Mike and I have been married since May 1997. During the early years, we were struggling to get by. I worked my “college degree” job during the day and a part time job at night. Mike worked all day and then was in night school to finish up his degree. During that time, we’d go to Barnes & Noble on the weekends to grab a coffee and read the magazines and books for free. During one of these trips, I came across the book Rich Dad, Poor Dad.
This book changed our lives.
if you haven’t read it, the premise is that you’ll never be rich if you keep working for money. In order to be rich, you need to find ways to make your money work for you, like real estate investing and starting your own business. I was really drawn to this concept and to real estate investing in particular.
No one in my family had ever thought like this. No one was an entrepreneur… everyone went to college, got a degree, worked somewhere for 40 years and then retired.
This whole concept of having your money make money was foreign to me.
And, the idea of doing this at a young age and taking control of our future was so appealing. Almost immediately, I signed us up for a real estate seminar.
After the seminar, we jumped right into purchasing three seemingly-safe investment properties. And since this was 1999, we funded our down payments with credit card advances.
What could go wrong?
Turns out, there’s much more to real estate investing than just finding what you think is a great deal. As we learned, you need to have an understanding of your local market, you need to know how to analyze the numbers to determine if the opportunity is the right fit, you need criteria about locations and types of homes and… you should know how to manage tenants.
We had none of those skills or knowledge.
About 3 months in, it was clear that we were in a bad situation. The properties were losing money, we were now deeply in debt and Mike was spending all his time trying to make things work. After many sleepless nights we realized 3 things:
- We had no idea how to make these properties make money.
- We needed to dig out of debt.
- If we wanted to be in this business, we needed to learn the business.
We gave back the properties. We moved in with my parents. And, Mike went to work for a property management company.
Armed with real knowledge and experience, we now knew how to run real estate investing as a successful business. We knew how to manage risk and how to conservatively assess each property and opportunity.
Our experience this time around?
Our real estate investments generated annual returns on our investment of 25% while my 401k only made 6.5% over the same timeframe. We also benefited from capital growth and our original down payment investment was quadrupled in 4 years – which equates to a 400% return.
We already knew real estate investing was a great way to diversify our portfolio and that there are many other benefits such as tax reductions but we were astounded by the impact on helping grow our wealth.
We wondered, “why doesn’t everyone do this?”
Our friends saw what we were doing and asked us for advice. Some wanted to know how we built our portfolio. Others wanted our feedback on properties they were considering purchasing. Still others asked us to help review options on properties that weren’t performing. We’ve finally put together training and coaching to help others gain the benefits of real estate investing — without the painful lessons we experienced.