fbpx
U

How Much Money Do You Need to Invest in Real Estate?

January 21, 2023

Transcript

We have a question about real estate. He says, “Hi Money Guy, you guys have mentioned it’s good to have deep pockets before going into real estate and investing, but how deep are we talking? In other words, how do you know when I can get into real estate investing in some capacity according to the money guys take?”

We’ve talked about our journey into real estate and how one of the things you want to do, is you want to make sure that this is a more more mature step in the Financial Order of Operations. When it comes to real estate investing, it’s often recommended to have deep pockets. But what does that actually mean? How deep do your pockets need to be before you can start investing in real estate?

Having deep pockets means that if your real estate investment goes wrong, it won’t break you financially. It’s important to stress test your investment and run a business plan that considers the worst-case scenarios.

Real estate investing is not a passive investment and requires a level of entrepreneurship. Don’t be fooled by social media posts that make it seem easy and hands-off. Every real estate transaction requires work and effort, whether it’s commercial or residential.

One thing to keep in mind is that low-purchase price properties in less desirable areas may come with a lot of transition and repairs. Transient residents can cause damage to the property and require rehabbing every time a tenant moves out. This is why it’s important to have enough financial cushion to cover the mortgage, utilities, and repairs.

In 2009 through 2011, a successful individual with 45 rental properties found themselves in a difficult situation due to the high turnover rate of tenants during the housing market crash, particularly in South Atlanta. This is a prime example of why it’s important to have deep pockets and be prepared for the worst-case scenario.

In conclusion, before diving into real estate investing, make sure you have the financial means to weather any potential storms. Run stress tests on your potential investments and have a solid plan in place. And remember, real estate investing is not a passive investment and requires effort and work. To learn more about our Financial Order of Operations course, click here.

Most Recent Episodes

Financial Hacks and Habits of the Top 1% (By Age)

ho wouldn’t want to have a high enough income and net worth to be considered part of the top 1%? In this episode, we’ll tell you exactly how much you need to be considered part of the top 1% - and the habits and hacks those in the top 1% used to get there.   In this...

How to Win With Money in 2023!

Financial resolutions are always near the top of the list of Americans’ most popular New Year’s resolutions. Whether you want to save and invest more, pay off debt, or have other financial goals, we will give you the tools you need to win with money in 2023.   In this...

TikToks That INFURIATE Financial Advisors

The most powerful time to get serious about building wealth is when you’re young. So, what is the younger generation learning? Financial Advice (good and bad) is being produced in massive rates across online platforms and TikTok is the new frontier. Is there good...

5 Levels of Wealth AND How to Achieve Them! (2023 Edition)

We believe there are five distinct levels of wealth, but they aren’t solely dependent on income or net worth. We’ll walk you through each of the five levels - including how to know where you are at, how to advance to the next level, and signs you are doing it right.  ...

Average Net Worth By Age in 2023!

It’s time for one of our most anticipated shows of the year: our annual Net Worth By Age show! In this year’s edition, we’ll shared updated numbers and data for 2023 and discuss the most important things for you to focus on in each decade.   In this episode, you'll...

Win Financially During a Recession! (Everything You Need to Know)

The bear market we've experienced in 2022 has been longer than many in recent memory - and some are concerned that the economy may soon enter into a recession. Here's everything you need to know to stay on-track and win financially during a recession!   In this...

The Fed Just BROKE the Car Market! (What You Need to Know)

Car prices have been on a rollercoaster ride the last few years, and it looks like they might finally be coming down. In this episode, we’ll discuss what you need to know about the current car market, pitfalls of buying a car, and how to do it the right way.   In this...

Top 4 Money Mistakes People Make During the Holidays!

There’s a reason why financial resolutions are always near the top of the list in January - many Americans spend the holiday season making financial mistakes. In this episode, we’ll discuss the top money mistakes people make during the holidays and how to avoid them....

Financial Advisors Share What They WISH They Knew About Money Earlier!

Have you ever felt like if you just knew this one thing about money earlier your finances would be in a better spot? In this episode, we’ll share the five biggest things we wish we knew about money earlier!   In this episode, you'll learn: What we wish we knew earlier...