Real estate investing has completely changed my life! I am on the very real path of achieving financial freedom within a few years and retiring before the age of 32. But there is a whole lot to this business that I had to figure out along the way which I now view merely as pricey learning lessons.

I was scared shitless when I bought my first investment property. And hopefully my experiences can help those of you wanting to get started on the path of financial freedom through real estate. So, without further ado…

Use a small local bank

Larger banks are usually subject to more scrutiny and regulations. Smaller banks often have the power to make more independent decisions based on the individual being worked with.

This means they often invest in the investor. Where big banks will say ‘no’, small banks often say ‘hell yes’.

Don’t believe everything you see on those bullshit flipping shows

All these shows that have gained mass popularity have made flipping homes very seductive to gullible folks looking to make money. The problem is that they make all of this look a million times easier than what it is .

They usually only show a wife and husband easily carrying out the rehab with minor setbacks. That is, if they even show the rehab at all. The reality is that that husband and wife likely have a team of very skilled contractors that know how to handle every problem that arises. They probably also have a team of experienced laborers to carry out the bulk of the physical work . This allows the couples the freedom to seek out more deals instead of being tied up with various labor.

Sure, the idea of picking out colors and designs seems so fun to ladies who are dying to put their creative touch on the project. And guys love the idea of the big returns of real estate investing. But trust me when I say that there is way more to this than what they show on TV.

The numbers are almost always flubbed when they show the budget, sale, and profit. They usually don’t furnish these homes for the buyers. And many of the projects are only partial remodels. That’s why they almost never show the whole house (just pay attention to that).

In real estate, there are possibilities of huge returns but also big losses if your not careful.

Bathroom Before

Bathroom After

It’s going to cost more than you think to get fixed up

However much money you think it’s going to cost to get it fixed up, just double it be on the safe side. You’re always going to find wonderful little gems during the rehab process that cost unexpected money to repair. And I’ll also tell you that a lot of little things can add up quick.

The duplex that I just finished cost me almost $300 alone in liquid nails, spray foam, and tub and tile caulking. Most people just don’t account for the little things that you need to get up and running like fixture covers, light-bulbs, door knobs, etc.

The cost is almost always more than just carpet and paint.

Utilities can be a hidden cost

A gas heating bill can run up to $300 in freezing temperatures during the winter. When I first started doing this, I almost shit mypants the first time I received the winter heating bill.  I really didn’t account for all the little expenses that occur between fixing the property up and getting it rented out.  Make sure you always make these items into account and have a means to float the costs.

Kitchen Before

Kitchen After

Save the cash to make the mortgage payments- put the materials on credit

The method for rental property that most investors use is known as the BRRR strategy.
Buy it right, rehab it, rent it out, then do a refinance to buy the next property.

During my first investment, I took the cash that I had to buy all the materials to rehab the property. But the problem was that it took 3 months to get it rent ready Which meant that I had to pay the mortgage and utilities out of pocket because I already spent it on materials.

Had I known better, I would have put the materials on a credit card and paid it of during the refinance. Building my credit, and allowing me to have the cash needed to float the payments

It’s going to take longer than you think

I had some experience in basic remodeling and assumed that I could get it done by myself in about 6 weeks.

Well, life happens.

I had a family and a full time job. And this was a hug project because it was a duplex that needed a COMPLETE rehab. So, get some friends and family over on the weekends and reward them for helping. Trust me…pizza, beer, and $20 can go a long way!

A friend helping me rehab the kitchen

Don’t Replace every damn thing in the house

At first I was attempting to do this because I wanted provide a great product for people to live in. But my wife quickly brought me back down to reality by showing me just how unrealistic some of these things were going to cost. I soon learned that kitchen sinks and bathtubs could be easily re-purposed by using Brillo pads and refinishing kits. Thus, only costing a fraction of buying brand new stuff.

Always keep in mind these are rental units that people will be putting wear and tear on. If you were doing a  flip to make cash on sale, that would be a completely different story. But in this situation, always remember that every dollar you spend needs to be a dollar that’s returned. Its why these are called investment properties

YouTube is your best friend

There’s no doubt that there takes a level of skill to do remodels and repairs. And trust me I know how intimidating it can be to replace a window or install linoleum flooring if you’ve never done it before. But every single repair, installation, or remodel that you could ever think of… You can find a tutorial of someone doing it on YouTube. At this point I would consider myself to be pretty damn skilled in finishing drywall.  I learned every single bit of it by watching videos by a girl called SeeJanedrill on YouTube!

And most of the stuff really isn’t that hard to do. Just watch a few videos, then get in there and try it for yourself. At first it might look like shit. But as you go, your skill level will get better. This is extremely important if you don’t have the cash to hire someone to do all the stuff for you.

I would also suggest doing everything that you can at least one time. That way,  you’ll understand exactly what it takes to get it done. And you will know if a contractor is trying to fuck you over.

Always hire a home inspector before buying

I can happily say that this is a mistake that I’ve never made. Hiring a home inspector has kept me from entering into harmful deals  that could’ve ruined everything. There is one particular deal that I was going I do early on that would’ve  financially ruined me. But upon a home inspection, we found out that there was serious termite damage that would’ve cost about 40 grand to repair. This absolutely killed the deal and there was no way in hell I was going to do it.

One week later, I got a call from a random person who had bought the property.  They got my information from the folks that lived next-door to this property. This guy found out about the termite damage only after he had already bought the house though.

And guess what? He never got a home inspection done to reveal the extent of the problem. The sad part is this guy called me to find out if I knew how he can get his money back! He assumed that I knew a way for him to back out of this deal after the transaction had already been completed.

That was an expensive learning lesson for that dude.

Vet the living hell out of your contractor

Contractors are in this for one thing and that’s to make money. Even if it means fucking you over. And it happens more often than not in this business. Make sure their licensed and bonded. Then go over all their cost of materials and up-charge. Get bids from other contractors to compare cost.

And lastly, do frequent visits and ask questions  while their working  on it. The more involved you are, the less likely they’ll be pulling one over on you. I had a contract attempt to haul off all my copper pipes “to the dump for me”.  That is, until I asked why all my copper pipes were in the back of his work truck.

FYI, I turned in all those copper pipes for nearly $250 in scrap metal. What an asshole!

Just always remember this… Treat this as a business, not a side hobby.

The number one reason why most landlords fail is because they don’t treat this like the actual business that it is. Don’t rent to just any friend or random person off the street. Do background checks, get references, take applications, sign agreements, get deposits, charge late fees, etc;

If this sounds like a lot, that’s because it is. But no one ever made any money by setting on their asses.

It takes a lot to get going, and very little to maintain afterwards. I would definitely suggest The Book On Managing Rental Properties by Brandon Turner because he created a system that pretty much anyone can implement and achieve success with.

I would also suggest checking out the bigger pockets podcast if you would like to know more about getting wealthy and r I would also suggest checking out the bigger pockets podcast if you would like to know more about  creating wealth through real estate investing.

My first transaction was a huge financial success. A 1800 sq that home for $22,000 that needed $18,000 to fix up and make into a duplex with units that rent out for $450 per month.

And the refinance was outstanding enough to put down-payments on two more houses.

Even though its scary and a lot of work, you can often find big success. And just know that if it was easy, everyone would be doing it.