• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer

The College Investor

Student Loans, Investing, Building Wealth

  • About
  • Podcast
  • Research
  • Contact
  • Save For College
      • How To Start

      • How To Save For College
      • How To Pay For College
      • What Is the Average Cost of College?
      • What Is A 529 Plan and Where to Open One in Your State
      • How Much Should You Have In A 529 Plan By Age
      • How To Use A 529 Plan For Private Elementary And High School
      • What Are Qualified Expenses For A 529 Plan (And What Doesn’t Count)?
      • The Best Brokers To Open A 529 Plan
      • Tools + Accounts

      • 529 Plans: The Ultimate College Savings Plan
      • 529 Plan Contribution Limits
      • Prepaid Tuition Plans | What To Know
      • Understanding And Using 529A ABLE Accounts
      • Using A Roth IRA To Save And Pay For College
      • FAFSA Deadlines for Financial Aid
      • CollegeBacker Review
      • Upromise Review
      • UNest Review
      • Other Options

      • Student Loan And Financial Aid Programs By State
      • The Guide To Military And VA Education Benefits
      • How To Fill Out The FAFSA
      • How To Find College Scholarships
      • The Best College Scholarship Search Websites
      • How To Find Grants To Pay For College
      • Pell Grants: What They Are And How To Qualify
      • Understanding Federal Work-Study
      • How To Use A 529 Plan If Your Child Doesn’t Go To College
  • Student Loans
      • Borrowing

        • How Student Loans Work
        • How To Apply For A Student Loan
        • Best Student Loans And Rates In January 2023
        • 10 Best Private Student Loans Of January 2023
        • Best Student Loans To Pay For Graduate School
        • Best Student Loans To Pay For Medical School
        • Parent Loans To Pay For College
        • No-Cosigner Student Loan Options
        • Guide To Income Sharing Agreements (ISAs)
        • Best International Student Loans
      • Get Out Of Debt

        • Best Student Loan Refinance Companies In January 2023
        • Best Student Loan Repayment Plans
        • Best Student Loan Refinancing Bonuses And Promotional Offers Of January 2023
        • Student Loan Forgiveness Programs (The Complete List)
        • The Full List Of Student Loan Forgiveness Programs By State
        • Public Service Loan Forgiveness (PSLF)
        • Top Student Loan Scams
        • Average Student Loan Monthly Payment
        • Average Student Loan Debt By Year
      • Reviews

        • Credible Review
        • Splash Review
        • Ascent Review
        • Citizens Bank Review
        • Commonbond Review
        • Earnest Review
        • ELFI Review
        • Laurel Road Review
        • LendKey Review
        • SoFi Review
  • Investing
      • How To Start

        • How To Start Investing in High School
        • How To Start Investing In College
        • How To Start Investing In Your Twenties For 22 – 29 Year Olds
        • How To Start Investing In Your 30s For 30 – 39 Year Olds
        • How To Start Investing With $100 Or Less
        • How To Give Kids The Gift Of Stock
        • What Is Dividend Growth Investing
        • IRA Rollover Chart
      • Tools + Accounts

        • Best Online Stock Brokers
        • The Best Traditional And Roth IRA Accounts
        • The Best Robo-Advisors
        • The Best Investing Apps
        • The Best Places to Trade Options
        • The Best Places To Open A Health Savings Account
        • The Best Solo 401k Providers
        • The Best Self-Directed IRA Providers Of 2023
        • Best Cryptocurrency Exchanges
      • Reviews

        • Vanguard Review
        • Fidelity Review 2023
        • M1 Finance Review
        • TD Ameritrade Review 2023
        • Charles Schwab Review
        • Robinhood Review
        • Webull Review
        • Betterment Review 2023
        • Wealthfront Review
  • Earn More Money
      • Extra Income

        • 20 Best Side Hustles You Can Start Earning With In 2023
        • 53 Side Hustle Ideas To Make Money Fast
        • 100 Ways To Make Money In College
        • 80 Ways To Make Money From Home In 2023
        • 5 Quick Money Making Ideas (That Take Less Than 1 Hour)
        • 10 Interesting Ways You Can Make Money Driving
        • High-Paying Side Gigs That Earn $1,000 or More Per Month
        • The 10 Best Money-Making Apps
        • Paid Surveys: Earn Money For Giving Your Opinion Online
        • 10 Crazy Ways To Make $10,000 You’ve Never Heard Of
      • Build Wealth

        • 40 Passive Income Ideas You Can Use To Build Wealth In 2023
        • 3 Ways To Make $50,000 Per Year Without Working With Passive Income
        • How To Become A Real Estate Investor With Just $500
        • 15 Best Online Business Ideas
        • Residual Income: 7 Super Smart Ways to Build It
        • The Most Common Multiple Income Streams
        • How To Become A Real Estate Mogul With Only $10,000
      • Reviews

        • Fundrise Review
        • RealtyMogul Review
        • FarmTogether Review
        • AcreTrader Review
        • Swagbucks Review
        • Survey Junkie Review
        • TopCashback Review
        • DoorDash Review
  • Personal Finance
      • Banking

        • 10 Best High Yield Savings Accounts Of January 2023
        • 10 Best Money Market Accounts Of January 2023
        • 10 Best Free Checking Accounts In January 2023
        • Best Bank CD Rates Of January 2023
        • 10 Best Business Checking Accounts In January 2023
        • Best Online Banks Of January 2023
        • Best Credit Unions Nationwide Of January 2023
        • Best College Student Checking Accounts Of January 2023
      • Insurance

        • Best Life Insurance Companies
        • Renters Insurance
        • Car Insurance
        • Pet Insurance
        • Umbrella Insurance
        • Disability Insurance
        • Tuition Insurance
        • Travel Insurance
      • Credit Tools

        • Best Budgeting Apps
        • Cash Advance Apps
        • How To Get A Free Credit Score Report
        • Best Credit Monitoring Services For 2023
        • Debt Settlement: Inside The Secret World
        • Credit Repair Explained: Should You Pay For Help?
        • Best Personal Loan Companies And Lenders
        • Online Loan Companies To Borrow From Home
      • Tax

        • Best Tax Software
        • Free Tax Software
        • IRS Tax Refund Calendar
        • Common IRS Questions and Errors
        • Federal Tax Brackets
        • Capital Gains Tax Brackets
        • 401k Contribution Limits
        • IRA Contribution Limits
        • HSA Contribution Limits
  • Forum
  • Search
Home » Investing » Real Estate » How To Become A Real Estate Mogul With Only $10,000

How To Become A Real Estate Mogul With Only $10,000

Updated: December 8, 2022 By DJ Wetzel

Tweet
Share87
Share
Pin4K
Email
Print

At The College Investor, we want to help you navigate your finances. To do this, many or all of the products featured here may be from our partners. This doesn’t influence our evaluations or reviews. Our opinions are our own. Any investing information provided on this page is for educational purposes only. The College Investor does not offer investment advisor or brokerage services, nor does it recommend buying or selling particular stocks, securities, or other investments. Learn more here.Advertiser Disclosure

There are thousands of financial products and services out there, and we believe in helping you understand which is best for you, how it works, and will it actually help you achieve your financial goals. We're proud of our content and guidance, and the information we provide is objective, independent, and free.

But we do have to make money to pay our team and keep this website running! Our partners compensate us. TheCollegeInvestor.com has an advertising relationship with some or all of the offers included on this page, which may impact how, where, and in what order products and services may appear. The College Investor does not include all companies or offers available in the marketplace. And our partners can never pay us to guarantee favorable reviews (or even pay for a review of their product to begin with).

For more information and a complete list of our advertising partners, please check out our full Advertising Disclosure. TheCollegeInvestor.com strives to keep its information accurate and up to date. The information in our reviews could be different from what you find when visiting a financial institution, service provider or a specific product's website. All products and services are presented without warranty.

how to become a real estate mogul

Real estate has traditionally been one of the most sought after investment vehicles for its passive income potential, appreciation, positive cash-flow, and tax reducing deductions.

However, real estate investing is also viewed as one of the more difficult investments to start due to the high risk and high up-front costs required to start. I want to break that myth and show you the exact steps that I am taking to become a real estate mogul with low up-front costs.

Table of Contents
The First Purchase
Second and Third Purchase
The Mogul Road
Building Your Team and Securing Your Future
Alternatives To The Traditional Real Estate Path

The First Purchase

Your first real estate purchase will always be the most difficult. As I lay out my plan, you’ll see that each subsequent builds off of the first, and each subsequent purchase becomes easier as your cash flow improves and you refine your systems. But getting the first piece of real estate can be tricky. My suggestion is to start with a modest priced single family home and live in it yourself while you aggressively pay down the mortgage.

For example, you purchase a 3 bedroom, 2 bath, 1,600 square foot home in a decent area of your town for $100,000 (Don’t laugh, this exists in MANY areas of the county).  You utilize a lender like Bank of America’s new ‘No PMI’ mortgage program or SoFi, and take out a mortgage with a 10% down payment, respectable 4% interest rate and no PMI. With taxes and insurance included, you will owe $541 per month. Now the fun begins.

Once you take ownership of this home and move in to make it ‘Owner Occupied’, you will begin paying down your mortgage as much as possible. Use your tax refund checks, bonuses, side hustle income, etc to get the mortgage balance down as low as possible.

Your goal is to pay the mortgage down so you reach at a maximum 70% loan to value (LTV). This means that if the house is valued at $100,000, you will only owe $70,000 on the home, giving you a 70% loan to value ratio. What this means for you, and more importantly for the bank offering you financing, is that you could now qualify for a cash out refinance.

Once you reach your 70% LTV, you can refinance your home back to the original 90% LTV and ‘cash out” your home’s equity meaning you will walk away from the refinance with a $20,000 check in hand. Your monthly payment won’t change, and could potentially even be lower if you can secure a better interest rate.

Second and Third Purchase

With your $20,000 cash in hand you have a few options. If you don’t like the house you currently live in, you can replicate Step 1, move into a new house, and rent out the one you already own. Or you can continue to live in the existing home you own and purchase 2 new homes as rentals. To get on the fast track of becoming a real estate mogul, let’s explore the option of remaining in the existing home and purchasing two new single family homes as rentals.

If we look to purchase homes similar to our above example, that $20,000 will let us purchase two single family residences each with a $541 monthly payment. However, now that these homes will be treated as an investment, the tax rate increases to 6%, so your monthly payment will jump to $600 each.

The beauty of this model is that now you can rent out both of these homes, with average rental rates in most areas at $1,100. This gives you a positive cash flow of $500 each month per house. Of course you will want to save a portion of that income to build up an emergency fund for each house, but after saving $5,000 per house in an emergency fund, you will have an additional $1,000 per month in positive cash flow that you can use to build up your down payment for the next home.

The Mogul Road

You can see where this path is headed. Now that you have two homes producing positive cash flow, you just have to wait until you build enough cash for your next down payment. Purchase house number 4, save up the initial emergency fund, and you will soon increase your monthly positive cash flow to $1,500.

With each additional house you purchase, you will decrease the amount of time it will take to save up the down payment for your next home. With 10 rental homes, each producing $500 monthly positive cash flow, you can save $10,000 for a down payment every 2 month, allowing you to reasonably purchase 6 new homes per year. At this point, the sky is the limit, but you will need to ensure you begin building your team to assist you in your growing empire.

Infographic on 19 Ways To invest in real estate

Building Your Team and Securing Your Future

Managing 3-5 rental homes by yourself will require a lot of patience, frustration, manual labor, and stress. However, it can be done if you are willing to put in the time and energy required. However, once you have acquired 5 rental homes, the amount of time required to manage your properties will be beyond what you are individually capable of. At this point, to scale your business, you will need to begin assembling your team.

The first logical member of your team is a property manager. You can either hire this person, or hire an agency to manage it for you. Most property managers will take a percentage of the gross rental rate, so you will need to factor that into your monthly cash flow figures. But they generally pay for themselves as a property manager will manage the leasing and marketing of your property, rent collection, field phone calls from tenants, and schedule repairs and emergencies.

The second member of your team is a handyman or licensed contractor. All homes will break down, and depending on the tenants you house, there may be more damage than not. Your handyman or licensed contractor will be able to handle all of the repairs and ensure your assets are protected and well cared for so they can produce income for years to come. Once you reach a certain level in your business you will also want to contract with an attorney and an accountant to help you manage your business.

Alternatives To The Traditional Real Estate Path

One of the latest additions to owning rental property or real estate is crowdfunding and co-ownership. The premise is simple - what if you could invest just $1,000 or $5,000 in a property, and you pool your money together with 10 or 20 people to do it? It's been done like this for years in the real world, but the Internet just made things much easier.

It's called real estate crowdfunding, and it works very similarly to peer to peer lending. You pool your money with other investors, buy a property, and enjoy the benefits (income and appreciation). There are several platforms that do this. Our favorites are:

  • RealtyMogul: RealtyMogul offers one of the largest selection of real estate online - from residential to commercial, even some mixed use buildings. They don’t charge their investors fees, instead placing that burden on the property holders. Investors can start seeing a return just a few weeks after the project is funded. Check out RealtyMogul here.
  • Fundrise: Fundrise has a mix of both commercial and residential real estate. Their minimum investment is $500. Furthermore, Fundrise is open to any investor regardless of net worth -- something that sets them apart from the rest of the industry.
  • FarmTogether: FarmTogether is an alternative path to real estate wealth via investing in US Farmland. This is a slow and steady real estate plat. Check out FarmTogether here.

If you're looking for other options, we compare all of the major crowdfunding real estate platforms here: Top Crowdfunding Real Estate Companies.

The bottom line is that the future is bright for real estate investing. People will always need a place to live and anywhere there is a need, there is an opportunity for the adventurous entrepreneur!

Have you ever considered real estate investing?

DJ Wetzel

DJ works in financial services at a large public university. He lives in the Southeast with his wife and young daughter.

How To Become A Real Estate Mogul With Only $10,000

Editor: John Frainee

Editorial Disclaimer: Opinions expressed here are author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, or other advertiser and have not been reviewed, approved or otherwise endorsed by any of these entities.
Comment Policy: We invite readers to respond with questions or comments. Comments may be held for moderation and are subject to approval. Comments are solely the opinions of their authors'. The responses in the comments below are not provided or commissioned by any advertiser. Responses have not been reviewed, approved or otherwise endorsed by any company. It is not anyone's responsibility to ensure all posts and/or questions are answered.
Subscribe
Connect with
I allow to create an account
When you login first time using a Social Login button, we collect your account public profile information shared by Social Login provider, based on your privacy settings. We also get your email address to automatically create an account for you in our website. Once your account is created, you'll be logged-in to this account.
DisagreeAgree
Notify of

I allow to create an account
When you login first time using a Social Login button, we collect your account public profile information shared by Social Login provider, based on your privacy settings. We also get your email address to automatically create an account for you in our website. Once your account is created, you'll be logged-in to this account.
DisagreeAgree

14 Comments
Oldest
Newest Most Voted
Inline Feedbacks
View all comments

Primary Sidebar

Investing Resources

Featured Broker Reviews

>  Vanguard (recommended)
>  Fidelity
>  Robinhood
>  TD Ameritrade
>  M1 Finance
>  Schwab

Featured Robo-Advisors

>  Wealthfront (recommended)
>  Betterment
>  WealthSimple
>  Vanguard Digital Advisor

Annual Contribution Limits

  • 401k Contribution And Income Limits
  • IRA Contribution and Income Limits
  • HSA Contribution and Income Limits
  • 529 Plan Contribution Limits

More On Investing

  • Best Online Stock Brokers In 2023
  • Best Brokerage and Investing Bonus Offers In January 2023
  • Best HSA (Health Savings Account) Providers Of 2023
  • 5 Best Investing Apps Of 2023
  • How To Buy Stocks Online For Free
  • The Best Robo-Advisors Of 2023
  • The Best Self-Directed IRA Providers Of 2023
  • The Best Traditional And Roth IRA Accounts Of 2023
  • Comparing The Most Popular Solo 401k Options
  • Top 3 Automatic Investment Apps Of 2023

Footer

Who We Are

The College Investor is an independent, advertising-supported financial media publisher, focusing on news, product reviews, and comparisons.

Connect

  • Contact Us
  • Advertise
  • Press & Media

About

  • About
  • Our Team
  • Podcast
  • Editorial Guidelines
  • How We Make Money
  • Archives

Social

Copyright © 2023 · The College Investor · Privacy Policy ·Terms of Service · DO NOT Sell My Personal Information

wpDiscuz