Where Do We Stand on Real Estate?
My wife and I have a few friends who have experience with real estate investing. One of them invests in duplexes with his wife, one focuses on fix and flips with his wife, and one owns over 50 condos that he rents out.
We’ve taken some time to talk to all of them about their experiences, and they’ve been forthcoming and candid with us. One of the things they’ve emphasized is that you have to be willing to work. Real estate can be a great tool in your investment toolbox, but that doesn’t mean that it’s a free lunch.
They’ve also all encouraged us to try it out, provided we both think it’s right for us and that we have personalities that are suited for it.
My wife and I have talked it over, and we both agree that real estate is something that we want to get into.
Unfortunately, we don’t really have the money to do it right now, and probably won’t until I finish school. Although we’re fortunate enough to be able to attend a well-priced university and have no student loans, our income is conservative, to say the least. We save what we can, and we invest a small amount in the stock market, but for the most part, our income goes directly towards paying the bills.
So what should you do if you’re looking to invest in real estate but you don’t have any money?
Some would tell you that you should try what they call creative financing and invest now before the market goes higher than it already is.
While I think there’s a time and a place for that, I don’t think this is it. I’m sure that we could arrange seller financing or negotiate with an investor or broker, but the reality is that with school going on, I don’t have time to figure that out, and neither does my wife.
We’re also planning on relocating to another state when I graduate, and the prospect of managing real estate three states away from where we’ll be living isn’t something that gets us excited.
What Are We Doing?
For us, we’ve decided that the best thing we can do right now is to learn more about real estate investing and save for a sizeable down payment.
To learn I usually read books on real estate investing when I can fit them in and spend time listening to podcasts from Bigger Pockets. As a side note, if you have any good real estate books that you’d like to recommend, let me know in the comments! After the semester ends, I’m planning on attending a few local real estate investing meetings through the realtor’s association.
I also try to find others that are investing in real estate, sit down with them, and talk to them about what they’re doing. Although reading books is great, a face to face conversation allows you to absorb the experiences of someone you have a relationship with.
Saving, on the other hand, is a little bit of a different story.
We’ve set a goal to have $20,000 saved for a down payment by this September, which is approximately two years before I’ll graduate with my master’s degree. Once we hit that point, we plan on reevaluating where we’re at and deciding how much more we think we’ll be able to save by the time I do graduate.
So far, we’re 69.5% of the way to our goal, with just under $14,000 saved up. Ideally, we’d be saving based on a monthly rate, but the reality is that our income and expenses have proven to be all over the place during school.
To compensate, we save any large lump payments we receive, including scholarships and tax returns. During the summer, our income typically doubles or triples, and we plow as much into savings as we can.
If we save approximately 50% of our income over the summer we should be at just over $19,000 in savings by mid-August, right about the time we start getting scholarship payments. It would be more than that, but my wife will stop working when our first child is born, which will mean we’ll be relying on my income.
We’re excited to try our hand at real estate, but it’ll be a few years before we’re able to say with confidence that we’re real estate investors. That doesn’t mean that we have to give up on that dream or that we can’t move towards our goal, so we’re doing what we can now, and I recommend you do the same.