When getting started in real estate investing, it is essential to approach with the right angle and attitude. The days of walking onto the scene and making millions in your first year are long gone (if they ever existed at all), and these days it is all about baby steps. There has not been a better time to be a start-up investor in decades since interest rates and prices, in general, are so low right now. The key to starting out with reliable success in real estate, at a time when the market is not blowing up, is to invest in income-generating properties. They may not be glamorous, but small condos, duplexes, triplexes, and even four-unit buildings, will produce steady and reliable monthly cash flow. Garnering and maintaining a few of these is a great way to start development of an ownership portfolio, and—more importantly—they should allow the start-up investor enough income to quit a day job and focus on making some real income moving forward.
Again, the key is to start out slow and steady. Do not expect huge immediate returns. Imagine your first investment is a duplex, for which you charge $800 rent for each side. If the property only costs you $1,200/month to maintain, then you are earning an easy $400/month. It doesn’t sound like much, but it is a great launching platform and not a huge risk for a first-time investment. If that works, you’ll buy more, and once you have five of these, you will be earning almost $25,000/year. Once again, it’s not an overwhelming amount of money, but you could do much worse working much harder.
Once you’ve developed a bit of a portfolio, some capital, a whisper of a reputation, and—most valuable of all—the experience of owning and maintaining an investment property, you will be much better equipped to focus on bigger, and more fruitful investments. Plus, in that first year or two of development, you may even collect enough funds to quit your day job, allowing you to focus your attention on your investment projects.
After a while, you will see that you are not paid in labor hours as an investor. At first, acquiring properties, tenants, lawyers, etc., will be a lot of work, and you will feel underpaid. But if you take it slow, adding one property at a time, you can learn all of these skills at a very manageable rate, until eventually, the money is coming in with very little labor input on your part.
This is the beauty of investing: if you prepare correctly, and start from a good portfolio launching point, you can plant the seed of an investment, and then simply sit back and watch your money grow.