Real Estate Investing Business is sneaky and smarter way to become rich.
I’m talking about Small Landlording here.
What is being Sneaky?
The dictionary meaning of the word is
To be Sly, Crafty, Wily, Cunning, Devious, Canny, Artful, Scheming
We’ll take the positive meaning. Crafty, Artful, Canny.
Small Landlording provides an option to become rich with comparative small investment, working part-time. Which, I think, is attempting to be successful beyond the ways and means.
Do you not think it’s a sneaky way to do the business?
What is the capital requirement of Real Estate Investing Business?
Real estate investing is different from other types of businesses. Small landlording allows you the opportunity to start investing in some capital and keep growing. And then gathering up some more capital, invest again in more real estate and so on.
To purchase the first investment property would require capital as little as 20% of the total price of the property. Typically investor would wait for a couple of years, in what is called ‘buy and hold strategy’. This ‘hold period’ helps the investor to settle down. It also helps to learn skills of landlording and to save money to buy next property. As soon as the investor gathers enough money, would go for the 2nd property. These steps are repeated as per investor’s desire to expand the real estate investing business.
Alternatively, One can also buy the first property as the primary residence. Down payment or capital requirement, in this case, can be just 5%-10% both, in the US and Canada. In which case, after a few years, one can buy and move into the new primary residence and rent out the earlier one to convert that into the investment property. And then keep repeating the process.
As you can see, the full capital is not required to be invested at the start of the business.
More often than not, Investors are able to take out some portion of equity and appreciation from the earlier purchases to purchase more properties.
The operational requirement of Real Estate Investing Business
Typically, a landlord starts by purchasing one investment property.
Starts renting out and managing the property. Also starts dealing with a tenant or the tenants depending on the type of the property. All these activities are a hands-on experience for the landlord. Repairs may come into play. The owner can hire the agencies for major repairs and can fix the minor repairs by himself.
All these being done by the landlord while keeping his or her full-time job intact.
All the above activities do not require the full-time presence of the landlord, at least as a landlord of a single property. When the landlord acquires more property, he or she may choose to outsource some or more landlording responsibility.
The point I’m making here is that the landlord can treat this business as a part-time job.
So in conclusion, you can see 2 overwhelming characters.
The total capital requirement for real estate investing business is not required at the start. That means that the owner can raise the subsequent capital from individual savings. Alternatively, many times, it can be drawn by refinancing already purchased properties.
The owner of the business can treat real estate investing business as side-gig or part-time business. This works favourably to the owner as not quitting the full-time job provides the security and support for further investment.
Strategically thinking, real estate investing provides the opportunity for ‘not a very rich person’ to become ‘rich’. After some years and few properties, the owners would find themselves sitting on a huge chunk of real estate wealth.