In the realm of real estate investment, success can often feel elusive. However, many successful investors will tell you that the key to unlocking this success is not in reinvention but imitation. This is, in essence, the philosophy of using proven real estate investment strategies that have been used by others. Instead of trying to craft an all-new, all-different strategy, you can often find that by adopting a tried-and-tested approach, you can achieve remarkable success in the realm of real estate investment. Now we’ll walk you through the journey of one set of investors who managed to purchase five properties in a span of a single year by adopting this approach.
#1: Knowing your Goals and Where to Start
Before diving into any investment strategy, it is crucial to recognize your goals. In the case of the investors we’re referring to, their objective was to achieve financial independence and retire early. To accomplish this, they had to get a firm grip on their financial situation, live modestly to save money, and learned to leverage the power of investing.
In getting started, just like ours, your journey may involve a great deal of learning and acquiring knowledge. To understand the mechanics of real estate investment, they read multiple books on the topic, attended conferences and seminars, and actively engaged with others in the space.
#2: Building a Network and Learning from Others
Once equipped with the fundamental knowledge, the next step is to network and learn from other professionals in the field. During their journey, the investors made use of local Real Estate Investment Associations (REIAs) where they engaged with other investors who were willing to share their experiences. By learning from these seasoned investors, they were able to glean valuable insights into successful strategies that had already been proven to work. This invaluable experience meant they were able to avoid many pitfalls that might have harmed their overall investment strategy.
#3: Emulation, Not Invention
Armed with knowledge from books, seminars, and networking, they were ready to put this wisdom into action. Instead of trying to reinvent the wheel, they decided to emulate the successful strategies that they had learned from other investors. These included:
– The BRRRR Method- An effective real estate investing strategy that involves buying, rehabilitating, renting, refinancing, and then repeating the process.
– House Hacking- Living in one unit of a multifamily property while renting out the others to offset the cost of the mortgage.
– Long-Distance Real Estate Investing- Investing in properties located in different cities or states for diversification and to benefit from different real estate markets.
The clever adaptation of these strategies led to the acquisition of five properties in a year.
#4: First Property – House Hacking
In their first foray into real estate investing, they got a taste of house hacking. They purchased a duplex, living in one unit and renting out the other. This allowed them to mitigate the cost of their mortgage while getting hands-on experience managing a rental property. The income generated from the rented unit offset their monthly mortgage payments, reducing their overall living expenses.
#5: Second Property – BRRRR Method
With their house hacking strategy underway, it was time for the next strategy – the BRRRR Method. They purchased a distressed property at a lower price, renovated, and rented it out. This increased the property’s value, enabling them to refinance the loan and take out a new one based on the improved value. The cash drawn from the refinance was then used to repeat the process.
#6: Remaining Properties – Long-Distance Investing and BRRRR
For the remaining properties, they decided to diversify geographically via long-distance real estate investing. This strategy allowed them to capitalize on different real estate markets. They used the BRRRR method and combined it with the long-distance investing strategy to reap the benefits of the two approaches.
#7: Learning from Challenges Along the Way
In this journey, and just like any other investors, they also faced several challenges. Renovations took longer than expected, properties were challenging to rent out, and financing was sometimes tricky. However, by continuously educating themselves, staying patient, and keeping the end goal in mind, they managed to navigate their way through these obstacles.
#8: Finding Ongoing Success
Their real estate investing journey didn’t stop with these initial purchases. They used their accumulated knowledge, experience, and money to further grow their real estate portfolio. The next steps included purchasing larger multifamily properties, looking at passive investments like real estate syndications, and continuously learning and networking with other real estate professionals.
The road to real estate investing success isn’t easy. But, like our investors, it can be made more manageable by applying strategies that have been proven to work. There’s no need to invent unique investment methods; you can achieve financial independence by learning and copying from seasoned investors. So continue to study, network, and most importantly, take action.
Remember that this path is not without its bumps, so it’s crucial to stay patient and keep your goals in sight. Real estate investing is a long-term game where the prize is financial freedom. Even if the journey seems challenging, remember that a steady and consistent approach will yield positive results in the end. Let the tale of these successful investors inspire you as you embark on your own real estate investing journey.
