New York City, NY · Member since 2016 · 3 posts · 0 votes
Hello All. I am wondering how to become a successful landlord. However, no one explains how they get the first money to buy land/ home to get that property at a young age. I am not asking for a mentor but for advice.
snowballing = compounding. Re-investing your profit from your very first rental property into the next deal.
So the idea is that you have a stable income. Living frugally on that income, you use your saving to buy the first rental property. Then you re-invest the profit, including your day-job income, into the property, and repeat the process. Before you know it, you could be a millionaire real estate investor, assuming things are going right.
When we're starting out, the most important thing is education. Getting educated on real estate investing. Getting educated on whatever your day job is, so that you can maximize your income in order to be able to invest in real estate. Without it, you wouldn't be able to invest in anything, if at all, which then makes everything else impossible.
Say you make $100K. Take home pay is then $70K. Say your living expenses (including rent/mortage, bills, etc.) are $40K. So you have $30K/year left to say. Using that money, saving for 2 years, you can buy your first property. Assuming you go the rental route (this is my preferred way of building wealth):
Year 1: Income -> Property 1
Year 2: Income + Profit 1 -> Property 2
Year 3: Income + Profit 1 + Profit 2 -> Property 3
Year 4: Income + Profit 1 + Profit 2 + Profit 3 -> Property 4 (possibly even Property 5)
Year N: and so on, and so forth.
The snowballing/compounding effect can make any serious investor really wealthy.
Now, if you spend the profit on consumption (a.k.a. buying a new house, a new car, clothes, jewelry, etc.), it'll just slow down your wealth building strategy. So it's up to you
Hey Melissa Dobson
I am also 22 and have thought the same thing you are thinking before. From what I know there are 2 ways of getting money. Grinding and sacrifice to get your first property and then progressively snowball or you can try and find a partner that will be the financing person while you provide value somewhere else. Good luck, I am not an experience investor but happy to answer any questions I have the answer to. Feel free to connect.
@Melissa Dobson He is referring to starting small and building off itself into something bigger and bigger. Imagine a small snowball and you push it down a hill, it will keep getting more and more snow on it, turning into a massive snowball! That is how most investments work. It takes time and you need to build off what you have, usually starting off small.
I bought my first house at the age of 25, with just enough money to get started. Word hard, build up some money for a down payment and then work off that! No need to go huge right up front. Buy a small two family, or single family and begin there. You don't need to get rich in a day to be successful in REI.
snowballing = compounding. Re-investing your profit from your very first rental property into the next deal.
So the idea is that you have a stable income. Living frugally on that income, you use your saving to buy the first rental property. Then you re-invest the profit, including your day-job income, into the property, and repeat the process. Before you know it, you could be a millionaire real estate investor, assuming things are going right.
When we're starting out, the most important thing is education. Getting educated on real estate investing. Getting educated on whatever your day job is, so that you can maximize your income in order to be able to invest in real estate. Without it, you wouldn't be able to invest in anything, if at all, which then makes everything else impossible.
Say you make $100K. Take home pay is then $70K. Say your living expenses (including rent/mortage, bills, etc.) are $40K. So you have $30K/year left to say. Using that money, saving for 2 years, you can buy your first property. Assuming you go the rental route (this is my preferred way of building wealth):
Year 1: Income -> Property 1
Year 2: Income + Profit 1 -> Property 2
Year 3: Income + Profit 1 + Profit 2 -> Property 3
Year 4: Income + Profit 1 + Profit 2 + Profit 3 -> Property 4 (possibly even Property 5)
Year N: and so on, and so forth.
The snowballing/compounding effect can make any serious investor really wealthy.
Now, if you spend the profit on consumption (a.k.a. buying a new house, a new car, clothes, jewelry, etc.), it'll just slow down your wealth building strategy. So it's up to you
It is pretty common knowledge available out there. As you explore more and more on real estate investing, you'll find a lot of articles, books, and the likes, where you can find just about anything in REI (Real Estate Investing).
What I mentioned in my previous post is just a 50,000-ft view; a very generic strategy. As you dig deeper, you'll find a lot more details, a lot more different strategies, etc.
Also very important is to read people's experience (good and bad) and success stories. There you can find what they did, and what worked and didn't work. That'll help you avoid pitfalls in REI.
There are many first time home buyer programs out there today that offer loans with very little down. Depending on your credit score and income you may be able to purchase your first multi unit with relatively little down (as low as 3%). Another way is to seek investors but you might find that hard since they will want you to show some skill set that will make it a wise investment for them.