A Real Estate Investing Journey
Real estate investing is a business and like most businesses, it does take time to build from the ground up. Once you have a foundation knowledge and understanding of what real estate investing is all about, you can benefit from this business tremendously.
"The journey of a thousand miles begins with one step." - Lao Tzu.
How did I get started investing in real estate?
I got started when I turned our old home into a rental after we purchased our new home. We become an instant landlord. I discovered after a few months paying for all the expenses from the monthly rental income that we got, and we still netted almost $500/month.
I am a curious person and when I experienced a benefit from real estate passive income, I decided to learn more about real estate investing. I looked around for local real estate investing education that I can take, but there was nothing readily available in 2001. After a few months, I saw a TV commercial from a real estate company advertising that they were coming to my city for a half-day free training on real estate investing. I called and signed up for the event.
What did I learn at this half-day free event
What I learned from the presenter was a lot about the benefits of owning real estate investment properties and how much money could be made from them, but they would not disclose much on “how” I could get started. They did not mention how long it would take for one to truly be financial free from real estate investing.
In order to learn the how I had to sign up for 3 full days live seminar, costing me $7997. I did sign up and learned a lot about different real estate strategies (wholesales, fix and flip, buy and hold, subject to…etc. ). I was overwhelmed with all the strategies and still not sure which one that I could implement right away. None of these topics were taught deep enough on the HOW so that I could go out and do it on my own. More offers to come.
More money to spend
After 3 days, they offered 6 months or 1-year private coaching to work with a coach so I could lean the necessary in’s and out’s of real estate investing and having a coach holding accountable on a weekly basis on my progress. I signed up for 6 months coaching program for $20,000. The fact that I did not have the money to make one single payment, so I selected 4 months payment option plan. It was a very difficult decision to make because it was a lot of money! And I just started a new mortgage company. I took a faith and signed up for it. I had a long discussion with my husband about it and he supported my decision. That was one of the biggest ticket items that I ever spent since I came to the US. You wouldn’t know how much I was motivated to be successful in the real estate investing so I could at least get back this expensive tuition as soon as I was able to. I calculated that if I could buy four rental properties and each of them produce $500/month, totaling $2,000 /month and I could recoup my education money in a year. The rest of the gain would be my profit!
What I got out from 6 months of private coaching:
I gained clarity on which real estate investment strategy fitted me best for our overall financial objectives. I wish that they covered this in the 3 days live training seminar, then I could have made the decision not to join the 6 months private coaching. I have shared with you about different real estate strategies from this blog post. You must know what real estate strategy will best meet your overall financial objectives, so you can focus and master that one strategy, before even thinking about venturing into others, if they are still relevant. Now you know you do not have to spend money for a private coaching to figure out which strategy best fits you. You can get it from this link.
"The more you learn, the more you earn" – Warren Buffett
Be a student of life
I’m glad I took the training. Despite the cost was high, I could not find any other real estate educational source that I could have saved some money. I am a frugal person by nature because I came to the US with nothing except a few pairs of clothing. I came from a culture that reinforces the idea that we do not spend until we have to earn it first. This was the backdrop as to why I had to work two jobs while I attended 4 and half years of college in order to avoid student debts.
Definitely, It was not easy as I was trying to learn a new language and maintain my GPA so that I could continue to get the scholarship.
I know without learning and understanding the foundation of real estate investing, I would not be where I am today. I wouldn’t recognize any real estate opportunities presented to me. I couldn’t make a well-informed decision to distinguish a good real estate project from many not so good ones.
One priceless thing that occurred to me during the 3 days live event was someone I met there, who eventually became my real estate mentor and has had a huge impact on my real estate investment career.
Time changes as the technology evolve. There are a lot of readily available and free real estate tools and resources available online now that were not there a few years ago. I’m very grateful for some of these tools that make it much easier and enjoyable to do the necessary research. Thank you to all of those brilliant internet minds. You can check a value of a property from www.trulia.com or www.zillow.com. You can learn about a city demographic from www.city-data.com, etc… Prior to the availability of these tools, I had to rely on other specialized knowledgeable team members (real estate broker, loan agent and property managers) to provide me with the needed data and information. Nowadays, I can do all market research from my computer and get a clear idea where I want to invest next. I am still using my real estate power team to provide a second set of verification on my findings and analysis.
”I don’t look to jump over 7-foot bars; I look around for a 1-foot bars that I can step over." – Warren Buffett
Real result takes time and success come from you and your focus
No matter how many programs or coaching you have signed up with, what I have learned that YOU still have to put in the work and take consistent action working toward those goals.
Most of the programs that I was involved in the past made it seemed so easy and some of them even made it sounded like your success could happen fast and effortlessly.
Real estate investing is learnable subject and you too can do it when you put your effort into it. This business has created a lot of wealth for many other real estate investors and they’re ordinary people just like you and I. Give yourself a couple of years to learn one real estate investing strategy well…the one that meets your financial objective, and if you wish, you then can move on to a next real estate strategy.
To be successful in this business, you will need to learn as much as you can in your spare time and then take actions. You may be overloaded with information, but the best starting point is to assess where you’re now with your finance and then pick one specific real estate strategy that fits YOU. Through my personal experience, once you pick a specific real estate strategy, the education money that you invest in the real estate training will be less than the money that you will invest in your 4 years of college. Most of these training courses will cost between $1,997 - $25,999 depending who offer it. The reward is huge when you consistently work your plan, and you will make your money back.
Why do I like Buy and Hold real estate investing strategy?
I like to buy and hold real estate investing strategy for two main reasons.
The first reason is the income now that can cover our monthly household expenses that my husband and I will not be tied down to a job, which may be taken away totally out of our control (e.g. layoffs or company running out of funding). This event had happened to both of us before. It was not fun when we have financial worries, especially that we have young children. I want this business to serve our lifestyle, now and into the future. Work when we want to and not when we have to. Besides, we have two sons, we want our time to raise them well and be there to support them. I do not like the traditional way of making a living or having a JOB that maybe one day is taken away, risking our family’s finance falling back to square one. I would rather work hard on a new path that may take up to 10 years, but I know it will eventually provide my family freedom of time and financial abundance.
Whenever you work for a company there is no such thing as a job security. Things may happen or what if we can’t work for any reason, our finance can be in trouble. 78% of American full-time workers are living paycheck to paycheck and it takes toll on their health ----> This is an article by CNBC NEWS
The second main reason is to create generations of wealth. This strategy fits well with our overall financial objectives. At the time that I started in real estate investment, I already had an active income job from a mortgage company. I love this business and I also worked long hours. I missed spending time with my first son when I had the business. Whenever I want to go somewhere for a month, my income dropped, but our passive income from our cash flow properties stay constant. I worked in the business so we could use our active income from it to buy more income producing properties.
Through my own personal experience, when you acquire a good asset, it works and generates cash flow when you’re not around. Properties that generate positive monthly cash flow is not just an investment but they are also hard assets. We all need shelters and when population continues to grow and there is finite land to build on, your property value will continue to appreciate due to increasing demands.
Buy and Hold real estate strategy is a long-term investment strategy!
When you know how to buy right, your rental property generates positive cash flow from day one and continues to create wealth for years to come. Tenants who stay at your rentals will pay for your mortgage so your loan balance will continue to decrease, i.e. you own more of the house as your loan is being paid down. The longer you hold on to your real estate, the more equity you will accumulate.
How long did it take you to be financially independent through real estate passive income?
It took me almost 8 years to be financially independent through real estate passive income. By end of 2008, we owned 45 real estate projects across 5 different states and the passive income generated can pay for our family monthly expenses. How can I finance for 45 projects?
When you have a job, it’s great to borrow through traditional financing through banks or mortgage broker. You can borrow up to a total of 10 loans, including your primary residence. Traditional loans will look at your current income and credit to qualify for this type of loan. This is a great way that you can get the lowest interest rates to maximize your monthly cash flow.
I and my husband were able to get a combined total of 20 rental property loans through both of our income. Over time, our investment increase in value and we continue buying them with cash via cash-out refinancing from previous properties, which got double in value over a 10 years period. By the way, we did not have to pay tax on the money obtained via cash-out refinancing. With cash withdrew from our appreciated properties, we turned around and bought additional properties below market prices from real estate wholesalers as we continued to build our real estate portfolio.
The next financing strategy is to do real estate portfolio loans. These are the lenders that you finance 5-10 real estate projects in one commercial loan with assets in your portfolio. They can lend up to 70% of property value and they will not need your income to qualify for cash-out refinance.
One such portfolio lender is CoreVest American Finance Lender, LLC (http://www.corevestfinance.com). The interest rate is typically 1.5-2% higher compared to the traditional lenders. They do not care how many real estate projects you have under your name.
I used to own a mortgage company and I have worked with hundreds of wholesale lenders. Something that I am also very passionate about. My company closed S200+ Millions in mortgage loans so I understand in depth about mortgage loan underwriting guidelines. Each lender’s guidelines can change overnight so it’s important that you have a good relationship with a mortgage broker, who can guide you thru the process successfully.
How did I survive market downturns?
The real estate market goes thru cycles similar to the stock and other markets. I survived market downturns by setting aside reserve funds that can bridge a property over when cash flow is choppy, e.g. delay rent payment when a tenant loses a job, longer than anticipated vacancy period when the rental market is soft, etc. With reserve funds, I am not forced to sell when there are hiccups in an investment and when the market is less favorable. Investing in a few dozens of real estate projects, I can smooth out any unexpected dips with income from other stronger investment. This link illustrates and serves as a reminder for all of us on the principle of not putting all eggs in one basket. Diversify your real estate portfolio just like you would diversify your stock and bond holdings.
All my investment are the long-term investment; therefore, I have to have a plan in place for each of my real estate projects: many are buy and hold, but some are fixed and flip, etc.
Another key way to survive a market downturn is to stay current with market trends and to commit to continued learning to be well informed. You can anticipate a market downturn and turn it into massive opportunity to build your real estate portfolio faster. You can prepare to have cash set aside to acquire more projects at deep discount when the market weakens. You can sell your projects that maximize your return in one market and do a 1031 exchange into another upcoming market with higher growth potential. You only take this into consideration when the numbers make financial sense. If your rental properties are in a good market and it consistently generates positive cash flow, then you may consider keeping the cash cow. Always do your own due diligence before making a change in a project.
Buy and Hold strategy is a long term real estate investment! How realistic is it to create financial independence through real estate investing?
It’s possible when you have a plan in place and work toward it.
Set a realistic financial goal. If you want to earn $4,000 per month, then do the necessary research and buy a first rental property that can at least give you a net after all expenses monthly cash flow of $350-450/month. Then you set another goal to buy a second income producing property, then a third, and a fourth.
When you have a plan, it is much easier for you to see and work toward it. When you can’t achieve it, then you can adjust and make some changes, so you can still work toward it. I planned to achieve my financial independence in 10 years, but I was able to do it in 8 years.
Here’s a simple spreadsheet that I have put together for you to use and figure out where your income and expenses are now. After you put in all the figures, you will find out how much you can save away each month for a down payment of a purchase.
How my knowledge can help YOU?
My commitment is to change lives by teaching and sharing what I have learned in the last 17 years to you so you can apply it to make your financial future better through real estate investing. I have invested in hundreds of real estate projects and have analyzed thousands of them before I only selected good ones to add to our portfolio. I have invested in 6 different real estate markets in the US and now currently holding in 5 markets. Real estate is a business, so I manage it like a business and have worked with a lot of strong power team members to run a successful income producing business. I still love to learn and stay current with the real estate trends. I cannot and do not like to predict the market, but I like to anticipate the market in a long run.
Why do you decide to share your knowledge?
I was helped by two amazing mentors and it’s my turn to pay it forward to help others.
Another reason is that I was raised by a great father who taught me to give and help others when I know it can benefit them. Be kind and compassionate is better than to be right! Leave a comment below for me! _____________________________________________