Initial Thoughts on Real Estate Investing

Real Estate Investments: Buying houses/flats and receive rent

The book Cashflow Quadrant triggered my interest in real estate investments again. A few months ago I already thought about it and requested detailed information about real estate that was for sale. It was easy to see, that this piece of real estate wasn’t a good investment, most of the rent had to be spent on monthly expenses. At first I decided to stay focused on stock and ETFs.

But, as described in the book, real estate has its opportunities, too. The main advantage is that buildings are commonly accepted as a credit security. With this mortgage, you can use other people’s money as a leverage for your earnings – you borrow money, the mortgage improve the conditions (lower interest payments!). Then you buy a house with this borrowed money and receive rent. A fraction of the rent is used for paying back the loan and interest. The remaining part is cashflow and can help you to get a financial cushion.

The key is to find real estate which offers opportunities other potential buyers do not see. Therefore I wanted to check out how this works.

After my experiences with podcasts, I looked for a podcast on real estate investing. The episodes kept mentioning a forum, and in this forum I found a meet-up of real estate investors in a city close by. I went to visit this meet-up. And it was really exciting. Lots of people with real estate experience discussing with each other and lots of opportunities to ask questions.

Apparently there are at least three different ways to invest in real estate:

  • Buying really bad houses, fixing them and sell them
  • Buying houses that are ok, pay back the mortgage over time with a little cashflow remaining. The cashflow increase after you paid back the mortgage
  • Buying houses that are ok, use a part of the rent to pay the interest of the mortgage, keep the mortgage and the other part of the rent as cashflow

So, bottom line: Other people who are discussing and talking about things you want to learn is very helpful. Meeting those guys saved me probably more than one month of reading books and blogs. If discussions at conferences were as vivid as the discussions at this meeting, science would advance much faster! So if you want to learn things like starting a business or investing, meet people who are already doing this in an environment were they are likely to discuss freely and emotionally.

If you think, real estate investing might be an option for you to acquire income which is independent from your research: Check it out for yourself and get some additional information in a forum or a facebook group on real estate investing!

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