If you are an entrepreneur who has not yet ventured into real estate investing, it’s worth considering, and here’s why. Many have heard about real estate’s consistently lucrative ROI’s in almost every market — an investment that will continue to give, even in the face of today’s economic uncertainty. As Sofia Castro, Cofounder of Ortsac Capital Group reminded me, “Everyone needs somewhere to live.” She says that this is a reason why multi-family real estate can still pay successful returns even in a pandemic. “At this time, the rental market is thriving, and you may potentially find great deals during a crisis,” she noted, which means now can be an ideal time to consider investing.
Sofia has built a $400 million real estate empire and now wants to help others build generational wealth doing the same. Castro gave me some insight in why real estate is an opportunity worth pursuing, especially for busy women and/or mothers who are looking for new income streams that will not be a significant time investment.
It does not require a fortune to begin in real estate investing. Throughout Sofia’s early investment stages, she began by purchasing single family homes and renting them out. She did not start off by purchasing the large sized assets she currently has within her portfolio. Sofia offered the following insights on why real estate is such a worthwhile investment and how to get started.
1. You Can Start Small — And Should
Some worry that beginning in real estate investing requires buying up massive properties, such as multi-story apartment buildings or building communities from the ground up. While this does comprise part of real estate investing, it certainly isn’t the whole picture, and you don’t need to invest in these areas to see a return on your investments.
“I always tell beginners to start small by investing in a duplex, four plex or even a single-family rental,” shared Castro. “You shouldn’t start big. Even if you have the cash to go for something bigger, save that cash for future investments or heaven forbid for emergencies,” she said. Single family homes may require some of the smallest deposits of upfront cash, which means the returns could be more significant, depending on what you do with the properties. This is how you can get in at a lower barrier of entry and get started sooner. One of the biggest dividends by just starting is the knowledge you gain early on. You will never truly learn if you don’t get started.
2. Reinvest The Real Estate Income Into Multi-Family Units
Once the cash starts to come in, resist the urge to spend it right away. “The key to turning this real estate venture into an empire is to not spend the cash that’s earned from the first investment,” urged Sofia. Instead, she says to take this cash and invest it into other multi-family units, which can be thought of as the second rung on the real estate empire ladder. This is how the empire begins to build — the cash from each initial investment leads the way for bigger investments.
“By investing into a multi-unit asset, if one tenant moves out, you still have others contributing to the overall expenses. This is one of the biggest advantages which multi-family has over single-family investments,” shares Castro.
3. Once You’re Up And Investing, You Can Go Bigger
Castro chose to outsource management once she moved up to investing in larger assets, and notes that it’s not required to be at the property every day. This sounds like a lot of upfront work, and while it is, once the property is running and you’ve found your tenant(s), you have the time to do anything else that you please. Sofia does suggest in the beginning that investors should self-manage their units to gain as much knowledge as possible and to save on the management expenses. “Once the real estate infrastructure is built (and the ROI provides that management can be hired to handle any on-sites needs or issues), you can ideally sit back and watch the cash come in,” states Castro.
“I’ve found that as a mother, I have more time to spend with my children and grandchildren because I outsourced management for the units,” Castro notes. “That’s why real estate investing is such a great opportunity for anyone who is busy or wants to pursue other ventures. Just invest some time and money upfront and see an ROI in both cash and more time to spend on whatever you please — which could include expanding your real estate portfolio,” she advised. She especially wants wives and mothers to know how easy it is to balance building generational wealth in real estate investing while having family time.
Having an understanding of what real estate investing entails and how getting in on the ‘ground floor’ (through investing in a small asset) is the best way to get started can be the push that aspiring female founders or investors need. Castro is forging the path ahead for breaking into the industry more easily and taking advantage of the freedom that this type of investing provides.