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, you may feel overwhelmed when looking for that first piece of property. It’s easy to get discouraged when you hear about real estate investors owning multiple properties while still trying to get your foot in the door. This is why it is important that you do your best and focus on doing everything you can to ensure that you are able to purchase your first property.
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GOBankingRates spoke to a self-made millionaire who built wealth through real estate about how to buy his first property so you don’t feel alone on your journey.
Buying your first property
Often the hardest part of getting into real estate is purchasing your first home. This is a difficult hurdle, as there are different factors involved in obtaining the first set of keys. You have to take the time to save enough for a down payment to get approved for a mortgage, and then you have to find a home that fits your budget. After all this, you have to hope that your offer will be accepted and your financing will be completed. It’s understandable why many people are intimidated by real estate.
GOBankingRates caught up with James Lowry, a real estate investor and co-founder of Rethink The Rat Race, to discuss how he and his wife, Emily, achieved 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 Laurie save up to buy his first property?
“I was able to purchase my first property by prioritizing saving as much as possible and making sure I had enough for a good down payment, which gave me a smaller mortgage and a better chance of getting approved,” Lowry said.
The key to getting approved to buy your first home is that you have to find a lender who is willing to lend you the money to buy the home. To do this, you will have to lay your foundation in advance so that your finances are sound when it comes time to start looking for a home.
To save up for your first home, you will need to consider the following steps:
- Work on saving so you have enough for a down payment.
- Make all your payments on time to build your credit score.
- Pay off any debt you have to improve your credit score.
- Shop around for mortgage pre-approval to see what you might qualify for based on your income and savings.
- Continue saving as you search for homes based on your criteria.
How did Lowry land the first unit?
What happened when Laurie saved money to buy his first property? “I found the place on Zillow,” he said. “It was initially listed for sale, then it was taken down and listed for rent, so I felt like the seller was excited.” Lowry knew he had a good chance of having his offer accepted, as the house had not sold during the initial listing period.
“The unit was located in Madison, (Alabama), and (I) paid $43,500 at the time.” Lori was fortunate enough to start with a low-cost property to get started in real estate without investing a large amount of capital.
Although you may not encounter this exact scenario when you are searching for a property, it is important to remember to maintain confidence in your search even when you feel like giving up.
How did Lori become a millionaire with real estate?
“I achieved millionaire status by living in that first unit for a year and moving to a new house to rent the place out,” he said. What’s next? “Rinse and repeat a few times while purchasing other small rental properties I can afford.”
Once you purchase your first property, you can start paying off your mortgage and saving until you are ready to make your next investment. In this case, Lowry lived in the house for a year while he upgraded it and saved for the next house. Then, when Lowry was ready to buy another unit, he rented out his original unit. After doing this several times, Lowry became a millionaire through real estate.
The main strategy for building wealth here has been to rent homes either to renters or through platforms like Airbnb that offer short-term rentals. When you turn your property into an income-producing asset, you can increase your income while freeing up more money to make your next purchase. You should try to repeat this process several times until you have enough money coming from your real estate units so that you eventually have a noticeable income.
How can you buy your first property?
If you’re looking to get into real estate but aren’t sure how to get started, here’s what Laurie suggests.
Get pre-approved for a mortgage
“When you start your search, get a pre-approval letter from your lender to make your offer more enticing,” Lowry said when asked about getting approved for his first offer.
Although you don’t necessarily need a mortgage pre-approval, it certainly helps with your first home search. You’ll also be more realistic about the properties you’re looking at so you don’t waste your time looking for units you can’t afford yet.
Don’t be discouraged
“My top advice is don’t get discouraged,” Lowry said when asked how he stayed motivated while trying to buy his first property. “We made hundreds of offers and only a few were accepted.”
The harsh reality is that you will be outbid and offers will be rejected. You should keep researching and submitting offers even when you feel discouraged. If you are searching in a competitive market with low inventory, your search may take longer. It’s important to remind yourself that there is no set timeline for purchasing that first property.
Keep your search open
Some investors get the perfect property on the first try. Others have to search for a long time to achieve this. Every real estate journey is unique and depends on the market you are looking into.
Here’s what you can consider doing if you can’t find the perfect property:
- Expand your geographic horizon.
- Consider investing in a riskier community.
- Change what you’re looking for.
- Keep saving while searching for that first property.
Everyone’s real estate experience will be different, so it’s important that you don’t give up on your search just because it takes longer than expected.
If you are interested in becoming a real estate investor, there are different ways to get started in this field. Many other people have gone through this process before you, so you don’t have to feel alone. It’s important to remember that closing on your first property may be the hardest part, but if you stay committed, you can eventually start 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
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