4 Business Principles Learned Getting Rich in Real Estate by Age 30 There are certain actions to take and mentalities to follow that make for a recipe for success no matter what field you're in.
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Last week I turned 30 years old.
For many people, it's a depressing birthday filled with constant reminders that one is getting old. But for me, it was a joyful milestone and a day of reflection, allowing myself to look back at how epic my 20s were, reflect on the mistakes I made along the way, and respect the journey I have been on -- and it all started in a bowling alley with seven simple words:
"Why don't you just buy a house?"
I had never met the woman who said those words to me, but knew she was a local real estate agent, so it was pretty much her job to say that. However, as I sat down and started thinking about the idea, my 21-year-old self realized that she was right. It would actually be cheaper for me to own a house than to rent one. Sure, there were the facts that:
- I was just 21 years old and looked 12.
- I knew nothing about real estate, construction or money.
- I had no savings.
- I made just over minimum wage at a terrible job.
Rather than letting all those things dictate whether I'd succeed, I just jumped in with both feet.
My first home was a single-family house I got on sale due to the fact that it smelled like something my dog occasionally brings in from outside (you don't want to know). However, with some good, old fashioned sweat equity and a home improvement book I picked up on my very first trip ever to a hardware story, I was off to the races.
I lived in the home for just a year before realizing that I could sell it and make some good money, so I did. The new buyers received a fixed-up, gorgeous home and I made $20,000.
Since that day, I've been buying real estate, mostly rental properties with the occasional "flip." At 27 years old, I was able to leave my terrible desk job and "retire" on the small cash flow provided by the rental properties. Today I've acquired a total of 42 rental units, spread out over about a dozen different properties (ranging from single-family houses to my 24 unit apartment building).
The following are four thoughts I had about my journey to inspire others who are looking to build wealth through real estate, whether they are 20 or 60.
1. Follow the 80/20 rule with investment properties.
I bought way too many properties that didn't really matter. In real estate, as with most things in life, the 80/20 rule exists. Eighty percent of my income comes from just 20 percent of properties. Had I focused on recognizing that 20 percent and focusing only on those, I would have had far fewer problems, fewer tenants and more profit.
Don't neglect your education
I did this one right ... for the most part. When I first started investing in real estate, I read every single book my local library had on real estate. Then I began ordering books online, going to another library and checking every thrift shop for the best real estate books.
Sure, a lot of the information was repetitive, but it didn't matter. Every book taught me something. Recently, I wrote my first full-length book to chronicle the steps I used to purchase all those properties, despite never having any money. It's my hope that others will learn from me, the same way I continue to learn from others.
Real estate investing is a business, despite the way so many people treat it. Just as the local fast food joint has written processes, checklists and other repeatable systems in place to deal with the business, so should real estate.
No one told me this when I got started, and for years I struggled, dealing with every situation like it was the first time.
Today, everything I do is systematized and handled in a way that should I die, someone else could pick up the business and not skip a beat. For more on that, see The Surprisingly Simple Reason Why You Feel Stressed.
Tenacity is key.
Things go wrong all the time in real estate, as with any business. The ones who succeed are the ones who can push through, learn from the tough times and keep going.
Tenants will lie to you, contractors will steal from you and your family will likely think you are either crazy or greedy. Push through. Every lesson makes you and your business stronger.
In looking over this list, I realize that each of these four points could apply to almost anyone. Following the 80/20 rule, continuing your education, systematizing your business and pushing through no matter what happens seems like a pretty darn good recipe for success, no matter what business you find yourself in.
If you are interested in building wealth through real estate, understand that it can be done, but it's not as easy as the late-night TV guys make it seem. It's hard work, but it's worth every moment.