I’m a Self-Made Millionaire Who Got Rich Through Real Estate: Here’s How I Bought My First Property
If you’re thinking about investing in real estate, it can feel overwhelming when you’re looking for that first piece of property. It’s easy to feel discouraged when you hear about real estate investors who own multiple properties while you’re still trying to get your foot in the door. This is why it’s important that you buckle down and focus on doing whatever you can to ensure you can purchase your first property.
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GOBankingRates spoke with a self-made millionaire who built wealth through real estate about how they bought their first property so that you don’t feel alone on your journey.
Purchasing the First Property
The toughest part of getting into real estate is often making that first home purchase. This is a challenging barrier, because various factors are involved in getting your first set of keys. You have to take the time to save up enough for a down payment to get approved for a home mortgage, and then you have to find a home that suits your budget. After all of this, you have to hope your offer gets accepted and your financing goes through. It’s understandable why many people are intimidated by real estate.
GOBankingRates reached out to James Lowery, a real estate investor and one of the founders of Rethink The Rat Race, to discuss how he and his wife Emily reached millionaire status through real estate investing. As is often the case, the journey to millionaire status through real estate begins with the first property.
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How Did Lowery Save Up for the First Property?
“I was able to buy my first property by prioritizing saving as much as I could and ensuring I had enough for a healthy down payment, giving me a smaller mortgage and a better chance of getting approved,” remarked Lowery.
The key to getting approved for your first home purchase is that you have to find a lender willing to loan you the money for the home. To do this, you have to lay down your foundation in advance so that your finances are in order when it’s time to begin house hunting.
To save up for your first home, you’re going to want to consider the following steps:
Work on saving up so that you have enough for a down payment.
Make all of your payments on time to build up your credit score.
Pay down any debt that you have to improve your credit score.
Shop around for a mortgage pre-approval to see what you would qualify for based on your income and savings.
Keep on saving up as you search for homes based on your criteria.
How Did Lowery Land the First Unit?
What happened when Lowery had the money saved up for the first property? “I found the place on Zillow,” he said. “It was initially listed for sale, then taken down and listed for rent, so I felt the seller was motivated.” Lowery knew that he had a good chance of getting his offer accepted, since the home didn’t sell during the initial listing period.
“The unit was located in Madison, [Alabama], and [I] paid $43,500 at the time.” Lowery was lucky enough to get started with a low-cost property to get started in real estate without investing a significant amount of capital.
While you may not experience this exact scenario when you hunt for a property, it’s important to remember to keep faith in your search even when you feel like giving up.
How Did Lowery Become a Millionaire With Real Estate?
“I got to millionaire status by living in that first unit for a year and moving into a new house to rent the place out,” he said. What was the next step? “Rinse and repeat a couple of times while buying other small rental properties that I could afford.”
Once you purchase your first property, you can start paying down your mortgage and saving up to be ready to make your next investment. In this case, Lowery lived in the home for a year while upgrading it and saving for the next home. Then, when Lowery was ready to buy another unit, he rented out his original unit. After doing this multiple times, Lowery became a millionaire through real estate.
The key strategy to building wealth here was that the homes would get rented out to either tenants or through platforms like Airbnb that offer short-term rentals. When you turn your property into an income-generating asset, you can increase your income while saving more money to make the next purchase. You have to attempt to replicate this process a few times until you have enough money coming in from your real estate units that you eventually have a noticeable income.
How Can You Purchase Your First Property?
If you’re looking to get into real estate but aren’t sure how to start, here’s what Lowery suggests.
Get a Mortgage Pre-Approval
“When you begin your search, have a pre-approval letter from your lender to make your offer more enticing,” expressed Lowery when asked about getting his first offer approved.
While you don’t necessarily need a mortgage pre-approval, it certainly helps in your house hunting for the first time. You’re also going to be more realistic about the properties you search for so that you don’t waste your time looking at units you can’t afford yet.
Don’t Get Discouraged
“My top tip would be to not get discouraged,” reflected Lowery when prompted about how he stayed motivated while trying to purchase his first property. “We’ve made hundreds of offers and have only had a handful accepted.”
The harsh reality is that you’ll get outbid and have offers get rejected. You have to keep on searching and putting offers in even when you feel discouraged. If you’re searching in a competitive market with low inventory, then the search may take longer. It’s essential that you remind yourself that there’s no set timeline for purchasing that first property.
Keep the Search Open
Some investors land the perfect property on the first try. Others have to search for an extended period to make it happen. Every real estate journey is unique and will depend on the market you’re searching in.
Here’s what you can consider doing if you can’t find the ideal property:
Expand your geographic horizon.
Consider investing in a riskier community.
Change up what you’re looking for.
Keep on saving up as you search for that first property.
Everyone’s real estate experience will be different, so it’s critical that you don’t give up on the search just because it’s taking longer than expected.
Closing Thoughts
If you’re interested in becoming a real estate investor, there are various methods for getting started in this field. Many others before you have gone through this process, so you don’t have to feel alone. It’s important to remember that closing your first property could be the toughest part, but if you stay committed, you can eventually begin building wealth.
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This article originally appeared on GOBankingRates.com: I’m a Self-Made Millionaire Who Got Rich Through Real Estate: Here’s How I Bought My First Property
