I always tell people that real estate has the potential to be a great investment. But getting started can be daunting.
As a real estate investor of eight years, I’ve found that the key is to take small steps. When I first began investing at age 23, I set a modest goal to make a bit of extra money on top of my engineering salary with one or two rental properties.
Today, I own 61 rental units that last year grossed $431,000 in rental income. I’m also a real estate coach at Roofstock Academy. I mostly work from a converted van that my wife and I live in. When we’re not traveling across the U.S. in our van, we stay in our California duplex home.
Thanks to his flexible streams of income, Michael Albaum and his wife spend part of the year living and traveling across the U.S. in their converted van.
Photo: Michael Albaum
After paying my mortgages, property taxes, property management and maintenance fees, I earn about $6,000 per month in passive income from my real estate portfolio.
Since 2019, I’ve been investing that money into a redevelopment project that is converting eight units into 17, and living off my full-time coaching salary.
How I bought my first real estate property
In 2013, right out of college, I worked as a fire protection engineer and made $73,000 a year.
Saving for an investment property was a goal of mine, so I lived well below my means. I paid $800 per month to rent an apartment with roommates. My employer covered essential expenses like my car and cell phone bills, allowing me to save even more every month.
In 2014, I used $40,000 I’d saved in cash and sold $20,000 worth of stocks to make my first real estate purchase: a $295,000 single-family home in Southern California. I also took out a loan from a family member for the remaining cost, so I didn’t have to borrow from the bank.
The home sat vacant for two months before I rented it out, but it didn’t need any renovations. The $1,810 per month rent from my tenant allowed me to cover monthly loan payments on the home plus the operational expenses of managing it.
Growing my real estate portfolio
By 2016, I was the owner of three houses. I financed my second purchase through a traditional bank loan, and I bought the third with a $250,000 loan from a family member at a 4%, 30-year fixed rate.
I made $51,404 that year in gross rental income from all three properties, and while most of that money went towards covering mortgage, maintenance and …….