Congratulations on entertaining the question “how to get started in real estate investing?” In this post I’ll go over some unique strategies (and not so unique strategies) for how to get started in real estate investing – some of which I’ve actually used!
I decided to write this post because I realized I was getting the same question over and over again- you guys wanna know how I got started! I’m happy to add to this at any time if you guys have any other questions that aren’t answered after you read this post.
But first, who am I and why am I qualified to answer how to get into real estate investing.
I’m not qualified. I am just beginning in this whole real estate investing thing. While I’ve been around it my whole life, I really only started understanding what I was doing in 2017 – after I found the biggerpockets podcast. It was then I realized that real estate investing makes sense. It’s a brilliant way to make money now and in the future.
Real estate investing is tough. It’s not quick money. It’s not a get rich quick type of gig (I mean c’mon, most things aren’t.) Unless you’ve opted for a way to do it totally passively, you’re buying yourself a job. But that job could eventually turn into something that can run on autopilot and become passive income for the rest of your life.
There are so many ways to get into real estate investing, here are a few ideas to help get the gears in your mind turning on how to get started in real estate investing!!
How to Get Started in Real Estate Investing – 7 Strategies
House Hacking
This is where you buy something you can also rent out. Usually a 2-4 unit multifamily but some people house hack by renting out rooms.
You need to qualify for a mortgage and have some sort of savings for down payment and closing costs. The cool thing about house hacking though is that mortgages for owner occupants are typically cheaper than those for investors and require a lot less money down.
In lots of people’s cases the money received for renting out the rest of the property can cover or close to cover the mortgage.
Live in Flip
It’s probably pretty obvious what I mean this, you buy a house that needs work, move in and fix it up as you live there. The best part about a live in flip is if you live in it for 2 or more years, you don’t need to pay high capital gains taxes on the profit.
I wrote a post with all the reasons someone would want to do a live in flip, (link here) there are obviously reasons why you might not want to do it, but we’ll focus on the positive for now.
Brrrr Strategy
You buy a single family or multifamily property needs some work, fix it up, rent it out but instead of selling, you refinance and get your money back out!
Brrrr stands for buy, rehab, rent, refinance, repeat. In my opinion it’s just like flipping but you get to the property at the end and collect monthly income. WHAT IS BETTER THAN THAT!?!
Every flip we’ve ever done, I think about how if we just kept the property we’d have tens of thousands of dollars coming in every month in rental income. That is why the brrrr strategy is my favorite. You put a lot of time, money and effort into something at the beginning and continually collect income for as long as you own the property. Read more about the brrrr strategy in this post (link here.)
The HHbrrr
The house hacking brrrr strategy is something I might have just made up? This is kind of like a combo of house hacking and the brrrr strategy.
For example, we bought a 2 unit foreclosure that needed a lot of work. We fixed up both units, rented one out and moved into the other unit. Then we got a HELOC on the home and got all of our money back out. The best part is we were able to use that money to purchase a duplex!
I actually wrote a whole blog post on how we are currently house hacking a 2 unit and refinanced, read the whole thing here.
Save Save Save and Pay in Cash
Saving all your money to buy a house in cash isn’t ideal and is probably a pretty obvious option, but maybe someone hasn’t thought of that. In some locations this might be totally unrealistic because the prices of properties are just too dang high.
If you’re one of those people who buys coffee everyday or eats out every day or has subscriptions to all the streaming networks, that’s thousands of dollars every year! It may take a while to save up, but the time will pass anyway and every little bit helps.
Get a Loan
You could also save just enough for a significant down payment to obtain an investment loan, usually 25% of the purchase price. But make sure if you buy a fixer upper that you have a plan on how to pay for renovations.
There are also hard money loans, which are expensive, but if you build them into your costs and the numbers still make sense go for it! Just make sure you have a plan for getting out of the loan.
Partner Up
If you need money to get started in real estate investing, consider partnering with someone who has money to invest. I know, easier said than done, especially when you don’t have much experience in real estate and need to convince someone they should invest their hard earned dollars with you.
We’ve worked out a deal with a partner who pays for every thing. Yes, every single thing from purchase to renovation to utilities. We do everything else from managing the design, the subcontractors, the finances – and we actually physically do the work to cut down on reno costs and increase profits. Then we split the profits or losses 50/50 (so far no losses, fingers crossed.)
Did these 7 Strategies for How to Get into Real Estate Investing Get Your Mind Working?
I hope this post on how to get started in real estate investing helped get the ideas flowing. There are an infinite number of ways to get started in real estate, the seven above are just a few of my favorites.
I’ll link to the posts I mentioned above again as I definitely think you should read them all!
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