Years ago, like everybody, I read Rich Dad Poor Dad and got turned on to real estate. I knew that one day I was going to own a rental portfolio, I just didn’t know when or how it would happen.
Discovering Bigger Pockets
I was still living in Israel at the time, where I was born and raised. I knew nothing about real estate investing, and there is virtually no community of investors to talk with. I finally heard of a virtual group that would meet via conference call.
I joined the call, and ended up being the only one on it, along with the group leader. I picked his brain for half an hour, and his biggest recommendation was that I check out Bigger Pockets.
I was hooked.
I listened to the podcasts. I subscribed to the newsletters. I bought the ebooks. I got the general, abstract point about what investing in real estate is all about.
I started trolling Trulia from halfway around the world, trying to understand neighborhoods based on the community crime map overlay. I dreamt of being able to invest in the United States, instead of i the terrible local market.
Moving to America
Six months ago, I moved halfway across the world, to Baltimore, Maryland. My online research had I identified it as one of the best rental markets in the country: low purchase prices and high rents.
I landed in Baltimore with a suitcase and a few thousand dollars to my name. I didn’t have a driver’s license, and, it turned out, although I’d worked on building up a good credit score, I had insufficient credit history. I got rejected from every kind of financing I applied for.
I was lucky to get a job in my field, web design, within a few weeks of arriving. At first I worked as an independent contractor, until my boss heard I was having trouble getting a mortgage and was awesome enough to switch me to a salaried employee. I was approved for financing within two paystubs.
As soon as I had arrived, I had started networking. There are so many amazing groups here where people share extremely valuable knowledge and experience, completely free. The first few groups I went to, I didn’t even have a license yet, and I had to Uber there and back.
I had no experience investing, so my initial attempts to give back to the community had to be more creative. I started introducing people to other resources I had encountered – investors to hard money lenders, mortgage brokers to the networking groups I was a part of. I bartered my web design services in exchange for good will and mentorship.
To acclimate myself with the rehab part of it all, which made me the most uneasy because I was not familiar with it (houses in Israel are built completely differently), I got myself work over the weekends with a contractor I found on Craigslist. I was making $13 an hour instead of the $100 I make when I freelance, but it was the best thing I could have done. I gained some practical knowledge, but more importantly, developed a relationship with a trustworthy contractor and acclimated myself to the construction phase of investing.
At a certain point, I realized I was hearing the same information over and over again at the different meetups. I had gotten the picture. Bigger pockets had given me the broad strokes. The meetups had localized the knowledge. Now I just needed to take action.
I did not feel ready. I was terrified – what if I failed? Went bankrupt? My tenants ruined my life?
I took it one step at a time. First getting pre-approval for financing. Then looking for deals with my investor-focused agent, who I met at one of my first meetups.
Each step was a milestone, an emotional hurdle I had to get over.
“I have never looked at a house before. I feel like a fraud. I’m wasting my agent’s time.”
“OMG. How the heck am I supposed to decide how much money to offer on this house?”
Each step was its own mini crisis, and once I’d done it once, it seemed painless, easy, and matter-of-fact.
The House on Forrest Ave
After a few weeks of looking, my agent called with an off market property that had just become available. It was a cute cape cod in a quiet neighborhood 20 minutes away from where I lived. 3br/2ba, investor owned, had rented for $1,500, was comped at $150k and was selling for $130.
I made an offer that evening, it was accepted the next day, and we closed 45 days later. Don’t let the simplicity fool you – there were a ton of inspections, unexpected crises related to financing and issues with the houses’s condition that came up along the way. I was terrified as usual, and seriously considered backing out of the deal. My agent helped talk me down from the edge.
I moved into my house a month ago, 5 months to the day after moving across the world. It was a stressful month – I had to get the house in order, furnish it, and try to get a renter. The doubts were there as well. What if no one wants to rent? What if I got a terrible, horrible renter? (I didn’t know the fair housing act didn’t apply to finding roommates)
It took me a few weeks to summon up the courage to post my spare rooms. First Facebook, then a local college directory, finally Craigslist and Trulia.
It was from the last two that the responses came. And it was hugely validating – never before have I advertised something that got so much response. I find meaning in providing people with one of their most basic needs – shelter.
Today I closed with the first renter. Other authors have written here about that moment when you first have the cash in hand. And it’s true, that’s the moment it all comes together. It’s the point that validates the entire process, “This thing actually works!”.
Making $500 a month from the smallest room in the house means I’m already breaking even on the $900 mortgage and taxes, since I was paying $400 rent before.
I do have additional expenses to consider of course (this first month was a vacancy, for example), and hope to rent out a larger room in the house in the next few days.
My conclusion? Real estate investing is simple, just hard. It’s not rocket science, it just takes doing.
And to beginners who are just starting out, here’s my advice: start by immersing in the community. Go to meet ups. Soak up knowledge.
At some point you’ll reach a stage where you understand what’s going on. But you’ll still be unsure of yourself. That’s the point when you must take action anyway. Have someone look over your shoulder. Take it one step at a time. But do it.
House hacking is a great way to do this, because you can make pretend you’re just buying yourself a house, then turn it from a liability to an asset by simply renting out rooms.
I wanted to say thank you to the community. Both the people I never met who inspired me with their own success and knowledge, as well as the people I met in person who gave of their time and expertise to help me on my journey. To all those who believed in me, thank you for helping me believe in myself.