I struggled to come up with a title for this series of blog posts. It seemed as I wrote through the story of buying my latest rental I would go off in mini tangents about a certain topic. I tried to stay focused, but there are so many things to understand when it comes to real estate investing and more importantly, where I’m coming from as an investor. I hope you enjoy these posts on how I went about purchasing my latest rental property and the approach I have taken towards real estate investing (not necessarily the one you should take). If you enjoyed this post and found it beneficial (or have questions) please let me know in the comments!
It was the summer of 2017 when I first announced my plans to purchase my next rental property. From July 25th to when I slipped on my crocs and rode my bike to the title company to drop off my earnest money, a lot has happened.
I tried to tweet my progress throughout the entire process to remind myself later of the ups and downs. Now I’ll try to delve deeper into the process, looking back on the purchase of my latest property. This happened to be the most difficult one to purchase when it comes to time invested. Even though I’ve purchased two other rental properties already, I continued to reflect on exactly what I wanted in my next property. (Want to follow me on Twitter?)
Deciding to buy a third rental…
It all started with a slightly annoying day at work. I had originally planned to not purchase my next rental until spring 2018 since I would likely be able to pay cash. But if you’re not happy with the way things are, you tend to make plans to fix them and this was just an acceleration of the plan. I don’t like to complain about my job since I have it pretty good (work from home, full insurance premiums paid etc.), but I have a strong desire to capture back my time, to work on things that I enjoy, and to most importantly – work part time. My goal for 2018 is to have more scheduled off days than working days on any given week. For me personally, the best way to accomplish this goal is through real estate. It is something that has been in my family from quite some time, but don’t confuse that with thinking that I knew or know what I’m doing.
I had to learn just like everyone else when I purchased my first rental back in 2012 at the age of 24. Probably the most important piece was having the support from family and Miss QCI. It was just the kickstart I needed to buy my first, second and now third rental property. Miss QCI has truly become my sidekick landlady doing everything from helping me install a toilet to handing out eviction notices (one that needed the women’s touch).
It seemed owning two rentals (3 units) was the perfect balance between the amount of time they required and the payoff (see my 2016 rental income). But if we bought one more and paid cash or paid it off as soon as possible we would have some much needed cash flow as we look to change our working situation in 2018.
Where Should You Invest in Real Estate?
There are many people who recommend not investing in your local market. After all, it truly isn’t a passive investment if you’re managing the property yourself. Plus, what are the chances that the place YOU live is the best place IN THE COUNTRY for real estate investments. I understand where these people who preach this are coming from and I think anyone going into real estate investing should as well. Whether people may not agree with me, the below sums up my thoughts on this topic:
- The numbers work in my area. (you shouldn’t invest locally if they don’t)
- I like managing my rentals and enjoy the work that comes along with them (even the disgusting jobs – sewer backups and removing toilets keep me humble)
- No one can run my rentals as efficiently and profitably as I can. I am an efficiency freak, I am constantly looking to optimize my entire life and this spills into rental management.
- I like control and lack trust. I know you can find rockstar property managers, but I am already a rockstar property manager.
- My goal with real estate investing is have a small portfolio that still covers a significant portion of my living expenses. I have no desire to go bigger or be a real estate mogul. If you’re looking to scale to a large real estate portfolio, you should probably go a different route. It’s all about balance for me and this is hard for some people to understand. More is not better for me personally. With lots of things in life, I have my ‘enough’ point.
Now that you understand some of the background and my perspective…In my next post I’ll talk about the initial steps I took towards purchasing a property including initial discussions with my realtor and financing!