It’s amazing… the freedom… the freedom being a good steward of finances can bring you.
There are a TON of different strategies but today we are going to talk about Legacy income and how it applies to real estate.
About 15 years ago I decided I wanted to be a property investor. Yes, this was before HGTV and before I ever read anything by Rich Dad and waaay before all the “gurus” were teaching the “get rich” strategies. Yes, this was old school. When building wealth meant hard work and no easy way out. We did the basics, no fancy software and no secret sauce. We followed the principles of money that had been passed down for thousands of years.
Slow steady and calculated wins. Now, I know what you’re thinking. “I have to be rich to be a property investor”. Not True. What is true is that I decided to be a property investor when I was practically homeless. Yep, not a dime to my name and buried in student loan debt. All I knew is that from the beginning of time, the people who were consistently successful owned land or real estate. This wealth could also be transferred through generations. Interesting, right? So how do you start.
Broke or rich, work on buying your first home. Something anyone can afford… it doesn’t have to be pretty. If you don’t have a home, you could buy it to live in and do all the work on it while you’re there. No sense paying rent while rehabbing a home. Once it’s complete, you can sell or rent it.
NEVER spend the money you make on your 1st home. Re-invest it into home two. This could be a couple months for a flipper or a couple years for a buy and hold strategy. (Don’t try to get rich quick with this) slow and steady wins the race.
Use the income/profits from home one and two to purchase home 3. Simple right? It’s not sexy or glamourous but it works!
I saved, and saved, and saved, and saved to get my first true investment property. While others in their early 20’s were blowing their cash at the bar and nice cars, I was on a mission. Even when I made decent money I still ate food off the dollar menu and worked extra hours to get that down payment.
Finally, I found a home to buy. A duplex! If one side went vacant, I could always rent the other. Got it at a steal but it needed work. Little did I know how much work it needed. It was so bad that we had to start gutting it right away. But then when it rained we quickly discovered that it needed a roof. The rain would leak through the roof, into the attic, through the attic and to the second floor, through the second floor into the first floor, and into the basement. Yes, through all the floor and pool into the basement. Even the contractors that I hired would want half up front then never show up again. It was a disaster!! After long hours, and a whole lot of blood sweat and tears it was ready for rent. It was probably one of the worst experiences of my life. Give up? NEVER!
I quickly learned my lessons and as soon another home as quickly as I could. My family about disowned me and my friends all made fun of me. This time it was a single family. I learned that my duplex didn’t attract the best quality tenants even though it was really nice so I figured I’d try a single family. This second home was super easy - not. It was a nicer home than the duplex but someone broke in and stole my plumbing. YES! Who would steal plumbing?!? We quickly learned how valuable copper is and why we needed to keep the home on lockdown all the time. Another rehab project and a lot of blood sweat and tears again. I was a finance guy after all, what business did I have rehabbing houses? I’m just a little skinny dude with glasses, how could I run contractors and collect rent? Everyone thought I had learned my lesson and would never buy a home again. But then…
House 3 - Armed with everything I learned from house one and two, I cashed out what was left in my savings and 401k (by the way a bad plan because Uncle Sam takes most of your 401k when you cash it) but at this point, I’m all in. Luck favors the bold! We miss 100% of the shots we don’t take - WG. Now I know how to work with contractors and have assembled a good team. It’s time to shut out all the “naysayers” and noise makers… we are on a mission! Hey, worst case, if I go broke and least I’ll have a partially rehabbed home to live in. Who would have thought… it was slightly less painful than the second home which was slightly less painful than the first. Time to start saving for home 4.
By the time I got to home 4, I was living super conservatively. Any extra money I had went directly toward buying the next home and now I have the rents from the first 3 homes pushing me along! Also, I learned who to trust and who not to trust. I became a better land lord, although I’m still too easy on the sob stories. But it made house 5, 6, 7… just that much better.
Funny story, when the market crashed my income in lending went through the floor. Loan Officers and managers made peanuts. These houses helped my entire family survive through the 2008 economic crisis. All the people who made fun of me suddenly wanted my help and I was finally in a position to be able to help others. Was I rich? We are all rich by the company we keep. Money is only a tool we use to serve others. Money will never make any of us rich, the true value comes from helping those in need and supporting our families and their future. Creating passive income will give you more freedom to choose. It will restrict your financial bondage and you will have the ability make decisions out of abundance and love and not scarcity. Make today powerful. Make today the first day of the rest of your life.