“But wait,” you say, “those people on TV got out of debt and quit their jobs a couple of months after taking a course on real estate investing.” I’ve seen those commercials too, but I tell you one thing- if those people on TV are real, then they are the very rare exception. It simply does not work that way.
Believe us- it is possible to make massive amounts of money through real estate investing. The key is to set your goals and, through plenty of research, find properties that meet those goals. Once you’ve purchased the property (or properties), hold onto them for at least 5 years or longer. Never lose faith that real estate investing is a highly effective way to make money. Look at the richest people in your city- of those that are self-made millionaires, I would bet that at least 25% of them made their fortunes through real estate. We often look at the list of the richest people in Canada as well as the Power List for Vancouver, Canada, and see that our estimate of real estate investors is correct.
The secret to successful real estate investing is to learn what you’re doing first, then you can make more investments as your knowledge and assets grow. If you do that, you CAN get rich off of real estate, with less money and fewer headaches than people who try to do it in other ways.
I’ve always referred to my wife Julie as a saver. When we started out we only had $16,000. But that didn’t bother Julie; she had just graduated from college and continued to live like a student. With all the extra money she saved, she paid off her student loans and continued to save any extra money. She wanted to go back to school for her MBA and she wanted to do it without getting into debt again.
When I first met Julie, we had very different lifestyles. I was enjoying the money I was currently making. I went out a lot, drove a brand-new Volkswagen with financing, and had some credit card debt. I also had a piece of property that I owned with my mom. But when I met Julie she talked about retiring at 35. She spoke of it so clearly and had such a good plan, that I knew it could happen if I worked at it too.
It didn’t happen overnight, but it only took a few months to change my situation. I quickly paid off my credit card debt and started putting a few hundred dollars away each month in savings. And then we started shopping for our first investment property.
Thankfully, we had Julie’s savings to help us with our first purchase, but if you don’t have enough in savings, don’t worry. There are ways to buy property without money.
I’m sure you’ve heard of those no money down programs. I’m not saying it can be done; it can be, but no money down is one of the riskiest ways to buy property. There are only three low-risk ways to buy property, and 2 of them don’t require that you have money saved:
1. Cash out retirement and other savings, stocks, and GICs
2. Equity in your home
3. A partner with cash.
A partner with money to invest is essential if you have no money. However, a partner won’t want to work with you if your own finances are in terrible shape. You have to fix your finances before any partner would be willing to work with you. When a partner sees that you have a lot of debt, he/she sees a person that can’t be trusted with money- either your own or someone else’s. You haven’t proven yourself as a trustworthy partner, and investing with you would be too much of a risk.
In contrast, if you had $30,000 in student loans with only $5,000 remaining to pay and you’ve found a really great deal and seem to know what you’re doing, then a partner will want to hear what you have to say.
You’ll notice the difference; one person is full of ‘bad debt’ due to poor decision-making and the other person has ‘good debt’ and has shown that they make sound financial decisions.
So now you understand why controlling your finances also means controlling your destiny. Start spending less than what you make. If you’re not sure if you do that, keep a spending journal for the next six months. Write down what you bought, the cost, when you bought it and then evaluate whether or not you really needed it. In no time at all, you’ll have a pretty good idea of where your money is going and what you can cut out in order to save even more money.
It’s possible that a few of you may be thinking “well, I couldn’t possibly cut back on buying expensive birthday presents”, or “I’m not willing to give up my yearly beach vacation”. That’s fine, as long as you have a plan to save for those things rather than going into debt for them. If you go into debt often when things like this come up, you are a SPENDER, not a SAVER, and are not serious enough at this point about growing your wealth by becoming a real estate investor.
Learn How to Retire with Real Estate with Dave’s free Real Estate Investing Starter Tips Guide. Learn how to find money for real estate deals, create financial freedom, positive cashflow and massive wealth with tips like: How to find quality rental properties, finding and keeping great tenants, and easy ways to make more money with real estate.
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