Real estate investing is about the only field open to just about anyone who can do 3rd grade math. For the average person the entry requirements are about as low as you can get, with the rewards being almost limitless. (See Robert Kiyosaki, Donald Trump, etc.) In these trying times, it can seem like only the big hotshots with money have a chance at a great retirement. With downsizing, out-sourcing, benefit cutting, and corporate CEOs making monstrous salaries and bonuses, the average guy seems to be getting squeezed!
Luckily, there is still real estate!!! And despite the media doom & gloom routine, there is a huge opportunity right around us right now as we approach a bottom in this market. Nationally, there is still a downtrend in housing prices, which most of us would agree with, but you must remember real estate is local and there is always a good deal to be found even in the worst markets. Our local market here in the sacramento area is offering a great entry point right now, both for real estate newbies and the seasoned investor. Seasoned investors are snapping up the deals already, and here in sacramento multiple offers are becoming common again. The low end of the market, specifically the foreclosure market is hot, the mid-range is stagnant, and the high end is okay.
Cashflowing investment property in California on a 30 year fixed rate mortgage (principle & interest)! I thought I’d never say that again after the last several crazy years! The real estate market correction is a healthy allthough in many cases painfull! Many lessons have been learned the hard way.
So why isn’t everybody buying rental properties, if it’s such a no-brainer? The truth is that one of the qualities you need as an investor is financial discipline which comes through education (hard knocks school or otherwise), alot of determination, stamina, resourcefullness, and a somewhat adventurous spirit. You must be okay with alot of advice given freely by friends, neighbors, family, friends who have real estate licenses. Unfortunately most of the ‘expert’ advice you get here will come from news programs, old wives tales, one-liners, and people who have never invested in real estate (or people who invested poorly and had a bad experience). This usually creates a fear among many people, and that will be the end of that great idea! If you listen to this and/or the media too much you won’t do anything period. Most of the news is reported because it’s sensational or bad-whatever gets you to listen. It’s the same with real estate-everyone has heard the landlord horror stories. Okay… enough with the chicken little stuff!
So…. If you were to find a rental property, put 20% down, rent it out, have your tenant pay for the mortgage on it, and get $200-$500 above what it costs you every month, would that be good? Since you bought it discounted from the bank for less than it’s worth, didn’t you just make money? And 1-3+ years down the line you sold it (better yet refinanced, took out money and bought another!)and made a chunk of change, perhaps 100% return on your money? Wouldn’t that be great? Sound like a pipe dream? Some people do it all the time (and in their spare time). You must take the first step.
So… It will be your 1st home and you don’t make alot of money… Even better! You can get 100% financing still if it is owner occupied, or with 3% down, and ask for closing costs to be paid by the seller. Live in it for a year or two (or more), fix it up, sell or refinance, and buy another. That is how I started 10 years ago, and that is why I’m such a die-hard real estate junkie.
Need more to get started? You know that on average, 65% of your wealth at retirement is in your own home? The 35% of the wealth we have other than that is what we’ve managed to squeeze out of a paycheck to save over 30-50 years. With real estate investing done the right way (there are alot of right & wrong ways to do it!), your tenants pay your mortgages, allow you to hold for indefinite periods of time to take advantage of appreciation, and the IRS lets you take advantage of the tax laws to reduce your income tax on top of it!
It’s really a very passive form of investing, and can be done according to your taste-you can jump in full bore, or you can do it at an almost painfully slow and boring way and end up with astonishing results either way. By the way I’m full bore in case you didn’t notice!
Another note… Please do yourself a great favor and stay away from the real estate gurus, investment clubs, etc.. I know-I’ve been there, done that, spent money there, and to be fair did learn some things, but to be truthful, I should have just bought some more real estate instead! All you need is a good real estate agent and loan officer who are investors as well. This is my pitch in case you didn’t notice. All the gurus seemingly have this new product or secret that nobody else has (salesmanship is really what it is). There are no flashy secrets to wealth building, just repeating the same thing over and over, hopefully learning by experiences and applying new knowledge to better replicate again. Sound boring? In essence it is, but I admit I can’t help getting excited about it because it’s so simple yet soooo rewarding. Unfortunately boring won’t get you to sign up for real estate seminars! Good marketing will though- it worked on me. All the seminars had the same affect on me- I got excited, ran around in circles trying the ‘new’ stuff and then realized that I was wasting time, energy and focus-it was just another diversion sidetracking me. I guess it’s human nature to make things more difficult than they are.
