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My Mailman: the unlikely property investment mogul
My mailman’s my hero. Well, actually it was my mom’s mailman where I grew up in Wilmington.
He owned a shit ton of real estate that he gradually acquired over many years. And he diversified too! He had a solid property mix which included single family and multifamily properties in California and Oregon. As time went on he went for higher unit properties for example one of his last purchases was a 16 unit property.
And I can’t decide my favorite part of his story: that he managed to pay off all of the properties OR that he was delivering my mom’s mail until he retired with this dream investment portfolio.
Putting my loan officer cap on, I think I most admire his discipline about paying off the properties. Once I started doing loans we’d talk about him refinancing one of the properties and the next time I spoke to him he’d be like “oh I just paid that one off”. I couldn’t even be mad that he didn’t refi with me!
I was just cheering him on as he acquired more and more properties while also finding ways to eliminate his debt. So after everything he had a well diversified portfolio that was worth many millions (and no friggin debt!).
Because no one wants to get rich slowWarren Buffet
This guy single-handedly dispelled the most common fears around real estate investing:
- Getting started in real estate investing is too hard for most people
- First time investors need a lot of cash up front
- Real estate investors are always in debt and are financially overextended
Nah-ah…my Mama’s mailman dunked on all these myths.
Here are a few proven ways to get started with property investing.
- FHA mortgage: you can do a two unit with just 3.5% down payment. If you don’t have a lot of cash sitting around, THIS is the way to get going. And if interested in three or four units check out our article on the FHA sufficiency test
- Conventional loans: If you have 15% down, then you can get a duplex and for three or four units, the down payment goes up a little bit. Compared to FHA, this option can be preferable because the mortgage insurance payment is usually lower (or there’s no mortgage insurance at all).
- Cash out refinance for your down payment: if you have a property that has a lot of equity, consider pulling money out to use for a down payment on an investment property. That equity is just sitting there and not doing much for you. Sidenote: this is a regular practice that property investors perform repeatedly in order to expand their portfolio. There’s even a “fun” acronym for it called the BRRRR method (Buy, Rehab, Rent, Refinance, Repeat).
And of course I wouldn’t recommend anything that I haven’t tried myself. With my Mom’s mailman as inspo, the first investment property I bought was a duplex in Lomita with an FHA loan and 3.5% down payment. After the property appreciated, we eventually refinanced out of the FHA loan into a conventional loan. Later on we refinanced that and bought more property. Um, so yeah sometimes it’s ok to get high on your own supply!
And no matter what that mailman’s story is pretty cool!