How I Learned That Growing Fast Takes a Ton of Work
My story could be summed up as being one big adventure. I am currently three years into my real estate investment career. I still have a full-time career as a professor at a university. I am married with two kids, at five and seven years old. I have a wonderful wife who is passively involved in my real estate business, both as a financial partner and a strategic partner providing sound advice.
We wanted to grow our family’s wealth so we can have some of the experiences in life that money requires, as well as being able to be more philanthropic. We took time to think about WHY we wanted to be in real estate.
It’s important to have a Why.
It’s important to think about how your decisions will impact your ability to serve your family and community and how it will change the way you will interact with the world.
When My Story Started
We bought a house in Mississippi near Jackson. We were new at investing in real estate and so we didn’t negotiate to get it for less. We closed on it and took all of the steps society tells you to take.
However, a year later, we wanted to move on and needed to rent it out to pay for the mortgage payment. We did that for a couple of years, after which we found another tenant for another year or two. Our last tenant was not great, but we still got those monthly rental payments to pay for our mortgage payments.
We were doing alright but did not create lots of equity. We were essentially breaking even with the payments every month. In Louisiana, we did something similar. We bought a house at retail and only stayed for a couple of years. We couldn’t sell it for a profit, so we did the same thing and placed a tenant in the house. We have basically repeated that process a few times after that. These were our first deals in real estate.
Real estate can be incredibly forgiving. It worked out that those first two houses gave us the framework for how we could accept money from tenants and communicate with them. They were great learning experiences.
When we moved to Mississippi, we got into a community with high rents and low property prices. At this point, we already had a background in real estate investment and just needed to find good deals that would turn a profit.
My First Investment Property
My first true investment was an owner-financed deal. I saw a seller on Craigslist for a single-family house and reached out to him. I was very forthright about getting into real estate and wanting to to get the property owner-financed. He agreed, with $1,500 down, and we went from there to a closing attorney a few days later. That is still one of our well-performing properties today.
This strategy has worked out for me on other deals as well, such as an 8-unit apartment. All I did was find sellers, contact them, and see if they were willing to hold the loan rather than a bank.
You Don’t Need to Be Wealthy to Invest in Real Estate
When it comes to real estate investing, you don’t need lots of money. What you really need is “sweat equity” meaning talking to sellers constantly. You will have to meet with sellers and make offers on 20-30 properties per week.
This may sound crazy, but it works. Until you make an offer, you have no idea whether a deal is possible. You be be surprised at how many offers you receive if you just ask.
You can start without having lots of equity if you are willing to put in the time and effort. Establish a portfolio as well as a mindset so you can bust through mental barriers you may have. Growing portfolios takes a lot of work. You need a perspective shift so you can feel comfortable about taking on debt to invest in money-making properties.
You can also shell out less money by fixing up the properties yourself. Paint the walls, change the electrical outlets, get rid of the trash on the property. It will take lots of work, but it will pay off.
How to Find Deals
The best way to find a deal is to talk directly to sellers. Avoid going through real estate agents, since the deals are usually not there. Talk with the actual owner of a property that is being sold. You will have a better chance of making a deal with them where you can still make a worthwhile profit. Create a win-win for both you and the seller so you can get more deals done.
The Final Takeaway
Although growing fast is what we want to do, it may not always be the best thing to do. I grew my portfolio to 80 units within the span of three years. However, this takes a ton of work and is not something you have to do. It can be great to see how much you have grown, but it can be damaging to grow too fast.
Mistakes can happen along the way, which can lose you money and put you into difficult situations. It can take a toll on you if you grow faster than you can handle. The bottom line is that growing fast takes lots of work. However, if you are committed to succeeding and doing things right, you will find it incredibly rewarding.