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 property management costs, I was also able to take home around $1,800 per month.
In 2017, I decided to ramp up my savings to purchase additional real estate. I found an even cheaper apartment to share with roommates, and invested those savings plus the money I was making off real estate into the stock market and my investment accounts.
When I learned about how much further each dollar could go in opportune markets — where cash flow was high and buying prices were low — I started looking outside of California. I bought the cheapest multi-unit properties I could find in the Midwest, mainly Ohio and Kentucky, and fixed them up.
To do this from afar, I built relationships with agents and property management professionals in those markets, so I knew I’d have a team on the ground to identify the best properties and take care of my tenants.
I work with small family-owned management businesses, whose fees cost an average of 7% of my gross rent per property but can reach up to 20%. How to start your own real estate investment journey
I feel very lucky that I get to work a normal 9-to-5 job as a coach from my van and explore new parts of the country — while also earning passive income through my real estate investments.
Albaum works a 9-to-5 as a real estate investment coach, and is currently managing a redevelopment project.Photo: Michael AlbaumI believe that if you save up enough money and look in the right places, you can get a leg up by investing in real estate — even in an era of sky-high home prices.Here’s my best advice: 1. Start small with a well-researched strategy My investing strategy is the “BRRRR” method: Buy, rehab, rent, refinance, repeat.I buy homes in markets where units are renting for much more than their monthly mortgage payment. I fix them up, then rent them out to […]
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