How to Start Investing in Real Estate

How to Start Real Estate Investing: Our Journey (2025)

Hello, hello! Welcome back to Financial Self-Care, the place where you learn how to take care of yourself by taking care of your money. Today we are talking about a new venture we are very excited to share: our real estate investing journey.

You can listen to this episode on Apple, Spotify, or wherever you like to listen

I want to pull back the curtain on this because, like with many things in the personal finance world, real estate investing can feel like a big secret.

And you know I don’t do secrets. So, I figured I’d start early on this one because while we are not technically real estate investors YET, we have an accepted offer on our first property. 

Let me be absolutely clear here. I am in no way an expert on this, but you can’t become an expert on anything until you start as a beginner

So, as uncomfortable as it is, I am choosing to be a beginner in real estate investing so I can one day – possibly – become an expert.

AJ and I have been interested in real estate investing for quite some time, about three years actually.

Real Estate Investing: Type of Investment Property

And over the course of those three years, we’ve had dozens of ideas for what we might want to invest in: long-term rentals, mid-term rentals, short-term rentals. We’ve even considered running a campsite.

What I’ve found to be true with real estate investing is that the analysis paralysis is REAL. 

So I’ll be walking you through our journey thus far and how we are finally getting started in real estate investing.

When We Started

I wish I could tell you the true origin of my interest, but I honestly don’t remember. I mean my dad was a real estate agent for more than 40 years, but he never owned rental properties and he didn’t use real estate as a wealth generating tool.

So while real estate has run in the family, this specific side of real estate certainly hasn’t been passed down through generations. 

In fact, I remember as a kid, being dragged through the Parade of Homes and semi-hating it. Though once when I was probably 7 or 8, my brother and I were playing hide and seek as we paraded through these massive houses.

One time, I found the best hiding spot, under the stairs through a secret passageway. And my family couldn’t find me for quite a while. I thought I was super clever… they did not. I got in a lot of trouble that day.

So it wasn’t like I knew as a small child that real estate investing was in my future. 

What I do know is, when AJ and I started our own financial self-care journey, and started to get really serious about our finances in 2019, it didn’t take long until real estate started becoming a topic of interest. 

Real Estate Investing: Who Should Invest in Real Estate

Really, once you start learning about financial self-care, it’s hard to avoid the real estate conversation because many people reach financial freedom through real estate.

Yahoo Finance and many other sources often quote Andrew Carnegie  saying, “90% of all millionaires become so through owning real estate.” Now, that’s a very old quote and many people put too much emphasis on it.

Building Wealth with Real Estate Investing

But there is some truth to the idea that real estate is a powerful wealth building machine.

How to Start Real Estate Investing: Who Should Be a Real Estate Investor?

Now, let me preface this by saying real estate investing is not for everyone, and that’s okay. Simply investing regular ‘ol index funds is a fantastic way to build wealth.

If you’ve been here awhile, you know that my husband, AJ, and I have officially reached Coast FIRE, which means we are semi-retired. As a reminder, The FIRE Movement is an abbreviation or acronym for Financial Independence Retire Early. Nerd Wallet defines the FIRE Movement as, “a lifestyle movement that prioritizes extreme saving and investing in order to retire earlier than traditional methods might allow.”

I’m an advocate of optional retirement or work optional. I’m not an advocate of scrimping every penny and being cheap to invest like a crazy person.

There are varying degrees of the FIRE movement, but AJ and I fall into the Coast FIRE and/or the Barista FIRE category, meaning we never had to put another penny into our retirement savings, and we will coast into retirement very comfortably at 65, and likely even sooner than that. 

AJ and I will become millionaires (excluding the worth of our primary home), in 14 years if we never put another cent towards retirement. If we start contributing to retirement again, we could see millionaire status in about a decade or so. 

That’s all been done without real estate investing. Our wealth has been entirely built through investing in index funds in our 401(k)s, Roth IRAs, our HSA, and brokerage accounts.

If you want a recap of all that, you can listen to Episode 6: How We Semi-Retired with Coast FIRE or episodes 3 and 4, How to Invest for Beginners. I’ll link those in the show notes.

I tell you this for two reasons:

  1. I don’t want anyone to think real estate is a MUST. If real estate is interesting to you, then yes, it’s absolutely worth exploring. But I have a lot of people that come to me and say something like, “I want to own a rental property at some point for passive income.”

    And while I’m not technically invested yet, with all the research I’ve been doing, it’s abundantly clear that there is nothing more hands-off and passive than index funds. Real estate investing is still home ownership and we all know that that isn’t passive.

    Sure, you can hire a property manager, but you’re still the one making the final call on how to deal with tenants, home improvement costs, paying taxes, and all the other things that come with home ownership.
  2. And two, even if you are interested in real estate investing, there is an order of operations here.

    While wealth can be built with real estate, it’s vital to get your finances in order first.

    Real estate investing isn’t a hobby, it’s a business. And to run a successful business means understanding your numbers.

    So first, get your money mindset in a healthy place, work on putting systems in place to get out of high-interest debt, if that’s something you’re experiencing. Then, when you’re feeling good about all that — maybe it is time for you to consider real estate investing.

But, if you’re like yes, I want to do it or at the very least want to learn about the option of real estate investing, then I’m here to help and support you along the way.

Again, AJ and I are debt-free except for our current mortgage on our primary house. That has an interest rate of 2.25% and will be paid off in about 10 years. 

Real Estate Investing: Home Equity Line of Credit or Home Equity Loan

When we started considering how to get into real estate investing, we realized that we have a lot of equity in our house. About $150,000 or so. 

I started working on some numbers and thought, we could use that money to leverage our debt. And use it to create other income producing assets.

So we started looking for properties on the North Shore of Minnesota in the summer of 2022, about two and half years ago.

Back then, we found a little sleeper cabin on a ten-acre lot. And thought of it as a yurt. Like bare bones, super basic upscale camping, if you will. 

How to Start Real Estate Investing: A Business Plan

We created an entire business plan called the MN Nordic Houses, with a goal of having 3 dwellings on the 10-acres. Each would be their own Scandinavian themed tiny house. We had the whole idea – we even got the Instagram handle. I mean, we were ready to start this thing.

Call the City and Call the County

Then, literally as we were ready to put the offer in, we found out that the county was in a moratorium. Moratorium means they were not allowing anymore short-term rental permits in the county. So we wouldn’t be able to rent our sleeper cabins. 

The country was scheduled to meet in March of 2023, to decide if they were going to lift the moratorium, but that was nearly 7 months away. We didn’t have the financial resources to let this sit vacant for 7 months. 

Plus, the county could very well keep the moratorium in place. Which would mean we would go potentially longer than those 7 months without renters. And actually, that’s exactly what happened. 

Over two and a half years later, the county is still in moratorium, and not accepting new short-term  rental applications. 

So, while our dreams were a bit crushed, it was for the better that we walked away from that deal, without putting an offer in. 

We would have been really screwed if we had bought that sleeper cabin and it wasn’t producing income for years. And this is why calling the city and county is really important as you’re deciding where you might have a rental property.

Play Big or Play Small

But we were still wanting to do something, so I thought, “Maybe we’re playing too small. What if we started a campsite?!

We love that area and county, and a campsite isn’t classified as a short-term rental, it’s a different classification. We could have tent site, RV and camper sites, and even put yurts on the land. So AJ and I started learning about how we could do that.

We pretty quickly realized that a campsite was a far bigger endeavor than we wanted to commit to at that time – especially given the fact that I was 7 months pregnant with Koko.

So while we had looked at a couple areas of land, one of which we loved but after talking to a land surveyor, found out it was a high flood area – not so good for a campground – we ran away from that idea, and I don’t suspect we’ll ever circle back to that. But never say never. 

After all that, we pushed paused on the real estate investing endeavor. Mostly because I was about to have a child. We already had an almost two-year-old. AJ was still working full-time. I was building my blog. All the things.

How to Start Real Estate Investing Our Journey

Fast forward to now, we decided we’re ready to get back on the horse. What really inspired the idea again was a house that came for sale kitty corner from our primary residence. I had the brilliant idea to buy it and rent it out.

We had a showing, and it looked like a great rental property. But after crunching the numbers, we would have to buy the house for nearly $80,000 less than it was listed for it to make sense. That house was listed for $280,00, but comps tells us that it would only rent for about $1,950 per month.

Long Term Investing: 1% Rule

With long-term investing there is a thing called the 1% rule, meaning if the monthly rent is 1% or more than the purchase price, you might have a good deal. $1,950 divided by $280,000 is .7%, which is way lower than what we would want to see.

The 1% rule is a starter place – there are far more calculations to run – but I know that .7% is too low for me to even take the next steps of further calculation.

We would have to buy that house for $195,000 for us to even consider buying it, which is very unlikely to happen.

Anyway, at the very least, it got the conversation going again. We’re in a whole different place in our lives now. We’re done having kids, our family is complete. AJ doesn’t have a corporate job. I’m working part-time as a financial therapist. Like we have the bandwidth to take on this venture.

How to Start Real Estate Investing: Choose the Location

We decided we want to invest on Minnesota’s North Shore for a couple reasons. Firstly, we love it up there and go 2-4 times per year. Eventually, we see ourselves living – at least part-time on the North Shore, so that’s appealing.

Also, the prices are right. They have a wide range of prices and a wide range of homes: single family, multi-family, condos, lake properties, apartments. You name it – they have it.

So it feels like a good location for us. 

How to Start Real Estate Investing: Make Your PLAN

The next step was to build out a plan. We asked ourselves: What do we want for our portfolio? Are we more interested in cash-flow or appreciation or both? 

As it stands, our comfortable plan is to buy one multi-family property every year for the next 15 years. Then, in 15-years – when AJ is 50-years-old (these numbers work out really nicely for me) – we’ll sell one property every year for 15-years.

When every property is sold, AJ will be 65-years-old and we’ll start drawing on our retirement funds that, in theory, will have been compounding for 30-years, giving us plenty to live off of. 

This plan will allow both of us to be fully-retired in 15 years, in 2040

Cash Flow vs. Appreciation

So for us, cash flow isn’t the primary motivation; appreciation is. 

Now obviously, this plan isn’t fool-proof. There are many extraneous factors, but it’s a solid foundation for how we want to build our lives. 

Once we decided our plan, it was time to make some moves. 

We found a ton of multi-family properties on the North Shore that we would consider, based on that 1% rule. So we went to a few showings. One of the houses was excellent. We talked to the residents – they were great. It seemed like an awesome property for us. 

How to Start Real Estate Investing: Financing

But we hit another roadblock. Financing quickly became a barrier. 

What we didn’t know – and took me forever to learn – is how lending works.

See, despite AJ being in a consistent and stable job for over 9 years (not to mention his employment before that), my employment history, me running a profitable business, and us having no high-interest debt, having never been late on a payment for our house or otherwise, credit scores of over 800, and a net worth of $600,000.

We are currently ineligible for a traditional or conventional home loan

Financing: Lenders

Turns out, lenders want an employment history of two years and because I haven’t had my financial therapy business for two years yet (I’ve been in business for 18-months), banks (AKA lenders) see us as too risky to lend to. 

Yet they will happily lend to people with a ton of debt and credit scores in the 600s. I’m not saying these people don’t deserve loans, but it’s shocking to me that despite being in a very solid financial position, we cannot get traditional lending.  

I will not stand on my soapbox about how messed up our lending system is, but to be sure, it is messed up. 

Financing: FHA Loan, Conventional Loan, & Home Equity

Because of all that, not only are we ineligible for a conventional loan, or an FHA loan, we are unable to access the equity in our house. So we can’t use the $150,000 of equity! This was a MAJOR roadblock for us. 

Financing: DSCR Loan

But alas, when there’s a will, there’s a way. I learned of a little thing called a DSCR loan. DSCR stands for debt service coverage ratio. 

This type of loan looks at how much income a property will produce and how much the property costs, instead of putting emphasis on our employment status. It’s effectively made for investors like us. 

The only bummer is with an FHA loan or a conventional loan, you can put as low as 3.5% up to 20% down on a house. But with a DSCR loan, we have to put 25% down on the house. Not ideal, but it’s okay.

Plus, we’ll have access to those other types of loan and the equity in our house in about 6 months when I reach the two year mark in my business. Which means, we’ll have more options soon.

Financing: Seller Financing

We did consider seller financing, which is when the seller and buyer makes a deal and we don’t even use the bank. But the two properties that we were interested in still had loans on them and the sellers didn’t have the money to front us. 

However, if you are considering real estate investing, don’t sleep on the idea of seller financing. It might be a good route to take!

Once we learned about the DSCR loan, though, we were back on the grind and ready to put an offer in.

How to Start Real Estate Investing: Putting in an Offer

The house we wanted was a duplex, originally listed for $329,000. They had just price dropped by $50,000 and it’s now listed for $279,000. We offered $250,000. They countered at $270,000. We gave our best and final of $255,000. And they wouldn’t come down past $270,000. 

Putting in an Offer: Walking Away from a Bad Deal

We knew we were coming in really low, and were prepared to walk away, albeit disappointed. But that’s what we did.

The numbers didn’t make sense for us to come in higher than $255,000. And while the getting started step is invaluable, I didn’t want to get started on a bad deal. 

Emotional Roller Coaster

I don’t want to diminish the emotional roller coaster this journey has been, though. With real estate investing, especially people talk about the numbers.

But it is a very emotional experience – heightened excitement, anxiety about if we’re making the right choice, disappointment when walking away. It’s a lot of our emotions. And I never want to minimize that. 

A few weeks later, though, that house is still listed and we found out from the realtors that the current owners have a loan on the house, which is why they can’t come down below $270,000. They would really lose their ass on the house.

We’re just waiting on that one. If a few months go by and they change their mind, we might circle back and re-negotiate.  

Putting in an Offer: Finding a New Deal

So after we sat for a day in disappointment, we started looking again. We found another property; a duplex, originally listed for $225,000. They decreased the price to $215,000.

We haven’t even seen the property – we sent our agent on a preview and she raved about it. She met the tenants both single, older women who are clean and kind. They both want to stay, so we would inherit good tenants. 

We said “eff it” and came in at $198,000. They countered at $200,000 and we accepted, contingent upon inspection!

We have an inspection scheduled in a couple of days, and I’ll go do the walk through with the inspector. If there are any red flags or concerns, we can back out of the deal. So we feel good about that. 

This all happened really fast, but I do think for the stage of life we’re in, we were ready to do this and we see a lot of value in just getting started. In fact on that day AJ and I did the showings, my mom hung out with the kids. So AJ and I had nearly 6 hours of uninterrupted drive time, which is when we have the best conversations. 

“Throw a Dart”

We listened to a bunch of podcast episodes on the way up and one of the podcasts did a listener questions episode.

The question was, “What’s the best advice you have for getting started?” And legit, the guy’s response was and I quote: “Throw a dart.” AJ and I both started dying laughing. Like throw a dart? Wherever it lands, buy the house. 

And, his advice was a little tongue-in-cheek, but essentially what he was saying is that starting is the most important and best thing a new investor can do.

The Wrap Up: Our Real Estate Investing Journey

Because to my original point, we have to start somewhere. And that somewhere is here. 

So with that, that’s as far as my real estate investing journey has gone. I’m recording this in real time, so I’ll be keeping you updated as we learn more. 

Let me know if this episode was fun for you to hear. And if you’ve been enjoying this podcast, that best Chrsitmas present to me is leaving a 5-star review! It truly helps so, SO much!

Happy Holidays to you! Now go enjoy the rest of your day!

Read next: Is Renting Throwing Money Away? The SURPRISING Numbers