People occasionally ask me how I got started investing in real estate. Today, I own and have invested in a variety of residential and commercial properties, but it certainly didn’t start that way.
In fact, my very first investment property was a little brick ranch duplex on Curran Street right here in Burlington, Iowa.
Nothing fancy. Just a modest duplex that needed a little work and, as it turned out, a little patience.
I had been interested in real estate investing for quite some time, but like a lot of people, I didn’t necessarily have a pile of cash sitting around waiting to buy an investment property.
What I did have was equity in my personal home.
So I decided to put it to work.
I used a Home Equity Line of Credit (HELOC) to access some of the equity I had built in my house and used those funds to purchase the duplex.
The property had been sitting on the market and needed some modest repairs. It also came with a couple of less-than-ideal tenants who weren’t paying their rent.
Looking back, I honestly think the biggest reason the owner wanted to sell was that he was simply tired of dealing with the tenants and the headaches that came with managing the property.
But where he saw a problem, I saw an opportunity.
After purchasing the duplex, I went through the process of removing the nonpaying tenants, made the necessary repairs, cleaned things up, and found new renters.
And just like that, I had my first income-producing investment property.
Now here’s the part I think is interesting.
After expenses, that little duplex generated approximately $450 per month in positive cash flow.
Was that going to make me rich overnight? Absolutely not.
But that was roughly $5,400 per year in additional cash flow from one small property.
And perhaps more importantly, I had taken equity that was tied up in my personal home and used it to help purchase an asset that generated income.
Of course, using a HELOC isn’t free money. There are borrowing costs, risks, and responsibilities that come along with it. You need to understand the numbers and make sure the investment makes financial sense.
But for me, it was a way to get started without having to save up the entire purchase price in cash.
That little duplex taught me a lot.
I learned about managing tenants, making repairs, understanding operating expenses, and most importantly, recognizing the potential in a property that someone else was ready to walk away from.
I’ve since sold that duplex and gone on to purchase larger investment properties, but the basic strategy really hasn’t changed.
Find an opportunity. Understand the numbers. Make improvements where necessary. Put your money to work.
One of the things I love about real estate investing is that you don’t necessarily have to start with hundreds of thousands of dollars.
Sometimes it starts with a duplex. Sometimes it’s a small single-family rental. And sometimes the opportunity might be sitting in the equity you’ve already built in your own home.
Now, I’m certainly not suggesting everyone should run out and borrow against their house to buy a rental property. Every financial situation is different, and leveraging your home comes with real risks.
But I do think there are a lot of people who have built substantial equity in their homes and have never really considered what opportunities that equity might create.
And here in Southeast Iowa, where investment properties can still be found at relatively attainable price points, it’s a conversation worth having.
You don’t have to own 50 rental units to be a real estate investor.
You just have to start somewhere.
For me, it started with a little brick duplex on Curran Street and about $450 a month in cash flow.
Looking back, that was one of the most valuable real estate investments I’ve ever made. Not necessarily because of the money that property generated, but because of what it taught me and the opportunities it eventually led to.
If you’ve ever thought about investing in real estate, buying your first rental, or simply wondered how you might be able to put some of your home equity to work, I’d love to have that conversation.
At Thrive Realty, we can help you identify potential investment properties, evaluate the numbers, and connect you with local lenders to explore financing options.
You never know where that first investment might take you.
Don’t just live. Thrive.
John Mercer
Broker/Owner, Thrive Realty
