Why choosing real estate investment when you are young and broke?

Pretty much right after I started reading “Rich Dad, Poor Dad” by Robert Kiyosaki my eyes started opening wide enough for me to see potential opportunities around me. I didn’t fully understand what he meant about building a business(es) and investing in mutual funds. But the idea of people paying for your property was very appealing.

Imagine this:

Be me. Immigrant, 25 years young, moved to the US 5 years ago. Had 0 dollars in my accounts. Fuck, I didn’t even have any accounts to start with. I remember all the times I and my wife ate free food from donation centers. I remember fucked up apartment we lived in, that wasn’t pretty. You know, regular immigrant story blah blah.

5 years later, I’m making 6 figures on my office job that I love. And I have no savings at all. We are spending all of it, living the most retarded consumer’s life. Reading that book was the first time I realized that I probably should spend less. 

We were planning to get our own place too. Get ourselves a nice 3-br single family house in a quiet neighborhood. You know, american dream. This was before I decided to invest money, that I don’t have to buy a building I don’t want to live in in the neighborhood where it’s not safe to walk through.

This post won’t be too long, I’ll go through the very basics, and will go in-depth later in this blog, so feel free to subscribe if you want to read more about my real estate beginner’s journey.

The concept

Most of you understand how this works, but I will assume that there’s a single kid who’s reading this and has no idea how it works.

The process is simple:

  1. You do research
  2. You find money 
  3. You find a good deal on a property
  4. You make an offer
  5. You buy it
  6. You rent it out
  7. Your tenants are paying off your mortgage

Let’s spend 40 seconds on each step, okay?

1. You do research

Look, no immediate action needed from you right now. So far it is a 0-down investment for you since you are not buying anything yet. 

I started with YouTube. Started with BiggerPockets, then discovered Phil Pustejovksy‘s channel, Graham Stephan and Morris Invest. Truly amazing resources, which broke down for me that I have more than 1 option when it comes to buying real estate.

Before you put any money on the table, please allow yourself to be educated on the topic, simply to avoid spending what you don’t need to. You will also have a more in-depth understanding of how to calculate your Cap-Ex, PITI, maintenance and closing costs.

How to Replace a $70,000 a Year Salary with Real Estate Investments and Rental Property

2. You find money 

The most important step is to understand that you don’t always need to have money on you. I had maybe 2 grand in saving and nothing else and I was able to pull my deal through. Most of it will provide the bank you’ll be working with, however, it’s not the only option.

Remember this: Money should be your last concern. You don’t need money to buy a real estate, but it makes it way easier if you have some cash. 

If you decide to dig deeper into the topic, you’ll soon find out that having money only buys you the ability to do business on your own terms. However, there are endless ways of starting building your real estate empire with a hole in your pocket (for example BRRRR strategy, owner-financed deals, sandwich leases, even wholesales).

An Intro to BRRRR Real Estate Investing [Fixer Upper Rentals!]

3. You find a good deal on a property

Okay, so let’s say you want to go traditional way with bank mortgages, you found some cash, (let’s say you pulled $25K from your IRA account), and you got pre-approved for a $400K loan, so what next?

There are multiple different options that you can start looking for. It all depends on your situation. For example, when we were looking for a building, we were searching for 2-4 unit buildings, where we would live in 1 unit and rent out the rest.

Long story short, we were able to get $280K duplex and I’m currently renting my basement apartment for $1280/m.

But maybe you are not looking for multi-units and you want to buy a 25% down investment apartment for $60K. Maybe you are looking for a single-family house, that you can get with 3% down, where you live in for a year and then rent it out and get that sweet cash flow. Or maybe you want to flip or even BRRRR a building or two. This is all up to you.

Just know that you need to run your numbers as aggressive as you can. Analyze, then analyze again. And then again. And then several more times. You need to come up with the most ridiculous scenarios in your head of what can go wrong and be sure you are aware of ALL possible outcomes and ready to lose everything you invest. If you are not ready – start with the mindset and reading books, because you will need to react quickly when a good deal shows up.

4. You make an offer

So this is where things might get tricky. You still most likely haven’t put your mind in the right state. This was my problem and I can now see the potential difference I might have had if I was reacting faster and didn’t hesitate that much. 

This is the step when you need to make decisions quickly and without hesitations. You will be going on a back and forth with the seller for some time on a price, but at some point, you are going to need to make a decision of signing up for 30 years of the mortgage, and if you are not mentally prepared – you might have several offers that you miss.

5. You buy it

After you signed an offer, you need to do your inspection and appraisal. You don’t want to save money on an inspection. This is one of the most important investments that can save you dozens of dollars in the future.

One thing about appraisal to keep in mind: appraiser will know the selling price once he\she comes to the property. Their job will be to justify this number. If you think you found a building with a price of $200K and the REAL cost of $300K – this will not be visible on the appraisal. Now, this doesn’t mean that the property is not appraised for more, it simply means that if it is – it’s not the point of this particular process. You can re-appraise your building after some time and get a real value of it after some time (6 months at least).

Be prepared that you’ll spend extra. Your agreed 3% loan will suddenly become 7% loan, your estimated $8,000 closing costs will jump to $12,000, etc. With a good lawyer and a good mortgage broker, you’ll be alright. 

6. You rent it out

The very last push in the process. You need to bring cold-blooded bitch in you and start screening tenants. There will be a TON of sobbing stories, where you need to be empathetic, but still a businessman. You will need to follow a checklist with requirements you created (required minimum income, minimum credit score, etc) and understand that renters are people, but also your risk. 

Make sure you document everything and do no-cash deals (this will help when you do your taxes). Do the background check, pull credit report and make sure your tenant has no criminal history, and when you feel good about them moving in – just sign the contract and that’s it.

7. Your tenants are paying off your mortgage

So this is where the fun part begins. If you did your homework – you are golden. There will be some unexpected maintenance needed, some late payments and other possible problems, but that doesn’t matter because when you do you homework – you know about all that and you are ready. 

This all brings us to a final point of this post: SOME OTHER PEOPLE WILL BE PAYING FOR YOUR SHIT. 30 years later you will have a paid off property that will just cashflow in your face. If you buy more than one – in 40 years you will have, let’s say at least $5K/month in totally passive income. Now, I really want to see how you can do the same number if you just retire from 9-5.                                                                                                                                                                       

What else

Finalizing this brief overview of a process, all I can say right now is that if you do it – your retirement will be slightly different than your friends’ retirement

If you do things smart way and decide to buy 2, 5, 10, 20 properties, you will be able to retire in 50, or even when you are 45. If you are smart enough – you can retire in 5 years from now. If you are young and broke – there ARE WAYS of doing all the real estate deals without too much money invested. 

With that being said, I can not accent these 2 point enough:

  1. Please DO IT. This is a way to go if you can make the math work in your favor.
  2. Please KNOW WHAT YOU ARE DOING. Don’t just blindly go and waste your money. Do your homework.

Due to my domain name, I feel obligated going MUCH more in-depth of this topic, which I will later in this blog. I will be writing more about each and every step and will try to share everything that I know.

Thank you for reading,


If you want more content like this, please let me know in a comment section or on social media:

IG: @ian.dikhtiar

FB: @ian.dikhtiar

Check out my Shopify store: Teerrestrial.com

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