires a commitment of time, in especially large doses at first. While the amount of time you spend on any given property will (hopefully) diminish as you stabilize it, be prepared to spend many weeknights and the better part of many weekends in the process of turning a new investment into a stabilized one.

Related: The Harsh Reality for Newbies Who Think Real Estate is a Way to Get Rich Quick

This means that you will have to forgo other things like extra hours at work, leisure activities like hiking/skiing on the weekends, or hanging out with your kids. Real estate will dominate that time in its place.

This is particularly true for folks who work jobs and partake in activities with very limited flexibility. If you have to be in the office every day from 9-5, have an hour commute each way, and have things going on most weekends that take you out of town, then this real estate business will be a particularly harsh experience for you.

If you believe that making a significant time commitment to stabilizing your next real estate investment over the next few months will be a struggle, then I believe that the conditions in your personal life will make real estate investing a poor choice for you.


Here’s the good news: If you have a strong personal financial position, have built up a large amount of real estate knowledge and plan to continue reading, networking and learning, and are committed to being physically present in the location that you choose to invest in, then you are in good shape.

Now is probably a GREAT time to buy your first (or next!) investment property.

You have a high likelihood of success, and if the market tanks, GREAT! You will have a little bit more experience in real estate, and your strong personal financial position will enable you to buy many more deals at bargain prices in that future buyer’s market.

If the market continues to go up, then GREAT! You’ve built a ton of equity and can now intelligently harness that to buy more quality, stable investments that make sense for your life and investment strategy.

On the other hand, if you don’t have these conditions present in your life and the market tanks, then you will be screwed. You’ll be a motivated seller, and your investment will leave a terrible scar on your life and personal finances.

If the market does well, then you’ll be able to breathe a sigh of relief knowing you got away with one if you’re smart, and you’ll leverage out the wazoo thinking you’ve got it made if you aren’t.

In that last case, you’ll be on the other end of the phone from one of my yellow letter campaigns…

And I’m sure one of us will be getting a great deal.

Looking to set yourself up for life as early as possible and enjoy time on your terms? Scott Trench’s new book Set for Life, slated for release April 23, 2017, is now available for pre-sale! Whether you’d like to “retire” from wage-paying work, become less dependent on your demanding nine-to-five, or simply spend time doing what you love, Set for Life will give you a plan to get there. This isn’t about saving up a nest egg. It’s not about setting aside money for a “rainy day.” Set for Life is an actionable guide that helps readers build the accessible wealth they need to achieve early financial freedom.


Investors: Do you agree with this assessment of factors that need to be in place before buying rental property? Why or why not?

Leave your comments below!

About Author

Scott Trench

VP of Operations at, Scott is also a licensed real estate broker/agent, real estate investor managing 8 units in Denver, CO with a partner, a house-hacker, and personal finance nerd. His book, "Set for Life" (published through BiggerPockets Publishing) thoroughly details a step-by-step journey to early financial freedom for full-time workers earning median incomes and starting with little or negative net worth. When he's not helping full-time workers move toward early financial freedom, the 26-year-old can be found playing rugby, biking, or skiing.


  1. Syed Hussain

    Great article sounded like it was talking to me directly! I’m just starting out in my journey and if there’s one thing I know for sure, this is a marathon and not a sprint. Keep learning and get my act together along the way and I should hopefully have some success.

  2. Laura Collins

    Great info. I was nodding in agreement through most of the article, lol. Not because I have done a real estate deal yet, but, because I have been a business owner for almost 16 years now and all the factors apply to running any business. Very blunt and truthful, loved it!

  3. Wow! This is one of the most insightful and well-written articles ever displayed on the BiggerPockets website. You described to perfection my life over the past 25-years. I’m currently living 100 percent on passive income through real estate investing; excuse me, “semi-passive” income. RE is the greatest get-rich-slow investment program available, but it requires a voracious appetite for knowledge, a strong desire to succeed and a well-adjusted attitude. There is not much that can be added to such a well-crafted piece of writing, so let me make two brief comments.

    First, pick the right partner to go through your real estate investing journey. It is not enough that you display all the positive behavioral traits outlined in this article if your partner doesn’t have the same big-picture vision. My wife has been an integral part of my journey! This wouldn’t have worked without her.

    Secondly, developing relationships is a critical aspect of real estate investing. I have often wondered what would have happened if “text messaging” was invented before the telephone. Would people say, “it is so cool that we can actually talk to one another!” Texting is fine for certain things, but developing deep, meaningful, long-term relationships is not one of them.

    Thank you for this great article!

  4. Everything I hear is about taking action. But you’ve suggested circumstances have to be absolutely perfect or there’s no way to succeed. Now I’ll be stuck in a never ending cycle trying to have my circumstances “just right”

    • Steven Fitzen

      The truth is somewhere in the middle my man. This article was filled with a lot of good information, but was a little too risk averse for me. If everyone waited until the planets aligned, they’d never get started. Most people begin investing in real estate to improve their financial situations, nothing worth doing in life doesn’t involve risk. You’ve got the right mentality, be intelligent in your purchases, have a plan, don’t over leverage yourself, have an exit strategy and a contingency plan, and take action.

    • Scott Trench

      Brandon – I think that Steven is absolutely correct. By no means does everything have to be perfect to get started, but if you are very far away from being able to satisfy the four things I mentioned in this article, I personally believe that you will have a tough time with your first investments and may get into some trouble.

      If you are close or there on all or most of those things, you have increasingly high probabilities of getting a great investment.

      Everything is relative, and there are no absolutes in this business. But, you are at high risk if you have a weak financial picture, don’t have a solid understanding of investing fundamentals, are investing in an area that you can’t conveniently travel to, and are extremely busy.

  5. jeff Mihaljevich

    Great article overall, but I do have to challenge one point. If you’re doing it right, turnkey properties shouldn’t just “match the return of the stock market”. Not only are you getting fairly steady cash flow returns, but you are also building equity in the property over time as your renters pay for it.

    If I’m invested in the stock market and it tanks then my returns are gone over night. If I’ve invested in a buy and hold rental property the value of the underlying property doesn’t really matter in the short run as my cash flow continues to come in from renters.

    • Scott Trench

      Thanks Jeff! I think that the key word you use here is “if you’re doing it right.”

      If you are doing it right, you can make an excellent living and/or return at just about anything! I think that it is just as hard to invest in turnkey the right way at outsized returns as it is to do anything else in real estate.

  6. Penny Clark

    Scott, this is one of the most insightful articles I’ve seen here. Not only is it critical information for those jumping into re investing for the first time, but THANK YOU for validating those of us who have lived below our means for years to build up reserves to invest.
    My husband and I sat on $35,000 from a refi for four years before an opportunity came to purchase our first property which was a short sale and took nearly 9 months to close. So many times we imagined using that seed money to take a cruise or buy a new car. Yet soonafter closing we were able to save more and purchased two more properties from motivated sellers. We could do this because we drive older cars and pay off any credit card balances every month.
    If more people practiced the things you listed in this article, they would be more successful with their first investment.

  7. Harry Metzinger

    Great article Scott! Thanks for the words of wisdom! I know I am in the right position to buy and hold real estate since I check off the boxes. Gotta keep learning, keep saving, and tangible results will follow. Looking forward to reading your future blog posts.

  8. Shaniqua Dupree

    Good information. I think investing in real estate is possible for anyone at any stage personally speaking. There are so many different ways to invest, many not even needing money out of your own pocket but rather confidence that you know what you are doing and you will get the job done at any cost. One thing I learned is that using OPM is very much possible. I don’t believe that financial skin in the game is necessary. However it is a MUST to have EDUCATION. Trust is very important when it comes to asking others for help. All I am saying is that there is no one way however this post speaks of some very important values. Thanks for sharing.

    • Scott Trench

      Shaniqua – I agree that OPM is possible and that there are numerous case studies of folks that have succeeded with this strategy.

      I will say however, that this is a particularly dangerous option for myself and the target audience that I write for – the full-time W2 employee who has no intention of rapidly exiting the workforce, but does want to build scalable real estate wealth on the side.

      For people like us, OPM is very dangerous, because we might not have the ability to dedicate our full-time efforts to growing the real estate business and finding the incredible deals needed to safely invest with other people’s money. I would feel that as a still fledgling investor, I cannot in good faith leverage to the hilt using private money if I can’t dedicate my absolute best efforts to the project. I work a full-time job here at BiggerPockets! BiggerPockets gets my best efforts. My real estate investing is secondary.

      If you are someone that can dedicate the entirety of your focus to building a real estate business from scratch, then I believe that OPM is less dangerous for you than for I.

  9. Lance Van Buren

    How many rental properties do you own?

    The author was talking about buying and owning (holding for the long term) rental properties and what kind of financial shape a person should be in to minimize risk and maximize success.

    Not about other forms of REI using OPM.

    • Scott Trench

      I think there is definitely a sliding scale when it comes to being prepared to buy real estate. I would say that it should be possible for all or most to check off these four boxes in far less than 1 year. I’d suggest that anyone that thinks a year of preparation is too much to sacrifice to get an incredible real estate investing foundation poured may want to reconsider this business. But of course, it is up to the individual to make their own decisions.

  10. Josh Thomson

    Good Article Scott,
    I agree with everything that you say in this post. I have only recently become aware of the huge possibilities for real estate to change people’s lifestyles for the better when done correctly.
    -I have been buying and reading finance books and watching videos on property investing for about two weeks now.
    -I will be attending a two hour seminar on creating wealth through property in Adelaide in a weeks time.
    -In a month from now, I will attend a two day workshop on property investing in Melbourne.
    I’m learning as much as I can about property investing during my spare time so I can enter the property market with clear goals and understanding of what I need to look for to invest in a property or properties.
    I believe I can make a comfortable lifestyle through property investing and the BiggerPockets network can help me achieve what I want.

  11. Marquis Kirk

    Great post! I actually just mapped out the next 4 years of my life goals which will consist of being debt free this year except my house.
    Then in 2017 saving 3-6 months of living expenses and 23,000 to invest in real estate
    2018 save 28,000 to invest in real estate
    2019 save another 28,000
    Then in 2020 start my own trucking company and continue to expand both businesses…
    I read books and I will have the time…
    So this post let me know I’m on the right track. Thanks

    • Scott Trench

      I think this is a great plan Marquis!

      I bet you that if you hit that year 1 goal, then all of the sudden the 2018, 2019 and 2020 businesses come far faster than you plan here – once you start the habit of saving and paying down debts, opportunities to expand your financial means seem to flow to you!

  12. Viki Knowles

    I also agree with some others on this thread. This article does have great advice, but also seems to go against one of the main illuminators of this site…”just take action”. I have been reading articles and blogs for months, a few of Brandon’s books, listening to almost all of the Podcasts, and had JUST decided to cast aside fear and self-doubt and take the first leap of faith to leave the Rat Race (just read Rich Dad Poor Dad), and then I read this article. I’m 42, and not a lot of time on my side. OPM is the only option for me at this time. I may have to shake this one off and regroup. Hopefully, it doesn’t deter others, but it defiantly brought my self-doubt back to the surface.

    • Scott Trench

      Viki – you ARE taking action! If you have been reading all those books, listening to those podcasts, and reading this blog for months, you are pouring an excellent educational foundation. I’d hope that this flows through to your personal finances and that you have accelerated your wealth accumulation as well!

      Also, I’m no expert on the age thing, but I think that 42 is a very reasonable age to begin investing in! In 5-10 years, you could have a very large, stable portfolio, even if you build it very conservatively!

  13. Lance Van Buren

    People that ate vommenting about the self doubt. Dont doubt yourself. There are other REI that is open to you, Scott is only writing about buying and holding rental properties and being in a strong financial position to assure success in this area. You can still partner with people, do flips, wholesales etc.

  14. Dennis Legaspi

    Thanks for the article, Scott! It’s good to pump the brakes a bit to do a self-check prior to diving right in. People get so motivated by success stories that they sometimes forget about the basics and may tend to ignore the warning signs. Great read!

  15. Corey Berry

    Scott, I’m currently projecting to get into real estate within the next couple years. I’m focusing on 1 (I’m liquid, with good cash flow and savings, but not to the rate you suggest; I’ll see more cash flow and savings in the next year), progressing on 2, and solid on 4 (being single helps tremendously), but 3 has me concerned.
    I’m looking at traveling within my career field about every 2-3 years. I’m not mobile yet, but I’d like to be here within 2 years. I understand this presents a dilemma on not being able to physically access the properties. I’ve considered this before.
    My question is, would traveling be such a detriment to me?

  16. What a great article that just killed my dream of real estate investing…lol. Seriously it just helped to put things in perspective. I need to save a lot more money every month before I start this journey.

  17. I totally agree with you. Some of us do not want to make real estate our life. We’d rather be conservative and build up our real estate semi-passive income flow on the side of our real life. That said, there are times when we have to work many hours on this side business. Such as when you first buy a rental and when you have a rental turnover.

    Education is important. Luckily we live where there are several local, active, landlords’ and real estate associations which are heavily into education and networking.

    Our investing personality is very conservative because we’ve never made a lot of money in our W2 jobs. Also by building up slowly one house at a time, you can make sure each property is producing sufficient cash flow before buying the next one. So far for us we have gotten a better return on our rentals than we’ve gotten from our 401k and IRAs which are for when we are too feeble to work in any capacity.

  18. Andrew B.

    Great post on considerations of the big picture before taking action.

    Any thoughts on how much riskier it is to have lower cash reserves (initially) when you go in on a newly rehabbed Turnkey compared to a non-turnkey rental property single family purchase? This would seem to be a relevant discussion!

  19. Brad Lohnes

    Hi, Scott. Great article. I agree with all of the points…except perhaps waiting for them all to fall into place before getting started. 🙂 I think that what you describe is the target that I would recommend for my kids.

    In my case, we had purchased 3 excellent cash flow properties after getting started in REI properly, had another rental from a past life (former primary residence) that was sucking our lifeblood, and not a great handle on our personal finances. We have taken a relatively extended pause from purchasing to get our personal finances in order (enter Dave Ramsey’s 7 steps), sold the money pit, kept that equity as an emergency fund, and now are looking to start over when the market cools a little (pretty hot over here right now – very difficult to find buy and hold).

    Still, if we hadn’t actually got started, even if we weren’t in the best position, I’m sure I’d still be sitting on the sideline today. And now we have 3 great rentals that have appreciated greatly in value during the current upturn. So, despite agreeing with all of your points, I’m still on the side of action…educated action. 🙂

  20. Mack Lev

    Great article.. very insightful. The part about a investor using their HELOC to purchase properties really hit home for me because thats mainly going to be my strategy. Im trying to do as many wholesale deals as I can though to build up my own cash reserve but thanks for pointing out that, that route might not be the best way to go if your lacking in capital.

    • Hi Mack, My husband and I paid off our home and now use the heloc to buy one rental at a time. Once the rental is producing we finance it to pay off the heloc and start the process all over again.

  21. Matthew Kendall

    Thanks for the insight Scott. I am a new investor and this article was kind of a wake up call to not be too anxious to jump in. I am continuing to improve my knowledge and financial situation so that I can make a smart entry into REI and BiggerPockets is definitely a part of that.

  22. Lisa Holden

    I’m a little confused. Your article talks about having your house in order and a large amount of cash on hand. Yet, one of the things I see with bigger pockets is about buying with little or no money down. Based on what you wrote, it would be correct that only a small percentage of people will be able to do real estate investing. Does that mean the rest of us should bow out? Unfortunately, not everyone comes from a background where saving that kind of money came naturally. Your thoughts would be appreciated.


    • Hi Lisa, Do you already own a house or not? If you don’t own a house, depending on where you live and if your job pays a decent wage you could get started in real estate by buying a duplex and living in one unit. Then it is your home and you qualify as a first-time home buyer. Look at a lot of houses to make sure you are not overpaying.

      • Lisa Holden

        I didn’t really explain my question or comment very well. In the article it basically says that you REALLY need to be financially stable and to have had been for years, with plenty of money stocked away in order to be successful. As it says you really should be in a STRONG financial position in order to move forward. I have had a house already in the past but don’t at present.

  23. Michael Robu

    I’m brand new, but the math isn’t working in my mind. Say $48k/yr. 25% for taxes leaves you with $36k or exactly $3k/month. Saving $1k/month leaves you with $2k/month. If your rent is $1k/month, you have $1k/month for ALL other expenses? Am I missing something?

    • Scott Trench

      This was my position out of college. I saved $20K in just over 12 months. I paid $550 for rent, and yes, about $1K per month for ALL other expenses. I also earned about $5,000 creatively outside of my job.

      The tough part is, that if this sounds like an unreasonable savings rate, that person will simply not be investing in real estate any time soon. So, folks are either gonna have to drastically reduce their expenses, earn more income, or wait many years. That, or they can leverage to the hilt with other people’s money. Something’s gotta give.

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