How To Use Real Estate to Retire Early: Tips & Tricks

Whether you’re looking to buy your own home, invest in extra real estate, or live in and flip homes, I have some real estate investing tips that may be a great help if you want to pursue financial independence and retire early (FIRE).

Since Amon and I started our journey to FIRE, real estate has been one of the best investments we’ve made. And I want to share how it helped to shape our path to financial freedom, by giving you our best tips & tricks for real estate investing

You Don’t Have To Own A Ton of Properties

While on the road to financial independence, we only invested in THREE properties. But those three properties amassed over $400,000 in profits. Yep, you read that right.

People will tell you that all successful real estate investors juggle 50+ properties, but we don’t believe it. If your goal is to reach financial independence, you could do that with just one property, provided it’s the right one. Quality over quantity is key.

Your First Real Estate Transaction Is Your Most Important

Speaking of the “right” property, the first one you buy is going to set the tone for your overall profits, your losses, and the properties you may buy later on. It truly is important to buy carefully.

When choosing real estate to invest in, make sure you don’t let your emotions get in the way. Don’t overpay for something just because you love it, and try not to buy anything too large (you’ll have to be the judge of what that means). Make sure to be as conservative and methodical as possible when you’re considering properties - and always add roughly $20,000 to your cost estimates to make sure you can cover everything.

Don’t Set Your Heart On One Property

As they say, there’s plenty of fish in the sea. Don’t get attached to one property, because if the numbers don’t work and you choose to buy anyway, things are going to get sticky fast. There are always other properties and deals to look out for.

It’s More Just The Purchase Price

There are a ton of associated costs with investing in a piece of property, well beyond the initial purchase price. Maintenance costs, furniture costs, vacancy rates (for those periods where you won’t be able to rent it out), and more.

It’s really essential that you keep extra costs in mind and be as precise as possible, especially if you’re using real estate investments to fund your early retirement. If you get the numbers wrong, that could derail all of your future plans.

Pick The Right Real Estate Agent

It can be hard to know if you’ve chosen the right real estate agent, so it’s going to take a decent amount of skepticism on your part, no matter how charming the agent maybe (it’s part of their job to be charming after all). Honestly, you’ve got to put them through the wringer before you commit.

This might seem too negative, but you’re putting a lot of money on the line when you choose to trust a real estate agent. And they know this too! So look for the ones who are happy to answer your questions and don’t begrudge you for being thorough and even putting some pressure on them. Those agents tend to be winners.

And don’t forget that your agents work on commission, and they need you to buy a property, This can be a conflict of interest, so you want to make sure your agent is going to advocate for what you want and the kind of prices you want.

Every Transaction Has Two Phases

These two phases are: how you’re going to buy it, and how you’re going to sell it. The point is that you need to consider your exit strategy, even if you’re property is going to be a forever home.

People so often buy their first home or invest in real estate while only keeping that first phase in mind, and I believe that’s a big mistake. If you’re buying (particularly as an investor) you need to keep buying, maintaining, and selling the property in mind. You should be thinking about when and how you might sell it before you’ve even made the purchase.

Buy Between Thanksgiving And The New Year

The best real estate deals are going to be found between November and January. Seriously, that’s when we bought all three of our properties. The reason is that people who are selling during the holiday period were not prepared to sell, and they probably need to make the sale as soon as possible. This means better deals for you if you look carefully.

The other benefit of a November-January purchase is that you get to see the condition and prior maintenance of the home since leaks and draughts are always going to show up better in the cold and rainy weather as opposed to spring. You’ll have a much better idea of your potential maintenance costs if you choose to buy during this time of year.

Don’t Purchase Out of State

A lot of investors choose to do this because they think that real estate in their area is too expensive. I understand the reasoning, but personally, we would never purchase out of state. That’s because we like to live and flip, meaning we live in a property while we renovate and then move out once we sell it, or use it as equity to purchase the next property. That first part isn’t really possible when you buy out of state, so you have less control over your investment. Buying out of state comes with a much higher risk in general.

It’s not a good idea to buy just because it seems like a good deal. You need to consider how you’ll manage and maintain an out-of-state property. You also have to understand the out-of-state markets, housing costs, rental rates, occupancy rates, and more. There’s a lot of extra knowledge you need to have to make it work.

A first home buyer or seasoned investor or somewhere in the middle, whichever you are I think these tips will give you some valuable food for thought if you’re considering a new purchase. For more of our real estate investing journey, check out our other blog posts and videos at OurRichJourney.