Exploring Your Investing Options in Real Estate
Are you interested in getting started in real estate investing but don't know where to begin? We’ll uncover some opportunities and niches out there that could be a good fit for you!
Adventures in Real Estate Investing
In our community we have families at different points in their financial journeys.
This year we have some who are focused on knocking out debts that have been weighing them down.
We also have families who building up their financial cushion or saving up for a huge goal including starting a family, maybe starting a business, or buying a house.
Then some, including us are in the CoastFI phase of things. That foundation is in place and we’re considering options that can give us more flexibility with our schedule while still producing income.
Real estate investing can be a great way to be a solid path towards that and financial freedom. By investing in a property, you can generate passive income through rent.
However there’s more to it than what you see on HGTV, Magnolia, or those real estate flip channels on YouTube.
Buying property takes money and finding good tenants and contractors takes time. You may also worry about being trapped with a money pit.
Which is why I’m happy to have Rachel Hernandez on the show. Rachel is an award-winning mobile home investor with over ten years of experience and author of several books about real estate including Adventures in Mobile Homes.
In this episode we’ll get into:
- her journey into real estate investing and what made her choose to hone in with investing in mobile home
- different options out there besides flipping and buying holding property
- an honest look at the good and the bad with real estate so you have a clearer idea of what to expect
Hope you enjoy!
Resources to Stay on Top of Your Money
If you’re ready to achieve your family and financial goals and want to explore real estate, here are a few of my favorite resources, including what we covered in the podcast.
- Best Budget and Money Apps: Empower, Tiller, Mint
- Grab Your Copy: Jumpstart Your Marriage and Your Money
- Mobile Home Gurl
- Connect with Rachel : Twitter | Instagram
- Adventures in Mobile Homes and Rachel's other books on real estate investing
If you’d like to chat more your money system, please join us in our private and free Facebook group – Thriving Families.
We’re families looking to support and help one another out.
Hope to see you there!
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Exploring Options in Real Estate
In our discussion, Rachel discusses her experience with real estate investing, including her motivation for getting started and her transition to mobile home investing.
She emphasizes the importance of taking action and gaining experience, as well as finding a niche within the industry.
Rachel also offers advice for those interested in real estate investing and provides resources for learning more about mobile home investing.
Read the transcript below (edited for time and clarity) or watch our chat on YouTube!
Elle Martinez: You are seasoned with real estate investing. That's something my husband and I are in the early stages of talking about. We are thinking of having some cash flow for this next stage of financial freedom.
There's so many different ways to invest. We've done like index fund investing, which is really popular. But for you, what was your motivation getting started with real estate investing? What was that pull?
Rachel Hernandez: For you?
Sure. For me personally, I will make a disclaimer.
I hated viewing homes as a kid. I was with the family that moved every five to seven years because my mom wanted a bigger and better home, so we were in that rat race.
My parents were both professionals and so basically it's very surprising that I got into real estate because I hated riding in the car with the realtor, looking at homes as a kid every five to seven years.
Obviously as a kid you don't have any say. It's the parents deciding and I moved from so many different schools. I think that's why one of the reasons why I'm so outgoing, because I just had to make friends on my own because I'd be moving every five to seven years.
I will tell you, I was influenced by the book Rich Dad, poor Dad by Robert Kiosaki. You've probably heard about that, but what actually sparked my interest in real estate was the concept of passive income in that book.
I always knew I wanted to be an entrepreneur. As a kid, I did the lemonade stand, puppet show. Going into college as a young adult, I was supposed to be studying for my classes I was a humanities major, but on the side I had a resume business.
I got paid actually by my university to take notes, right? For classes. So I always had all these side hustles, you know?
Once I got influenced by that book, rich Dad, poor Dad by Robert Kiyosaki then the light bulb kind of set off, ‘oh, there's actually income that you can make passively and it doesn't require work from you to do it.'
I learned the difference between active income, which depends on you working at a job, you know, you get paid a certain amount to work that job. There's also this concept of passive income and it's more on the investing side.
You make your money work for you so that you don't have to work so hard. That's how I got into real estate investing.
I was a business to business corporate account executive, so I had the sales experience.
While I was learning, I actually started finding deals for other real estate investors. What I do, I'd go to my local real estate investor club and I'd meet these real estate investors who just didn't have the time to go out there and find these deal. They'd give me their criteria.
I did something called bird dogging, which is like, you go out and you find these deals, you get all the information, and then you bring the deal to the investor and then they talk things out with the seller, try to negotiate you to deal. If they do, then I get paid for that lead.
I did that for a while, and then after that I went into wholesaling, basically taking it one step further, getting all the information, but then putting it under contract and then assigning my interest in the deal to the investor buyer, like the end buyer, and then I get paid for that.
I did that for a while to build up cash. Eventually I started building up enough cash to buy and hold properties as a single family home landlord. I did that for a while. I built up our portfolio and I got burned out from that because every month. Guess who the first person who got paid? Was a mortgage company.
I was like, ‘why is all my cash flow going to the mortgage company or h o a or the insurance company, you know?'
I was the one that was paid last. , I'm like, ah, that doesn't sound right.' Yes. You know, where's all the, the, the, the passive income and cash flow that I was reading about.
Then I decide to, you know what? I'm just gonna sell my entire single family home portfolio. Wow. Which sounds crazy. Cashed out at a great time and then use that money to actually get into mobile home investing, which is what I do now.
I buy mobile homes for cash without a mortgage and then if I decide to rent it or sell it on payments and all that cash flow comes to me.
So that's pretty much what I do in
Elle Martinez: a nutshell. Yeah.
I love how you had this plan and you build up, I think. . I don't wanna say it's a myth, but to a degree a lot of entrepreneurs are put in this bucket where they're risk takers, they're doing this but then when I talk to entrepreneurs like you who've been doing this for years, there's like a calculated risk. There's some kind of numbers and analysis as you jump in.
And I didn't know about the different roles in real estate that you were just mentioning. I feel like I'm gonna have to put in the show notes of this dictionary for real estate.
Rachel Hernandez: Yeah, that'd be a good idea.
Elle Martinez: Yeah. But as you mentioned, there's different ways even to invest in real estate. Single family homes is what people imagine. They see H G T V, and these channels and think, oh yeah, this would be great. What made you pivot into mobile home investing?
Rachel Hernandez: Pretty much the mortgage company getting paid first. When I got that rent check. That money, a large portion of it went to the mortgage company, then the h o A association, then the insurance taxes, and then whatever was left over that's pretty much what I had.
To tell you the truth, I made more money wholesaling than I had with these cash flow properties in single family homes.
Yeah. Pretty much my first deal as a wholesaler, I made a whole year's salary. Which is crazy. Wow. Looking at that, I just kind of got burnt out and I even brought property managers to manage these properties for me, but they got their fee and I had to manage the managers so,
Yeah, it was crazy and I can't do this. And you hear all of these stories from these burnt out landlords, and I will tell you, it's true. It can be a nightmare, you know? So now, as a mobile home investor, I've learned how to balance that, but not having that mortgage and buying these mobile homes for cash, actually puts less strain on me financially.
When I have to evict a tenant, money's not coming in because this tenant's not paying. There are issues, with the home. I gotta do repairs.
It just kind of lessens the burden on me. I just can't imagine some of these real estate investors in California who have these crazy large mortgages on their home. You miss one payment. I mean, that's a whole paycheck to some people, you know?
Yeah. If you have to fill the home and it's empty and you don't have it filled with a tenant, so it's crazy. . Yeah.
Elle Martinez: Okay. So there's a couple things I'm trying to like order my questions . Sure. Cause we had a lot of good ones there.
First of all, let's talk about like buying a home because I know many are familiar. They bought their home that they're living in. Is there a different process or mindset when you go in and you're buying an investment for you, your process with that?
Rachel Hernandez: Yeah, absolutely. As a first time homeowner, if you're buying a home for yourself, it's completely different than buying an investment because as an investment, you are looking at how can this make me money?
To me, an investment is more of an asset because it puts money in your pocket. Whereas I know a lot of people are not gonna want to hear this. Your home is a liability. Because it's taking money out of your pocket.
Now we always hear, from the banks, like, no, your home is an asset. To me, it's not an asset. I learned this from Robert Kiosaki in his books. It's actually a liability because it's taking money out of your pocket. You gotta think about that.
When you're buying a home for yourself, you're looking at the home, you're looking at the location. Mm-hmm. , you're looking at, can I actually live here?
But you're not looking at it from an investment perspective. How can I make money off of this home unless you do that, but that's different philosophy. My own philosophy your home is not in an investment because it's just a place to live.
Whether you buy a home or you rent a home, it's both a place to live versus an investment.
You're figuring out, you've gotta have this extra strategy. How's this gonna make me money? Either I'm going to sell it to a retail buyer and fix it up. I'm gonna sell it to an investor, like what I did wholesaling or am I just gonna rent it out and become a landlord? So that is your exit strategy as an investor.
As an investor, you're thinking how generate a profit so you're looking at it from a business perspective versus buying your own home. It's just for you, but you're not looking at it as a business perspective. That's just my thoughts.
Elle Martinez: Gotcha. Yeah, I, I think it does take a mindset shift when you're looking at that. I was talking to some others about what they had noticed as a difference was when it's your home, even though you might do your own repairs and it's a fixer upper.
You're still like looking for I need this layout. It's you, you, you. But like you mentioned, you really, I mean, this is a business so you. Is this a place that functions for whoever I'm trying to rent out to? Is this gonna be feasible?
You mentioned, the realities. Again, I love that you're being transparent. You got good tenants, they pay, this is great. Things are flowing. And then you have bad tenant tenants.
I know there's no way to completely avoid bad tenants but for you through the years, what are like some processes or filters you put in place to make sure that you find first of all, like a good investment and then second, finding those tenants?
Rachel Hernandez: Yeah. The good investment it comes with experience. Honestly, what I can say to everyone listening on this podcast, there's only so much you can learn your education.
I do believe in education, reading books, listening to podcasts, watching videos, you know, in this case real estate investing, but there's gonna be a point where you actually have to take action and that is where you learn the most.
What I love about real estate is like you don't have to be the smartest person in the room. You don't have to have a lot of money. You don't have to have a PhD in real estate to do this.
It actually levels the playing field. So what you get from taking action is experience, and that experience is where you learn the most. From that, you obtain knowledge, what gives you confidence to do more deals and get out there. It really is having the courage to get out there and take action.
And I will be honest, I mean, I've been rejected a lot by a lot of sellers on the buying end. Like, no, I'm not gonna sell you this, but you just kind of have to brush it off. It's part of the business. If someone doesn't have that personality to be confrontational. They can always bring in a partner or work with someone.
Like what I did as a wholesaler. I have the experience because I was in sales. So I can take rejection, pretty much. On that end you just have to have the courage.
The only way people are gonna get that is by taking action and by taking action, you get to learn the market, you get to network, and you just get better.
There is no, educational university for real estate, despite what other people think with all these real estate gurus. You just gotta get out there and learn your market, figure out what you wanna do, and then just, keep learning as you go. I know that's very vague, but it's actually worked for me.
Elle Martinez: I understand. As an investor, are there some wins that you're super proud of or some hard, learned lessons that you picked up through your years of investing?
Rachel Hernandez: Sure. Probably my win that is the most memorable is my first mobile home deal. Yeah. And basically this deal came from, of all things, a flyer, I physically passed out in a mobile home park cuz I buy these homes in the parks most times.
This family called me, there was no for sale by owner sign on the home. Mm-hmm. , no one knew it was for sale, and the wife called me and said, ‘listen, we wanna move out of the park. We're looking to get into a regular home. Would you be interested in looking at our home and coming over to see if you would buy it?'
At that point I was like, ‘okay, sounds good.' And this was my first deal was completely new in mobile homes. I had the real estate investing experience in single family homes, but completely new to mobile homes.
I was like, okay, how much are you asking for the home? I mean, it's a natural question. And the wife paused and she said, ‘you know what? We don't wanna talk about that on the phone because we'd feel more comfortable if we kind of got to know you. And you came over for that.'
I was like, I've been told by many, many mentors and also these real estate groups spout out all day long. If they're not willing to give you a price, they're not a motivated seller.
Mm-hmm. I thought about that and I'll, but then I thought, you know, What have I got to lose? I haven't even done one mobile home deal if I passed this up. It could always be what if? What if? What if?
To make a long story short, I went over there. The reason why they didn't put a for sale by owner sign in their home is because they didn't want a bunch of people to go through the home and make it dirty, okay?
I went through the home. I negotiated. I got the home. It was, I believe it was a two bedroom, one bath. I think believe it was 1985, and I got that home for $3,600 cash. They even cleaned it. I filled that home in two weeks, sold it for 10,000, and with a nice starter family, they gave me a thousand dollars as a move-in fee, and then they paid me $250 a month for the next four and a half years.
Wow. So what did I learn from that lesson? You never know what's going through the seller's heads. So had I not gone over there and listened to what all these gurus are saying, or some MA mentors in the past, and they only tell me this because of their experience, but I could have a different personality than them.
You know? That's what I've learned. Then I may not be here on this podcast talking about mobile home investing. It may have never happened.
Elle Martinez: Wow. That's so fascinating. That's great that you were willing to take that risk. Again, it's like calculated risk. You had some experience already within real estate. I think that's fantastic.
For someone that is thinking about it, maybe it's on their radar getting started with real estate investing and they're also just curious about mobile home investing. How can people reach out to you?
Rachel Hernandez: Sure. Well, I do have a podcast. It's called Adventures and Mobile Homes. Really easy to remember and find on any podcast player.
I have a website, adventures in mobile homes.com. If anyone wants to learn about mobile home investing, I do offer a free class. If you are interested, check it out.
As for real estate investing, my advice is to pick a strategy and figure out where are you at this point in life.
Do you want to build up cash so that you can eventually buy and hold properties? Or can you buy properties now, but you want to have them for cash flow?
So do you wanna be a landlord? Or do you wanna be like, what I did BirdDog and a wholesaler, figure out what your strategy is. And I do have a book, it's called Real Estate Investing Sucks, how to Find Your Niche and Dominate.
Basically, from all my experience as a real estate investor, the most successful people are the ones that actually have a niche, and mine is mobile homes.
In terms of mobile home investing, my recommendation is to, pick a niche, stick with the niche and then learn it as much as you can.
It's funny cuz I did have a mentor when I first got started. She was local in my area. I met her at a real estate conference.
She had never done anything in real estate investing. She just picked mobile homes. She just read the, she just read up all the books on mobile homes started it. And she was a corporate executive too for a tech company. And we just had similar back.
She's like, you could teach me a lot because you have more experience than me.
I'm like, I have, I don't know anything about mobile homes. She's like, Rachel, it's not that different. You know, I was coming from single family homes. Yeah. That's one of the things I do and she just stuck with it all this time. That's all she did. She's done great for herself.
Basically stick with a niche. And if you wanna check out that book, I have a whole series of books. Real Estate Investing Sucks. Then if you are interested in learning about mobile home investing, I have a book, adventures and Mobile. How I got started in mobile home investing and how you can too as well too. So that's just my suggestions. And of course, listen to podcasts like this.
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