Start Your Path to Wealth: Tips to Start Real Estate Investing in the New Year

Embark on a quest for financial prosperity with the secrets of real estate investing, freshly served in our latest podcast. We’re not just talking about making a quick buck; we're diving deep into the strategies that build long-term wealth, starting from the ground up. Understand the critical components of your credit report and how it can make or break your journey, and listen closely as we explain the nuances of debt-to-income ratios that could unlock superior loan options. Grab your notepad, because we're also unpacking the resilient mindset needed to navigate the waves of property investment, ensuring you're equipped to handle any challenge this adventure throws your way.

As we chart a course towards financial independence, we lay out a five-year plan that's more than a cookie-cutter blueprint – it's a tailored suit for your monetary goals. Hear firsthand how to pivot and adapt when those inevitable obstacles appear, keeping your eyes on the prize with a strategy that evolves alongside your ambitions. We're offering a glimpse into our exclusive courses – the prepare to invest mini course and the six-week crash course for beginners – designed to transform novices into savvy investors, ready to confidently claim their slice of the real estate pie. Join us for a journey that's not just about acquiring assets, but about crafting the lifestyle you've always envisioned.

Transcript

Speaker 1: 0:00

If you want to start investing in real estate in 2024, then I got you. Welcome to the Money Cheese man Podcast, a fun and safe space for personal finance, investing and entrepreneurship tips, where we get the choose man on all things money, with sass and humor. I am your host, violeta, a first generation Mexican immigrant, a real estate investor, entrepreneur, and I am here to help you kick ass in the financial game. Each week, I not only bring you expert tips, but also share the financial freedom and entrepreneurship journeys from our own community, because you know representation is important. So grab un cafecito or, si quieres, an adult beverage and let's get into this week's Money Cheese man. Hola, hola, welcome to another episode of the Money Cheese man Podcast.

Speaker 1: 1:01

So it's a new year and you know many of y'all might be interested in, you know, starting to invest in real estate. So this week I'm gonna drop some tips to help you get started and you know how to, you know, be more successful in your real estate investing journey. Now these are part of my 12 days to prepare to invest in real estate, series that I did earlier in the year, and you know I just compiled some of my favorite ones, so that way you have it all in one go. Tip number one is do not jump in blindly like I get it. You want to get out there, you're a go getter, you're ambitious, you're motivated to start investing, buying real estate. There's so much that you have to learn and you don't have to know it all, but you want to know a little bit of the whole process and what it is and what goes into it. That way you understand what you're getting yourself into. You know this is where you hear the horror stories. So make that upfront investment and figure out what it is that you want to do. Learn. You could do this with books. There's podcasts, there are YouTube videos, like. There's so many resources out there. There's courses and workshops. I've gone to many workshops myself.

Speaker 1: 2:19

So if you want to get into real estate investing, you need to understand how real estate makes you money and how you know it benefits you to invest in real estate. The first one is rental income in the form of cash flow, and cash flow is really just like what the monthly expenses are for that property and the rental income that you get. The difference of that, that's going to be your cash flow and you can build multiple sources of that that each one is a multiple source of income and you get enough of them and you gain financial freedom. The second one is appreciation. So over time, historically, your property value is going to increase from what you paid and, yeah, the market might go up and down or whatever, but especially now that you hear like overinflated prices and yada yada that the market's going to crash. But historically, long term, the property values go up and that's a great way, to you know, build wealth. Number three if you have a mortgage, then as you pay off that debt and with rental properties this is done through your rental income you start building equity over time and then you build enough equity you could end up leveraging that equity to either invest it somewhere else or, to you know, fulfill other lifelong dreams.

Speaker 1: 3:44

And number four is taxes. Like this is the one that people forget about is that you know everything that goes into rental properties, like lots of that stuff, you can deduct and help bring down your tax liability, and that means more money in your pocket that you can use for something else or reinvest somewhere. So if you plan to use a loan to invest in properties, well, you need to understand what's in your credit report so that when you are trying to get this loan, there are no like random things that pop up that could, you know, become an obstacle when you're trying to close on a property. Now you do have access to your credit report once a year at annualcreditreportcom. So check your credit report. Start taking action to fix any discrepancies so that way, when you're out there and trying to buy a property, you get better loan options and you have a smoother closing process.

Speaker 1: 4:43

You need to understand your debt to income ratio, and your debt to income ratio is your gross monthly income minus your monthly debts. Like you know, credit cards or a mortgage and certain lenders want certain percentages for debt to income ratio because with that it's going to depend how much they're going to land you and what the terms are. Like you know what kind of interest rate you're going to get and what how much of a down payment they're going to require. So that's why it's important to start taking steps to reduce that debt to income ratio so that way, when you are ready to start buying and investing in real estate, you get the best loan options out there.

Speaker 1: 5:27

Alright, real estate investing has its ups and downs and it can get overwhelming, so you really need to start building a some resilience and start building a growth mindset. This is where new real estate investors usually just end up walking away because you know they don't have the mindset for it. They hit that first obstacle, they make that first mistake or whatever, and it's too much for them and they just get scared off and are like you know what? It's not for me, I'm walking away. Now the thing is you do want to make a plan to avoid mistakes and reduce your risk, but you also want to plan for those mistakes and you know, if you do hit those, you want to have like a process of you know learning from those mistakes, figuring out what you did wrong and, you know, making a plan to avoid that in the future and then bounce back from it.

Speaker 1: 6:23

Because real estate investing is not linear. You're going to go up and down and up and down like right now I'm at a down like to full transparency. But real estate investing is a long term game. So over time you're going to find out that you have been building wealth and making money. So what is your goal with real estate investing? Do you want to just gain a few sources of income so you could gain financial stability. Or, you know, maybe you want to park your cash somewhere instead of savings, so that way it's better protected against inflation. Or maybe you want to buy enough houses and build enough cash flow to where it completely replaces your current income and you gain financial freedom. Or maybe you want to go big and build a large portfolio to where you acquire lots of properties and build lots of wealth that you can leave to your future generation.

Speaker 1: 7:19

Either way, these are like some of the questions that you need to ask yourselves before you jump into it, because this is going to help determine what kind of strategy you want to go for, because real estate investing has so many strategies and you know the last thing you want to do is jump right in and then realize later on, once you've invested a lot of money, that you didn't want, you know, to be so involved. You wanted to do more passive, or maybe you didn't want to do like fixer uppers. You want more turnkey properties, or you want to do Airbnb versus, you know, long term rentals. There's so many things to think about. So the first thing, before you even start looking and get tempted to go all over the place, figure out what it is that you want.

Speaker 1: 8:04

So one of the things that stopped a lot of people from investing in real estate is that their market is crap. You know, I am in San Diego Like there's no way I could invest here, like in buy a duplex or any type of investment, because it's really out of reach for me, because everything's so freaking pricey. And this might be the case with you. Like your area, your local market might be out of range for you for what you know, properties are going for in the rental market in that area. But here's the thing markets are different in different cities, even sometimes in different neighborhoods, and you really just got to go out there and look for these markets. And sometimes you even got to go to a different state. And that's basically what I'm doing. I'm investing in a different state and buying duplexes because in that area I can find duplexes and multi-family properties for much cheaper way, much cheaper than San Diego, and you know it's more achievable for me and the rental market is still high enough to still make positive cash flow. But don't let your local market stop you from investing in real estate. Get out there and find a market that fits your needs.

Speaker 1: 9:17

My next tip is to figure out what resources you're going to need. You know whether you plan to manage yourself or even hire a property manager. You know you're going to need things like excels or like trackers or something to help you track of, like your expenses, your income and all that. Not to mention you're going to need like other things, like apps or other tools to help collect, you know, rents or you know do background checks. You know things like that that you're going to. You know figure out what kind of resources or tools you're going to need. Luckily, you know there's so many tools out there and resources out there now with, like the internet and all that, so it's easier now to you know be a landlord Now, on top of resources, you're going to need people as well.

Speaker 1: 10:09

You're going to need to have like a team. Whether you plan to, you know, self manage or use a property manager. I mean, you're going to have to figure out who you need Like do or, if you're going to use a property manager, you can find that you need, like an insurance agent, a real estate agent. You need contractors, property inspectors, all that. So, really, depending on, like the strategy and you know the property type and all that and if you plan to manage yourself or use a property manager, you need to start figuring out what kind of people you need on your team as well.

Speaker 1: 10:44

And, lastly, before you start real estate investing, before you get out there and start trying to, you know, find or buy your first rental property or investment property, you want to have a plan. So, like all these tips and you know, figuring out your strategy and resources and team, you're going to have to put all of that together, because this is where a lot of new investors getting trouble is, because they really just jump into it. They don't have a plan, they don't take the time to set themselves up, like financially, you know getting the knowledge that they need and you know just doing that research upfront. So there's no like set goals. They are just like you know what I just want to go out there and make money, but they don't have a plan of how they're gonna do that, what strategy they want to go for. You know they don't have the step-by-step kind of deal and then so they just wing it and this is where, like a lot of investors you know like end up failing or making a huge mistake that really costs them and sets them back to where, like, sometimes they just quit or they're forced to quit because these mistakes, without having a plan or anything like, really messes them up financially and they are forced to quit. The other thing that happens when you don't have a plan is that Some of these new investors, what they do is they go and buy their first, maybe second one, but then they don't have a plan after that, like they have no plan to how to grow their portfolio, how to, you know, diversify. So then what happens is that they kind of get overwhelmed or life happens and then they just kind of lose track of time because they don't have, like, a plan.

Speaker 1: 12:30

Like, for example, me, I have my five year plan and of course, it's not perfect and not everything has worked out exactly, but it is keeping me, you know, on track and making sure that I am going back and assessing my goals, assessing the previous years and making sure that I am tracking, but also that I am like making sure that I am on the path to reaching my ultimate goal or my dreams. And, you know, every time I reassess like quarterly, yearly, whatever it may be you know I'm making the proper adjustments and you know I've had to do that for 2023. I'm in the process of doing that because, you know, 2021, 2022 was freaking piece of cake, but 2023 was hard and so now, you know, gotta reassess and figure out what I could do better and, you know, fix the plan and adjust the plan so that way I am better off this year and the next year and continue to, you know, grow. So without a plan, you have no way to do these things because you don't have a plan or you don't have your goals to assess or to track or compare your year on how you're doing and you don't have like a timeline. You're just kind of like weaning it and you know, maybe you might be one of the lucky ones that it works out with by just weaning it, but the majority of the time you're gonna have to, at one point or another, you're gonna have to realize that you need to actually sit down and plan out your investment strategy and plan.

Speaker 1: 14:04

Now I am gonna plug two resources that I have available for you to help you through this if you are wanting to get into real estate investing but you're kind of like at the very beginning and you don't even know what to do. First, I do have my prepare to invest mini course, where it's like a five steps, it's like about 45 minutes and it's gonna take you step by step on, you know, preparing your finances and your mindset and figuring out strategy and stuff like that, and it's gonna guide you on the preparation stage so that way you could get ready to start investing. Now, if you are already kind of past that, you kind of already set up yourself financially and have like your down payment or you're ready to go out there, you just need kind of like a how to, and you know, build that knowledge and learn how to you know analyze a property and all that or how to find a property, then my six week real estate investing for beginners course is for you and this is a six week course, six steps. We're gonna go all the way from doing your finances and figuring out what kind of loans are available, how to fund your rental property, and then go all the way to like how to analyze a property to invest in, all the way to building your team and, lastly, we're gonna go over that five year investment plan that I you know what's talking about. That is so important. That way you have a guide and actual plan so that way you could go out there with the knowledge, the tools that you need so you could go and buy your first property.

Speaker 1: 15:38

So, if you're interested, they are linked in the show notes. But other than that, those are my tips to you know, start your real estate investing journey. And you know, other than that, I will see you in the next episode. Bye, thank you so much for listening. Don't forget to like and share this episode so others can also find this podcast. Don't forget to follow me on all my social medias listed in the show notes below, where you can also find resources to help you in your financial journey. If you're interested in becoming a guest on the podcast, you can find that information in the show notes. Other than that, thank you so much for your support and I will see you in the next episode. Bye.