My wife and I just returned from looking at a new mobile home to put on our 3 acres in Florida. We looked at a few mobile homes, and they would all serve our needs well. Then we talked about the purpose of buying this home.
Is it just going to be rental for the long-term, or will we plan to move our parents in eventually? Either answer has significant ramifications on price point, size, and amenities. Being able to ask these questions is what makes us intermediate real estate investors.
You do not have to be a hardcore real estate investor with a vast team to think like an investor. You just need to do the math, think logically (vice emotionally), and make decisions at face value and merit.
When Life Gives You Lemons…Make Passive Income Lemonade
However, to think like a real estate investor, you also must know what they know. We have been renting rooms for close to three years, so we know what the rents will be for the place when we buy this new mobile home.
Having experience in the room rental business helps us make decisions that are accurate and financially savvy. We did not start this way—we misjudged pricing initially, which led to attracting the wrong element.
Now, we are all the wiser, plus we have read many more books on business, investing, and real estate. An intermediate real estate investor understands that each room, house, or apartment is its own separate business entity.
We may get the house if the numbers work out, or we may miss this opportunity. I can care less which way because we have set ourselves up to be financially free already. Anything else is icing on the cake.
I mean, this is how the rich spend their time. We drove to the mobile home lot together, talked, walked around, ran the numbers, and went to lunch together afterward. Regardless of the outcome, we spent time together, learned some things about mobile homes, and predicted the cost of land improvements. Altogether a great day—I love being wealthy.
Happiness isn’t Free
Back to real estate—how do we get to the intermediate level of investing? We need to learn and become super confident in our abilities. Without confidence, you will not make it, even as an intermediate investor.
When you are a first-time homebuyer, you don’t know much. The real estate agent guides you through the process, and you make emotional-based decisions. Don’t worry; we did the same thing back in 2008.
As we move up the real estate investor levels, we need to learn the numbers, regulations, prices, comparisons, and regional quirks. Therefore, the first step to becoming an intermediate investor is reading “The ABCs of Real Estate Investing.”
This book will give us background numbers such as net operating income and cash on cash return. These concepts are invaluable as we navigate the real estate world, even as “light” investors.
When you talk to other real estate professionals, such as lenders, property managers, real estate agents, general contractors, and salespeople, the way we present ourselves (our confidence) is vital to getting the results we seek.
I Live Paycheck to Paycheck 2
Also, understanding why real estate is essential to our overall wealth is just as important as knowing the key terms. “The Millionaire Fastlane” describes the idea of wealth generators. Using a wealth generator dramatically increases the speed of our wealth accumulation. Real estate can be a wealth generator when done correctly.
The goal is to work a “4-Hour Work Week” because our wealth generators are building wealth for us. With these concepts in mind, we can set goals like “to buy one rental property a year.” Doing this can significantly add to our wealth and cash flow.
The 4-Hour Work Week is why we move into the intermediate level of real estate investing. We don’t need lots of properties either. Having 3-5 rentals at retirement can drastically change the prospect of living comfortably for the rest of our lives.
The book “Build a Rental Property Empire” is all about buying single-family residences and creating an immense amount of passive rental income. I love this book because it never forces you to move into the commercial or apartment space.
Prepare for Inflation
The book “Real Estate Note Investing” has you covered when it comes to financing your new properties. It is not so much the exact technique as much as the idea of how to fund your investments. The author used credit cards, private money, hard money, sponsorships, fundraising, and partnerships. Once you see how creative people are at using OPM (other people’s money), it will make you think twice about using your cash.
I wrote an entire series about Creative Financing in Real Estate. Read through this series before you even think about going to a bank. Know how many options are available to you and when to use them.
When my wife and I were at the mobile home lot today, we started using the house finance agency because of the low money down. The interest rate was 5%, though—it is currently 2% for first-time homebuyers of traditional homes.
Diversify Your Passive Income
Before I take the 5% loan, I will look at the possibility of combining my traditional home and my mobile home into one bank-conforming loan. Then I can refinance both into a primary residence 2% conforming loan. Not a bad plan—you just need to predict the future as best as possible.
Another reason why homebuyers must amass our real estate holdings is because we use real estate to pay for college. Please visit my series of the same name, the Use Real Estate to Pay for College series.
We have achieved Mortgage Positive with our primary residence, so our son can go to college while renting the rooms and living for free. Dropping a mobile home will further increase the profits on this property. It is a win-win for my son and the tenants, as they will probably be students as well.
In the end, real estate is about options. We want to have a fantastic Happy Cash Flow Retirement system in place when the time comes. Whether we decide to live the laptop life or buy a home in a small city, we want to have the ability to choose.
For these reasons, my wife and I keep ourselves firmly in the intermediate level of real estate investing. We love the options and creativity that real estate gives us on a day-to-day basis. We cannot oversell the Magic of Rents; all we can do is recommend everyone learn as much about real estate as possible. Enjoy and Happy Investing!
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