Investing while renting?!

[Mike Greenwood]

Hey BiggerPockets! I recently became a pro member and I’m looking to begin my real estate investing journey! The catch is, I just signed a 12 month lease in the Milwaukee area because I was relocated for my job. I want to begin my investing as soon as possible. So with that said I’m unsure which direction to take. My big picture goals for real estate is long term rental properties and flips. However in my current living situation I don’t believe either of those would be a good option to start with. I have been researching wholesaling and believe that wholesaling may be a better opportunity to get started at least in the short term. Has anyone been in this situation or done something similar? Any advice from the BiggerPockets community will be greatly appreciated! Thanks!

[Kyle Pockat]

Mike, congrats on making the decision to make the first steps in investing in real estate! Determining those first steps will likely be the hardest part--but don't get discouraged! It will get easier (and less daunting) as you become more experienced. To answer your question about investing while renting, there are a number of investors that have become successful because they rented (at least initially while they were first starting off). In one of the early podcasts, the individual managed to convince his wife to sell their big house, move in to a smaller apartment and use their sales proceeds to invest in cash-flowing rental properties! In certain markets, renting may be more cost-effective than buying which means your monthly payment will be lower than if you owned a home. If you're thinking about conventional/bank financing, they'll look at your monthly expenses to determine what you can afford (rent + car/student loan payments, credit card payments, etc.). So if your rent is less than a mortgage payment + monthly property taxes + homeowner's insurance and PMI (if applicable), you might actually be increasing your purchasing power by renting! Seems kind of counter-intuitive, but if you look at the numbers, it makes sense! So don't let your current circumstance of renting hold you back! You got this!

On another note, are you thinking of investing in the Milwaukee area or elsewhere?

Kyle