Since my last blog post I’ve listened to 54 hours of audio books about one particular industry that affects us all:
Residential Real Estate
On top of my audio book studies, for a couple hours each day, I’ve surveyed the depths of the north east Ohio real estate market, from behind the keyboard, and with my own two feet.
For most who have been following along to this blog, these statements may seem to come out of left field. But they are actually quite relevant to both my van, and my pursuit of a one-million-dollar net worth.
I need capital to bring my vision to life. And at the present rate at which I can obtain capital (my engineering sales job), I will turn 30 years old (heck 40 years old) before becoming a millionaire.
With my 30th birthday in mind, I decided to turn my short term focus to real estate because this industry has the rare ability to amplify existing capital. This is known as leverage.
Because a qualified buyer can borrow tens, even hundreds of thousands of dollars to acquire or re-finance real estate, there exists an opportunity to leverage a return on borrowed money and amplify existing capital.
For example, if a house is bought through foreclosure in cash at a discount of its market value, with proper considerations, the house can effectively be re-financed at a later date to free up the entire amount of cash used to acquire the property in the first place (while still retaining control of the house).
Just to use relatable rough numbers, if a home is bought through foreclosure for $60,000, fixed up to an after repair value of $100,000, the investor may have the opportunity to later take out a mortgage on the home and regain access to their initial cash investment. This amplifies the investors cash, turning the original sum into cash + house.
This process can be repeated. A complete cycle is referred to as “BRRRR” by the author of “The Book on Rental Property Investing”, Brandon Turner.
Buy, Rehab, Rent, Re-finance, Repeat
What this means for me:
I see an opportunity to take the little money I have access to, and leverage it for a greater return, and a stronger financial foundation. Ultimately I see this as an unparalleled method to significantly increase my access to capital over the next two years.
Residential real estate is not a get rich quick scheme and I won’t make a million dollars in two years this way. But from what I’ve seen, enough opportunity exists in this part of the country to jumpstart my progress without wholly compromising my flexibility (or day job).
What I can tell you right now, after passing over hundreds of area properties, closely analyzing roughly 70, and keying in on a few diamonds in the rough, I’m ready to commit to an opportunity that meets my criteria.
I’ve already formed a management company (LLC) in preparation of what I consider an inevitable real estate purchase (in concept, no specific deal is inevitable right now).
And in order to maximize my opportunities I’ve incorporated full time van-dwelling scenarios (as opposed to renting) to supplement cash flow considerations.
There’s really a lot going on here, and much more that can be said. But what you (and I) can look forward to on this blog, is not only a completed van, but a completed van parked outside of some in progress residential rehab project.
It’s been 695 days since I quit my job as a civil engineer to hike the Pacific Crest Trail. And what was true then is true now, I can’t tell you what’s going to happen next. And I love it!
Not waiting to live!