What is the most efficient way to start your investing career? Are properties really as safe as they seem? Or are you “missing out” by not investing in real estate as soon as possible? Today, I’ll give you the answers to all of these questions, along with a bit of backstory.
Hello everyone and welcome back to Investing with Antoaneta. In today’s blog, we’ll break down the ups and downs of real estate investing, and, as usual, we’ll look at examples from my own investing journey. Most of you probably don’t know this, but I actually started with real estate and only got in the Stock Market relatively recently. Why did I do that? Well, keep reaing and you’ll find out!
Now, had I known how to work the Stock Market back then, I probably would’ve put my money there. No, scratch that, knowing what I know now, I definitely would’ve done it. However, my mindset was very, very different back then. You see, I had this weird belief that Stock Market investments were somehow “reserved” for only the wealthy and successful. I simply couldn’t see myself getting anything out of it. In my mind even thinking about the Stock Market was taboo. And, yes, in hindsight, this was very silly of me. But hey – you live, and you learn, right? That’s exactly why I’m putting all of this time and effort into Lifestyle Tips because I want to help people learn from my experiences, mistakes and successes. I want you to be able to work on your goals and achieve your dreams without having to worry about the roadblocks that I faced.
If this isn’t your first time here, you probably already realise that anyone can put money into just about anything. Nothing was stopping me back then but my own misconceptions. If you want to invest, and, more importantly – if you know how to invest intelligently, there’s absolutely no reason not to. You don’t have to wait until you’ve saved a ton of money. You don’t have to be an established business leader, a celebrity or anything like that. You can open up Yahoo Finance and start doing your research whenever you feel ready.
However, since I didn’t know any of this back then, I chose to go in a different direction. Namely, real estate investing.
So, since I still didn’t have a place of my own back then, I was renting an apartment in …, and it was actually my landlord who sparked my interest in real estate. Every now and then, when he came by to pick up the rent, we’d sit down and have a chat. I really enjoyed our conversations because they allowed me to practice my English while also learning helpful stuff. I found his experience with real estate very inspirational and decided that it’d be really great if I could be in his position one day. Like most people, I was pretty much convinced that you’re supposed to work nine-to-five for your paycheck until that point. I obviously knew that there were plenty of people out there in the world who had other ways of making ends meet, but, much like with the Stock Market, I never really considered this an option for myself. But the conversations with my landlord changed that. You could say they helped me set my first major long-term financial goal.
And, yes, eventually, I was able to purchase a couple of properties that I’m still letting out to this day, and they present a really nice and solid side income. However, if you’re new to the investing game, I would not recommend going that route, and here’s why:
What I learned
In 2013 I decided to learn to trade. I found a couple of good programmes, did a bit of research and signed up. But a few weeks in, I realised that trading just wasn’t the thing for me.
You see, I’m a people person. The nature of my business demands that I interact with people daily, and, if I’ve got to be honest with you, I love every second of it. Anyhow, trading is the exact opposite of this. If I wanted to trade, I’d need to spend hours and hours locked up in my room, staring at the computer screen every day. That’s just not something I can tolerate.
Besides, I’m also a very emotional person (kind of unusual for a business leader, I know), and one of the first things that you learn when you go to a trading course is that you can’t afford to be emotional about this. Now, this can also be applied to long-term Stock Market investments, but it’s not quite the same. I invest long-term, which means I always have plenty of time to read up on everything, do my research and then decide. If I’m not feeling “up for it” on that day, I can just take a breather and get back to my research when my head clears up. But trading doesn’t give you that option. Still, I didn’t know any of this back when I was starting out. So, I signed up for the (quite expensive) course, and I found myself in a group of people who were also looking for ways to invest. So I didn’t become a trader, but I still got something out of the whole thing – I made some great connections. And that’s always a win in my book.
It wasn’t until 2017 that I really got into the Stock Market. Yeah, it took me a bit to get the courage to take the dive, but what can I say – I don’t like going in blind. And that’s where all of this time and experience came in. I didn’t like trading, but the course helped me connect with this group of like-minded people. I also did a ton of reading on my own, which played a big part in building up my confidence. I felt like I was almost “in the know” when it came to investing. So, it was finally time to give it a fair shot.
So, since 2017, I’ve been actively investing in individual stocks. Around this time, I also realised that the potential returns from investing in individual stocks are much higher than what index funds could net me. Since I already had some experience, I decided that it was time to start investing independently.
And here’s a tip for you – success is a long-term project. This goes for all aspects – career and business, relationships, personal development and fitness; all of this takes time. You can’t expect to start today and get your results by the same time next week. And you also have to maintain your projects. If, let’s say, you spend a year going to the gym and hit your ideal weight, you shouldn’t just go back to sitting on your couch and eating junk food because that’ll just waste all that time and effort you spent. You’ve got to do some form of maintenance, or, ideally – set up new goals and keep working on them in the long term.
So, when I say that properties kick-started my investing career, I don’t mean that I pulled all of my money out of real estate as soon as I got into the stock market. Actually, it’s the opposite. My property business is still going strong, and as I’m writing this, I’m currently in the process of making a new purchase. I’ve already got a mortgage offer, and I’m just waiting for the deal to get finalised. Well, it’ll need some patching up, but nevertheless, this is an excellent opportunity that I’m not willing to pass up. Yes, I’ve got my main business, and yes, I’ve also got multiple side-projects, but I’m not going to give up on something as lucrative because “it takes work”.
But how does any of this make properties “bad” for beginners?
Don’t worry, we’re getting that in a minute!
I know that property investing is pretty popular right now. I’m sure that most of you have seen at least a couple of videos about this on YouTube, telling you that real estate is super safe and a great way to build wealth. I wholeheartedly agree with both statements, but … Yup, there’s a “but” here. And it’s a pretty significant one.
If you want to invest in properties, you need a lot of capital up-front. That’s the real barrier of entry, and it’s a massive turn off for many people.
Do you have enough money set aside for the deposit? Have you calculated the potential returns? Have you thought about the rent price?
For example, being a landlord in the UK is a lot more lucrative than in Bulgaria. And you might think to yourself – yes, that’s obvious. The standard of living is higher, so it makes sense, right? Well, yes and no. Here’s a simple example:
My properties in Plovdiv make about £200 per month in rent. But a decent washing machine or good air conditioner costs three to four times as much. If you want to renovate (which, in most cases, you do, because that’s where the real money is at), you’re looking at a lot more. And keep in mind, these properties are paid off. Now imagine if I had to make monthly loan payments on them on top of the maintenance costs. Of course, you’re going to make this money back in time, but it will take significantly longer for a property in Bulgaria.
So, here’s my advice:
If you want to get into property investing, you need to go in with a long-term mindset. The initial step takes significant capital (or loans, which honestly, I wouldn’t recommend with the current economic climate and whatnot) and a lot of minor expenses in the long term. Even if you don’t have to renovate, change the furniture or buy new appliances, there will always be maintenance fees.
So, if you don’t have the capital for big purchases, it’s usually better to start small. And that’s exactly what I tell people if they come and ask me about “beginner tips”.
If you don’t have the money to sink into a property, just invest in something smaller, like the Stock Market. If I had known all of this back then, I would’ve started much sooner, and I probably would’ve made a lot more money in the long run.
Don’t sit on the money. Don’t hide it under your mattress. Don’t keep it in the bank. If you just keep the money in cash, you’re actually losing money because of inflation. Every year, your money will be worth less and less. How do you avoid that? You invest it in something. Something that will allow it to grow. And, of course, give it the time to grow.
This is why the stock market is so great for beginners. With the Stock Market, you don’t need to “go big or go home”. You can (and should!) buy a couple of shares in a solid and reliable company and then just sit there and watch your investment grow over time. And that’s incredible for building up your wealth. Yes, it will take time, of course. Making money with long-term Stock Market investments is slower than most alternatives, but it’s also a thousand times safer. As long as you’re smart with where you put your money (it’s best to start with big and already established businesses), it really just comes down to being patient.
Fast forward a couple of years, and you’ll already have enough to get into the property market. And this is even better if you’re younger and still live with your parents because saving money is much easier when you don’t have to worry about rent or living expenses.
I tell this to people from my home country as well – if you’re making 1500 leva (about £750), you can easily live on 500 and save the other 1000, especially if you live with your parents. This can give you a massive head-start in wealth-building. You limit your unnecessary expenses, invest and work your way up from there.
And this is also why when I make investing blogs, I go out of my way to focus on reliable businesses. You don’t want to speculate when you’ve got a small budget. You always want to go with the safe option. I mean, once upon a time, Amazon and Facebook were also speculative stocks, and people considered them risky or not worth the money. And, yes, the investors who believed in them ended up making a lot of money, but that’s not a risk that a beginner working with a limited budget should be taking. I’m looking for companies like this for my personal investments. Still, I rarely bring them up on the channel because I don’t expect to make any significant returns on these investments anytime soon.
So, in order to get your first property, you need capital on hand.
If you don’t have capital on hand, it’s better to start small. The Stock Market is one of the safest ways to do that. But you need to learn how to manage your budget.
As I often say, budgeting is the key to financial freedom. I know that, for a lot of people, saving money feels very difficult. They think that only the “chosen few” or “the rich” can afford to save. And, yes, some people have it really rough. I can’t argue with that. But as long as you’ve got at least something left over after covering the necessities, you absolutely can (and should) start saving.
If you’re struggling with budgeting, I’ve got a couple of blogs here on this platform and a bunch of videos on my channel that can help you with that.
But you’ve got to decide where you want to go. You know, that one really annoying question you always get asked on job interviews – “where do you see yourself in ten years?”. Yeah, you need to find an honest answer to it.
What do you want to do with this money? Are you looking to get into properties? Or maybe you want to go for dividends? I plan to post a blog about dividends soon because I’ve been getting a lot of questions about this recently, so stay tuned!
Anyway, if you’re young and just getting into investing for the first time, I wouldn’t recommend dividends. They’re kind of like a more affordable version of real estate – you need sizable capital before you can really get the good benefits.
- Get (save) money
- Do your research (the more, the better!)
- Find something that’s both safe and affordable
- Give your investments time to grow and keep saving
- Diversify your portfolio and income streams
- Rinse and repeat
Thank you for reading until the end. Don’t forget to check other investing blogs such as “What are Penny Stocks?”. If you enjoyed this blog, don’t forget to share and leave a comment.
Recommended for further reading:
- Smarter Investing: Simpler Decisions for Better Results
- Rule #1: The Simple Strategy for Successful Investing in Only 15 Minutes a Week
- How to Make Money in Stocks: A Winning System In Good Times And Bad
- How To Be A Landlord: The Definitive Guide to Letting and Managing Your Rental Property
- The Book on Rental Property Investing: How to Create Wealth and Passive Income Through Intelligent Buy & Hold Real Estate Investing