Low Income Rental Property Investing

[Frank Connelly]

Hello, all!

I'm a teacher in Central Texas, and am completely new to rental property investing. I've read some books and I've listened to countless hours of podcasts; however, I am obviously green as hell. In an attempt to garner the most genuine advice, I'm going to attempt to maintain 100% transparency about my (less-than-ideal) financial situation.

I don't make much money. After taxes, I personally pull in $4,000/month. $400 of that goes into a 457 Roth IRA. $1,200 goes to my biggest liability: the house that I provide for my wife and daughter. The rest goes to utilities, food, etc. I probably have around $200 that I could save per month. I only have about $500 saved in my emergency fund, and about $100 saved in my "down payment" savings account. Like I said, I'm green as hell.

I have a TON of liabilities. Including my house, college loans, and auto loans, I have close to $190,000 in liabilities. My goal is to gravitate towards more assets. 

My goal is to break the chain of lower-middle class living that my family has so blissfully perpetuated through multiple generations. Is my goal to become a real estate investor too farfetched? Do I need to pull in more money first? (My wife goes to college part time, and makes about $1,400/month. I'd prefer to be able to operate independently from that money.) 

Thank you in advance for your insight!

-Frank

[Jaron Walling]

@Frank Connelly Welcome to the BP community and I hope you achieve your goals! You'll find nothing but amazing knowledge and harsh truth in the forums. I grew up in the same scenario you described and understand the difficulties to break the cycle.  

I'd solely focus on cleaning up the debt and living below your needs. I'd sell the car(s) and buy something with cash. Most vehicles depreciate faster than you can blink. I'd focus on selling or paying off BAD debt. You can't be a slave to the lender and think you'll get ahead. The house isn't a liability unless you over paid and can't afford the payments. I jump started my journey by selling a treasured motorcycle to pay off a car. I started saving an additional $350 per month and realized the car purchase was a mistake. Another thing you could do is stop funding that Roth IRA. That money could be used for investments that yield greater future returns including cash-flow, principle reduction, appreciation, and tax benefits.