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Retire With Ryan


Nov 9, 2022

The secret to anyone’s life is cash flow. But what if that cash could flow into your bank account through passive income? On this episode, I’m joined by Dustin Heiner of Master Passive Income to discuss investing in real estate through rental properties. We’ll discuss his real estate investment journey, obtaining financing for rental properties, and the best ways to manage those properties.

You will want to hear this episode if you are interested in...

  • Getting to know Dustin Heiner and how he became successfully unemployed [0:42]
  • Obtaining financing to purchase a rental property [5:04]
  • The logistics of managing a rental property [15:33]
  • Simplifying the real estate investment process [23:05]
  • What about reserves for rental properties? [31:02]
  • Final thoughts [33:22]

Financing a rental property

When deciding whether to invest in a rental property, one of the scariest aspects is financing. Saving up enough money for a down payment of 25 to 30 percent can feel daunting. However, that’s only one way to do it. Dustin has used 14 different ways to finance a rental property, including mortgages, conventional loans, commercial loans, signature loans, private loans, and even credit cards. He admits that the last one is a bad idea unless you know you’re going to make money. 

One financing avenue I didn’t realize was possible for rental properties is using an FHA loan. Buying a home with a 3% down FHA loan is a fantastic way to get into a property. But don't sell it! If you refinance the property to get out of the FHA loan, you can buy and move into a second house with a new FHA loan and a 3% down payment. Then simply rent out the first home and repeat the process with the second. Another financing option Dustin recommends is using private money. He suggests approaching someone you know that can reliably invest in the property and find out what they need to invest. This could be 10% interest, points up front, or equity in the deal. You want to give them a good return while using as little of your own money as possible.

Build the business first

Dustin attributes all of his success to a simple principle: build the business first. Most people think the first step to investing in a real estate property is buying the property. But this is actually the LAST step in Dustin’s process. Once he establishes an area he wants to purchase in and how much he needs to charge for rent to cover all expenses with at least $250 in positive income, he seeks out local experts to ensure he can rent the property for the right amount. But don’t count websites like Zillow as experts! You want to find and hire experienced property managers who know the area and can give you insight into whether or not it’s a good investment before you buy.

The other reason you want quality property managers is that they will end up running the day-to-day of your business. They interact with tenants, collect rent, facilitate most repairs, and even deal with evictions if necessary. A common question for Dustin is how he affords property managers? The short answer is: he doesn’t. Everything needed to maintain the property, including its managers, is baked into the cost of rent. Listen to this episode for more on investing in rental properties for extra income!

Resources Mentioned

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