Why I Chose Real Estate Investing Over Other Business Options
Hey there, Paul here!
When I decided to start my own business, I knew I wanted to find a venture that I could ease into while still working my corporate job. After considering various options, such as franchises, insurance sales, and becoming a real estate agent, I ultimately chose to pursue real estate investing. In this article, I’ll share the reasons behind my decision and how I got started with the BRRRR (Buy, Rehab, Rent, Refinance, Repeat) method.
Setting your sights: The Allure of Real Estate Investing:
Real estate investing offered several compelling advantages that set it apart from other business options I considered. First and foremost, it provided the opportunity to make multiple small investments over time, rather than requiring a significant upfront commitment. Additionally, real estate investing allowed me to leverage borrowed money to acquire assets, which meant I could start building my portfolio without a substantial amount of personal capital.
Another factor that drew me to real estate investing was its simplicity in concept. Unlike many other businesses that require developing a unique product or service, real estate investing revolves around a basic human need: housing. This simplicity made the business easier to understand and execute, even without prior experience.
Elevation: The Potential for Passive Income and Wealth Building:
One of the most attractive aspects of real estate investing was the potential to generate passive income while simultaneously building long-term wealth. By acquiring rental properties, I knew I could create a steady cash flow stream that would provide financial stability and flexibility. As I paid down the mortgage on each property, I would also be building equity and increasing my net worth.
Real estate has historically appreciated over time, meaning that the value of my assets would likely increase in the long run. It wasn’t a guarantee, of course, but the potential for appreciation further solidified my belief that real estate investing was the right path for building lasting wealth.
Research Mode, Go! Conducting Research and Due Diligence:
Before diving into real estate investing, I spent approximately three months researching and educating myself on the industry. I found online resources like BiggerPockets and various real estate books to be invaluable in providing foundational knowledge and practical insights.
To ensure I was making informed decisions, I consulted with an attorney and a CPA to discuss the appropriate entity structure for my investments and to develop a solid lease agreement. I also attended local real estate investor association (REIA) meetings to network with experienced investors and learn from their successes and failures.
Get out your binoculars: Focusing on Single-Family Properties:
When I first started investing, I chose to focus on single-family properties for several reasons. They were readily available in my local market and were relatively affordable, making them an accessible entry point. Additionally, single-family homes were intuitive to understand, as most people, including myself, have lived in a house at some point in their lives. It wasn’t until later that I branched out into commercial real estate.
Anyone want to go for a hike?: The Scalability of Real Estate Investing:
Another factor that influenced my decision to choose real estate investing was its potential for scalability. I believed that once I proved the concept of buying and leasing a rental unit, I could acquire a significant number of properties over time. This scalability would allow me to grow my portfolio and increase my passive income stream, providing greater financial security and freedom.
Chaching: Tax Benefits and Tangible Assets:
Real estate investing also offered several financial advantages, such as the potential for tax benefits. By acquiring rental properties, I knew I could improve my overall tax situation through deductions and depreciation.
The tangible nature of real estate assets was appealing. Unlike many other investments, such as stocks or bonds, real estate is a physical asset that I could see and touch. This provided a sense of security, knowing that the value of the land and improvements was unlikely to ever drop to zero.
Wash, rinse, repeat: Implementing the BRRRR Method:
When I first started investing, I learned about the BRRRR method through BiggerPockets. This strategy involves buying a property, rehabbing it, renting it out, refinancing into a long-term mortgage, and then repeating the process. I was attracted to this approach because it offered a way to recycle my available cash and scale my portfolio more quickly.
Initially, I had some concerns about whether the refinance step of the BRRRR method would work as advertised. However, after executing my first deal, I found that it did indeed work as expected. To prepare myself for potential challenges, I set aside extra cash to cover any unexpected expenses or delays during the rehab process.
Looking back, I believe that starting with the BRRRR method was the right choice for my situation. It allowed me to maximize my available capital and grow my portfolio at a faster pace than the traditional method of putting a 20% down payment on every investment property.
What does it all mean?
Choosing to pursue real estate investing over other business options was a decision that has greatly impacted my life and financial future. The potential for passive income, long-term wealth building, and the tangible nature of real estate assets made it an attractive and rewarding path.
By conducting thorough research, consulting with professionals, and focusing on single-family properties, I was able to start my investing journey on a solid foundation. Implementing the BRRRR method further accelerated my progress and allowed me to scale my portfolio more efficiently.
For anyone considering real estate investing, I encourage you to educate yourself, network with experienced investors, and take action towards your goals. While there will undoubtedly be challenges along the way, the potential rewards of financial freedom and lasting wealth make the effort well worth it.
Ready to make your choice? Book a call with me. https://bit.ly/3WYIMHm
To Hearing From You,
Paul David Thompson