MoneyChisme: Personal Finance for the Latinx Community

6 Steps to Start Real Estate Investing with Rental Properties

March 13, 2024 Violeta Sandoval Episode 39
6 Steps to Start Real Estate Investing with Rental Properties
MoneyChisme: Personal Finance for the Latinx Community
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MoneyChisme: Personal Finance for the Latinx Community
6 Steps to Start Real Estate Investing with Rental Properties
Mar 13, 2024 Episode 39
Violeta Sandoval

Interested in real estate investing with rental properties but don't know where to start? Follow these 6 steps to begin your journey as a real estate investor.

How do you start investing in real estate? Well in this episode, I go into how I would start if I was back to the 23 year old version of me that was just discovering what real estate investing was. I get into the 6 basic tips to help you start your real estate investing journey. 

Tune in as I share my own experience with house hacking, the ultimate game-changer for beginners. I give you tips to creating a financial plan that fits your lifestyle, whether it's managing roommates or picking out the perfect property, like cozy duplexes or cool granny flats. So, join in on this week's chisme as I map out the planning steps crucial to securing your financial future in the world of real estate.


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Subscribe to the MoneyChisme Monthly Newsletter for more!


Get my Free Start Investing in Rental Properties E-book

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Disclaimer: I’m not a financial advisor. The information contained in this video is for entertainment purposes only. Please consult a licensed professional before making any financial decisions. I shall not be held liable for any losses you may incur for information provided in this video. Please be careful! This video is for general information purposes only and is not financial advice.

DESCARGO DE RESPONSABILIDAD: No soy un asesor financiero. Las ideas presentadas en este video son opiniones personales y solo con fines de entretenimiento. Usted (y solo us...

Show Notes Transcript Chapter Markers

Interested in real estate investing with rental properties but don't know where to start? Follow these 6 steps to begin your journey as a real estate investor.

How do you start investing in real estate? Well in this episode, I go into how I would start if I was back to the 23 year old version of me that was just discovering what real estate investing was. I get into the 6 basic tips to help you start your real estate investing journey. 

Tune in as I share my own experience with house hacking, the ultimate game-changer for beginners. I give you tips to creating a financial plan that fits your lifestyle, whether it's managing roommates or picking out the perfect property, like cozy duplexes or cool granny flats. So, join in on this week's chisme as I map out the planning steps crucial to securing your financial future in the world of real estate.


Support the Show.

Subscribe to the MoneyChisme Monthly Newsletter for more!


Get my Free Start Investing in Rental Properties E-book

Support/Apoya MoneyChisme:
https://www.buymeacoffee.com/moneychisme

Want to be a guest on the podcast?
http://moneychisme.com/contact-me/

Follow my Social Media:
https://www.instagram.com/money_chisme/

Tiktok:
https://www.tiktok.com/@moneychisme

Pinterest:
https://www.pinterest.com/MoneyChisme/

Disclaimer: I’m not a financial advisor. The information contained in this video is for entertainment purposes only. Please consult a licensed professional before making any financial decisions. I shall not be held liable for any losses you may incur for information provided in this video. Please be careful! This video is for general information purposes only and is not financial advice.

DESCARGO DE RESPONSABILIDAD: No soy un asesor financiero. Las ideas presentadas en este video son opiniones personales y solo con fines de entretenimiento. Usted (y solo us...

Speaker 1:

So if I was to start over and looking back hindsight you know where I'm at now and if I could tell you know like I don't know a 23 year old me on what to do to start real estate investing. There's a few things that I would say. 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 a coffee or, if you want, 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, and this week I want to talk about real estate investing. I mean, when don't I write? I'm always like ready to talk about it. But I saw it was it on Tik Tok or something? I saw like kind of a trend of saying, like if I was to start over, how would I start real estate investing. So if I was to start over and looking back hindsight you know where I'm at now and if I could tell you know, like I don't know a 23 year old me on what to do to start real estate investing, there's a few things that I would say, and I want to split this up into like two versions the version if, like you were married and another version if you were single. And because those two versions have very different goals and you have different obstacles that I kind of want to address, because I don't want to go like too easy, I give you like a generalized idea of what I would do. I mean it is kind of generalized but because I'm not going to get too specific. But that's two very big things that are different to different paths that you're going to have to take or will take, depending on what you're willing to give up and to kind of like deal with at the beginning of your journey. And so I want to split it up into two.

Speaker 1:

So, first up, I. What would I do if 23 year old me wanted to start real estate investing? So if I was back at 23 years old and I heard about real estate investing and I wanted to get into it. The first step would definitely start learning about it, like because I feel like when I first heard about real estate investing, I didn't really take too much time to figure out what it was, because the basic knowledge that I had was like you just rent out your house, because that's what they told me. Right, when I met somebody that did real estate investing, they were just like, yeah, just, you know the house that you have now, you know, move and rent that one out. Now, this is kind of specific to me because at 23, I had joined the military and I was able to buy my first home that way. But let's say I wasn't and I was just in a basic nine or five job.

Speaker 1:

The first thing I would do is, of course, like I said, start researching about real estate investing, start looking up. You know, the awesome part is that now we have like podcasts and YouTube and a bunch of books on real estate investing. So I would start with that. But kind of going along with it would be to start my budget and, honestly, these two first ones can really go with both if you're like single or married, because you definitely, for both paths, you want to start learning about real estate investing. And two, you want to start your budget and figuring out where your money is going, and figuring out where you are now and what you need to do to get there and see what you can afford to start setting aside, because that is going to be pretty much. The next step is to start saving for a down payment and for the closing costs, and so you're going to want to start doing that in the meantime that you're learning about real estate investing, because you want to get the ball rolling, because sometimes saving money can take time, especially if you can only do so much and like, say, you could only afford to set aside like $100 a month or $200 a month, whatever it may be. That may take some time.

Speaker 1:

Another thing I would do and again this kind of goes for both is figuring out what kind of loans are out there for me that I can be eligible for, and this is a major step that you want to do early on so you can figure out where you're at and talking to a lender, and figuring out if you're eligible, what you're eligible for and if you're not eligible, like what can you do to fill those requirements and this takes, you know, really calling a lender and just putting yourself out there being vulnerable with your finances your current finances because they're going to pull up your credit and you're going to see your credit history and it may or may not be good and you're going to see things, and sometimes what stops a lot of people at the beginning is that they don't want to face that truth, like maybe you missed some payments or you ran up your credit card since your credit score is low, and it can be embarrassing and it can be.

Speaker 1:

You might feel guilty and ashamed about it, but you really have to just put that mirror up and see where you are now so you can start taking the steps to fix it, because you do not want to be ready like have the money saved up and you are ready to go and you're ready to go out there and buy, and then realize that you have a lot of things that you need to fix first before you could actually like get your first home or property or whatever it may be which path you decide to take. So, whether you're single, starting out real estate investing or you're married and trying to, especially with your, when you're married because you have two people, you want to check both, both your credits and be very honest and, and on the marriage side, you got to like really be, you know, be compassionate about it, don't like be blaming or unless they really did something like horrible, you know, obviously, but if it's just like little simple mistakes, I had to deal with it. This is a conversation you know that we had to have and it was just some stuff that happened in his when he was younger that still affected him and he was ashamed about it and kind of like did the avoidance thing like hopefully, like it'll, you know, remedy itself? Because a lot of people think that just time will heal your credit and yes and no, but you still have to do some stuff to fix it right and so. But we ended up and within the year, like he was, like he has better credit than me now, and so that's one thing you have to really do and take the time to go through that and work through that and it might be easy.

Speaker 1:

It might be hard conversations at the beginning and you just have to kind of work through it and try not to like are you and stuff like that, because emotions may run high when you realize that you have something in your credit that might hinder you buying your first property. The other thing that kind of stops people from doing that is because they're afraid to get their credit pulled. Because, yes, you have the hard inquiries and the soft inquiries, but if you plan, if you don't plan, to buy like pretty soon, then you're it's not, it's going to fix itself by the time you do right, and then one pool is not going to affect you too much, unless your credit is already jacked up anyways. Then you know, like might as well go ahead and do it and then figure out what you can do and what's in it, so that way you could figure out what to do to fix it. Or if you plan to buy within I think it's, I think it's three months, it's not going to matter, because when they, when you do actually go get the loan or whatever, they pull your credit again and they see that inquiry, they're going to see it as shopping around and they're not going to hold that against you as much as you would think. Like just tell them like, yeah, we were figuring out our shit right and so don't let that stop you, because a lot of people are, you know, get so afraid of like doing anything with their credit because they don't want to like make it worse or affect whatever it is.

Speaker 1:

And, like me, I'm always doing something with my credit and it goes up. I think it's dropped down at one point To seven, I think it was seven, ten or something like that, and it's gone up to like seven, ninety or something like that, I think one point at eight hundred. I don't even know, but it doesn't matter because I'm always working my credit score, my credit, to benefit me and buy more properties and stuff like that. But anyways, that's. The other step that you want to take is check what is in your credit and you do get once a year the ability to pull your credit report and it has like everything that's on your credit and you want to do that for sure, and I think it's my annual credit report, comm or something I'll have a link down below. But you get one time every year for free and you get your full credit report and definitely go through it and see, because I've done it and I've noticed, like when I sold my house, like two years ago, apparently the electric bill wasn't paid and I was delinquent on that and, like I didn't notice that, it finally went to collections and then, for some Reason, last year it ended up being on my credit score of my credit report and I was like what?

Speaker 1:

Because I saw it drop and I was like what's going on? And it was because, like a house from two years ago that the new owners were supposed to, you know, turn on the electric and put it under their name. They never did and which don't even get me started with that, because my realtor was like Horrible and was supposed to do that for me, but anyways, and make sure that that got done, because she was also the property manager for that property and Like, so I didn't notice, I thought everything was fine, and then, like two years later, it shows up in collections and they hit my credit report. But anyways, I fixed that and and so you want to do that because things pop up and it might not be something that you did or maybe something you forgot about, and you want to figure that out now and take the steps to fix that.

Speaker 1:

The next step that I would take is, after you know, starting your budget, figuring out your credit, where you're at, and talking to the lender and figuring out what kind of Loans you're eligible for. That's where you start creating your plan, because If you're like a first-time home buyer, you have, you know, access to like down payment assistance programs, like here in California there's like a lottery system, but there's also other ones out there that help with down payment. You also have access to like the first-time home buyer loans, like the FHA loans. If you're a vet, veteran or military, you have access to the VA home loans Fannie Mae has the new one where you can get 5% down For conventional loans and so that's why you want to like talk to the lender and figure out what is available to you, and that way you could start making a plan For how you want to start your real estate journey.

Speaker 1:

Now, this is where it's going to get kind of like Into the weeds a little bit, depending on if you're single or married with, or even like if you're married with, kids, because this is where you start planning out and figuring out what it is that you're comfortable with and what your goals are. So, for example, if I was again back at 24, 23 year old me, I Purchased my first home and I ended up renting out one of the rooms, which ends up being a Strategy where you house hack, your, your property. But I fell on that Because that wasn't my intention. I just wanted to, you know, buy my first house, have my own home, and so I did just that. So I didn't go into buying this house with them the the goal of investing in real estate, so I just went and bought my first home and Now, in hindsight, what I would do is maybe look into Trying to find a multi-family home, maybe a duplex or a triplex or something like that, and Even with this home, probably still like rent out the rooms if I couldn't find a duplex.

Speaker 1:

But now, knowing more about real estate investing which is, you know, one of the first steps that you should be doing is Researching real estate investing so you could understand what all is out there, the different strategies and stuff. Because I definitely would have tried to go for like Something that is more of a duplex or a triplex or something like that, that I can house hack, where I can live on one side and Rent out the other. But even if I couldn't have found that, I would have, straight off the bat, then Rented out two of the rooms because I had a four bedroom house and Wasn't all that, it was just a basic house like Needed some. It was a poorly flipped house, but that's what I could afford and so I went for it and it ended up by the time I sold it. I bought it at 143 and it was sold at 220.

Speaker 1:

I believe, and that's with like things that needed to get fixed, because that area boomed like everybody wanted to like. It started popping off like everybody wanted to be there. But I definitely would have at least rented out more rooms and started house hacking earlier and Definitely would have started putting that money aside instead of like spending it. And you know I was like, yay, more money for me, right, and which. I ended up just like. I don't even know what I did to that money. To be quite honest, I think I just like sent some to my parents to like buy them like. I think at that time I had to buy them like a new fridge and stuff like that, which cool, and I think I just use it for my car payments and stuff.

Speaker 1:

So Would have changed my mindset a little bit and definitely started, you know, renting out the rooms. Now, if you are married and are comfortable with that, then you can do that as well and either go for a duplex at the beginning or some type of multifamily that you can you know house hack and you know rent out the other places. But you can also, if you're comfortable especially if you don't have kids, because I know if you have kids then you have to worry about like strangers, right, even more but if you're comfortable in renting out one of the rooms, I do this in my house still to this day. I think I have done that with every single house after my first home, and so that's what I can do. But it's getting a little bit more difficult now, and so for sure, next time our final home, we're not going to rent out rooms, but we're going to do something else, which I will talk about that in another episode.

Speaker 1:

But that's where you have to start talking to your significant other and figuring out what you're willing to, what you're comfortable with dealing like. Are you okay with dealing with a roommate situation? Are you okay with living in a duplex? What is it that you are okay with? Because then that's going to start to help figure out what kind of strategy you want to go for, because in some cases you can still buy your property, especially here in California, there's a lot of additional units where you can do a granny flat or a mother-in-law suite and rent that out, and so they're not living in the house with you, but they're still on your property, right, and you rent that out. And so people do that here, and it's actually one of the strategies that I may go for with my ultimate final property, my final dream home.

Speaker 1:

So definitely, start thinking about and figuring out what you're willing to do and then from there, on both sides, then you start looking to take action. So now that you have your plan, you go back to the lender and figure out what it is that you need, what kind of price range you're able to get, which they would have told you from the first time because they would be like, well, you can afford this much or whatever, but you got to get your credit score down or whatever, right? So now you start creating the plan and then you're going to have to start working the plan and working on saving, continue saving up for the down payment and closing costs and stuff like that, and then figure out what it is that you're going to go for and then start looking for that property and start figuring out what area you want to target. Is it going to be local? Is it going to be out of state? That's something that you all have to talk about as well, like when you're discussing that, or if it's just yourself, like on Single Me, I would have definitely still did my first property where I live in it, and then, from there, start branching out. So those are the things that you have to start thinking about F the bat.

Speaker 1:

Once you get to this step and finally it's not the last step, but this is like basically kind of like the somewhat final step for starting your investment journey is that you want to figure out where you're going to go from there. So, now that you know you you're going to go by your first property. What is it that you're going to do with it? You kind of picked out your strategy. Now you're going to have to start working out. You know the plan and start taking action, but then you have to figure out what then, like, you have to have. What is it that you want to do with that property? Are you going to just live in it forever and then save up and start investing on other properties, or are you going to do like how I did and then live in it for a few years and then move, rent that place out and then do it again.

Speaker 1:

That's where you start figuring out how you're going to grow and that you know that's going to be like another, another big step that you have to sit down and figure out what your goals are Like. Are you just trying to invest for a little bit of investment properties so you can get some cash flow, or do you want to go big and build a big portfolio? And that's really up to you to sit down and figure out what you want to do with that. But really, with these initial steps, you can get you from starting out, figuring out what real estate investing is, what you can do with it, and start learning it all the way to start taking action and figuring out where you're going to go from there. So those are the things that I would do if I was to start over, and really are the same steps that I tell kind of everyone that talks to me or asks me about real estate investing is like you know, just take these steps and really Take your time doing these steps, because the last thing you want to do is jump right into it, because I did and I stumbled along the way. I made lots of mistakes and some of them still, you know, kicked my ass last year and stuff things that I had to learn Because I didn't know what I was doing at the beginning and I just kind of winged it, and so that's why you want to ensure that, off the bat, you just set yourself up for success and even just start joining these groups, that there's lots of real estate investment groups in, uh, every city, like you know.

Speaker 1:

I'm in like three of them and each one is specific for their area. But there's some general ones too that are just overall kind of Investing groups, real estate investing groups that are just for general support and stuff like that. So, and all of those are free to join. That's like free information. There's books out there. There's a whole bunch of books. I'm, uh currently reviewing two books that, um, I want to post a blog about them and maybe an episode about them, talk about them and um, but there's a lot of books. There's podcasts, I mean, like this one, and um, um, youtube and all that stuff. So definitely, um, educate yourself, research and all that.

Speaker 1:

Don't be like me and just jump into it and wing it and and then just start planning, like set yourself up, like do the pre planning phase of figuring out where your credit is, where you're at, where your finances, and Start building that savings funds, start building that emergency fund and then, from there, figure out your goals and what strategy you want to go for. Make sure, if you have like, if you're married or have a partner or whatever that your stuff aligns, because the last thing you want to do is like you're trying to go this way and they're trying to go that way. That's gonna like mess up the goals and then start taking action and then figure out where to go from there. So hopefully these tips were helpful. And, again, I do have my course down below, but I'm also planning to do a webinar soon, so more details to come for that. If you want to be notified of when you know I plan to do that, the details for that, just subscribe to my email.

Speaker 1:

And Also planning to do a live version of the course where we meet weekly, but that's gonna come further later in the year. And, again, if you want to be notified about that, sign up for the emails or you know I'll post it on here eventually whenever it's going, or follow my IG. But 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, bye.

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