After five days on the road, I finally arrived somewhere I could call home. My hotel room overlooks a beautiful desert landscape here in Tucson, Az. The room is a great little studio apartment-style living arrangement.
One of the essential ideas of real estate investing is location, location, location. However, real estate is a mindset (beginner, intermediate, advanced), and this mindset will help you fail or succeed in the long term.
Welcome back to the Passive Income Road Trip series (Financial Mindset, Retirement Planning, Dividends, Cryptocurrencies), where I will take you on the ride of your life.
I Live Paycheck to Paycheck 4
The mindset for real estate. The key to understanding real estate is knowing that saving $500 on rent is the same as making $500 in passive rental income.
So many people believe they can’t become real estate investors because of the price of ownership or dealing with tenants.
These same people have 3,000 square feet homes with five extra bedrooms that stay empty. Real estate investing is about using all your space to increase revenue and get ahead.
Starting small. In my Real Estate Investing as Any Age series (20s, 30s, 40s, 50s, 60s, 70s), I recommended that you start small in your early years.
A High-Value Person Makes $100,000/year in Passive Income
An example of starting small is renting a small apartment when you can afford a small home or townhouse. Another example would be renting a room from someone to save for a down payment.
Housing will be your most expensive resource for the rest of your life; anything you can do to reduce this expense will buy you dividends. Becoming a real estate investor starts with seeing value in everything you own.
Start sharing. If you have the space, I can find you the income. If you are willing to share a room, some land, or a parking space, you can make tons of passive income.
This new ecosystem is called the sharing economy and is the average person’s path to true wealth. I’ll give you an example.
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Let’s say you own two acres of land. You spend $2,000 to retrofit this land and create a nice dog park for your dogs and others. Now, this piece of land can earn you passive income for the rest of your life.
After earning your $2,000 back through bookings, your dog park will be in an infinite return. You can now reinvest that money back into another income stream or business. How about investing in a storage shed that can make you $100/month in passive income?
From Dirt to Dividends. I recently rented a small piece of my land to a friend who needed to park his trailer. I charged him $240 for the year and immediately invested that money into a 10% yielding closed-end fund.
Transfer of Wealth in the Metaverse
This scenario is the premise of my Dirt to Dividend series. You take something you create from your land and turn a profit from it. Instead of spending your earnings, you invest them into high-yield income-producing securities.
- From Dirt to Dividends 1: Gardening & Preferred Shares
- From Dirt to Dividends 2: Livestock & Closed-End Funds
- From Dirt to Dividends 3: Insects & Business Development Companies
- From Dirt to Dividends 4: Community Farming & Mortgage REITs
- From Dirt to Dividends 5: Composting & Dividend ETFs
- From Dirt to Dividends 6: Vermiculture & High-Yield Blue-Chip Companies
As you invest your money, you are creating a second income stream. So if you sell chicken eggs, you will also have money from AT&T (T) stocks.
This concept is vital to your success as a real estate investor and overall retirement planning. If you can turn an infinite return like house hacking into another income stream like dividends, you’ll become wealthy faster than you can imagine.
It’s just a season. If you can sacrifice your living space or freedom for a season (maybe 2-4 years), you can change the trajectory of your life.
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If you have a small family and can allow your sister to live with you for a few years (paying you rent), you can parlay that income into a revenue stream for your entire life.
So many people don’t want to sacrifice in the short term to benefit in the long run. Real estate investing is all about getting started and then keeping momentum.
Many young investors buy a rundown home and flip it into a rental. They increase the equity by doing a renovation job on the house. They can then refinance their money out of the home and rent it.
This is called the BRRRR method, and you can read it in “Buy, Rehab, Rent, Refinance, Repeat.”
Building an empire. For the BRRRR method to be successful, investors had to sacrifice the first home, usually living in the house while renovating it.
Your First Five Dividend Stocks
Once they got their money back through the refinance, they moved on to the next home. Many did this process with family in tow. It sucks, but this is how they built wealth—one project at a time.
You can do the same by renting rooms, garage space, dog parks, storage sheds, rental properties, Airbnbs, bed & breakfasts, gardens, livestock, beneficial insects, community farming, etc.
However, no one is coming to save you and teach you how to be successful at your venture. You’ll have to jump in, learn, and fail your way to success.
Still a mindset. Do you have what it takes to get started in real estate? I am talking about creating $100 in passive income through your property.
Decrease Possessions. Increase Wealth.
If you create a $100 income stream, you can create a $10,000/month income stream. The hardest part is convincing yourself that you can become a successful real estate investor.
Conclusion. I own three homes that make me $2,200 a month in passive rental income. I could leverage up and add more houses to my portfolio, but that’s not the route I will take.
My wife and I want to retire overseas, so having tons of property in America would hinder our maneuverability.
Therefore, our next step is to pay off the homes one by one. That will increase our cash flow while decreasing our leverage. That’s how we will invest in real estate over the next ten years.
There is more than one way to become a successful real estate investor, and your path may look different than mine. That’s the beauty of rental income; it comes in all flavors.
No matter the technique, the mindset is the same. To create rental income, you’ll have to add value to someone else. How will you turn your passion into passive income? Good Luck!
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Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. I am an Amazon Affiliate. Please research any investment vehicles that are being considered. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. All Right Reserved Military Family Investing
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