2023 presents tremendous challenges for investors looking to get started. Financing is expensive compared to historically low interest rates during the COVID boom. And, although they are stabilizing, home prices have seen a steep rise. Throw low inventory into the mix, and you have an investor’s worst nightmare.
In short, it’s tough to cash flow right now, but luckily, it’s still possible.
Take, for example, Jessica Leiter, a real estate broker and investor who is crushing it in one of the country’s most expensive markets: Boston. In many ways their story is opposite. The lessons she shares in this article show you how to think outside the box to win big in any market condition.
no job? No problem
With a marketing degree and aspirations of working in the advertising industry, Jessica is faced with an unexpected setback. The company he had hoped to join lost a major account. Suddenly without income and unsure of her next move, she found herself at a crossroads. Little did she know that this challenging position would eventually lead her down an unconventional path towards financial success through real estate.
It was during this uncertain time that Jessica met a real estate agent. Recognizing her potential, the agent suggested she explore the world of real estate, starting with sales. Intrigued by the idea, Jessica decided to give it a try. To her surprise, she quickly discovered that “I was able to make more money in a single summer [real estate] As much as I would have earned in a full year in a marketing company.
As she delved deeper into the world of real estate, Jessica began to notice the remarkable success she was having with investors. Eager to learn from their expertise, she sought out mentors who could guide her along the way. Fortunately, he found many experienced individuals willing to share their knowledge and provide valuable advice early in his career.
The House Hack Stack
A few years into her real estate agent career, Jessica decided to stop paying rent and pursue a career as an investor. House hacking was the perfect place to start. It offered a low-money, low-risk way to start investing in Boston’s expensive market. After consuming hours of material about investing, he was convinced that house hacking was the right decision.
In her mid-20s, Jessica took her first significant step toward building her real estate empire when she bought a small condo in Boston’s Jamaica Plain neighborhood with the intention of living there for a year or so, then investing in the process. Repeat.
A year later, Jessica had successfully found her first long-term tenant at $1,600/month. All of a sudden, his one-bedroom, one-bathroom condo was $400/month cash flowing in. Today, the rent for the same property is $4,200/month.
“Starting is the most important part. Even if it means buying the smallest condo in your area. Waiting for something bigger and better means you are missing out on opportunities because you did not invest early,” says Jessica .
on the next one…and on the next
Encouraged by the success of her first investment, Jessica decides to further expand her portfolio. She bought a small condo in Boston’s trendy South End neighborhood. Instead of staying, he furnished the place and started renting it out.
Meanwhile, Jessica moved into her van and drove around the country for six months. She said, “I was willing to make the short-term sacrifice of living in a van for the long-term benefit of living the way I want to live.”
On the BiggerPockets podcast, she heard stories from investors like Craig Curleop who lived behind a curtain in their living room while at home hacking. Living in a van helped Jessica explore the country on a budget, save money on her accommodation expenses and grow her portfolio. Although it wasn’t as trendy as living in the city, it made her wealth accumulation process much faster.
Driven by her entrepreneurial spirit and growing success, Jessica didn’t stop there. He continued to buy properties in a similar fashion, opening his own brokerage, JL+CoRE. Through her dedication, determination and willingness to take planned risks, Jessica has demonstrated that financial freedom and success can be achieved with house hacking and real estate investing.
Exploiting an unseen property type
Jessica invests in condos. This unique approach allows him to tap into a market segment that is often overlooked by investors, thereby presenting him with untapped opportunities for growth.
When asked why, she highlighted several key advantages of condos in expensive markets:
- Condos often come at discounted prices compared to single-family homes and multi-family properties, making them more affordable for investors with limited capital.
- The cost-effectiveness of condos is enhanced by homeowner associations (HOAs) that cover exterior maintenance and repairs, saving investors money and providing convenience. Plus, HOAs act as training wheels for new investors, since the association also takes care of common area maintenance and other responsibilities.
Therefore, investors should not overlook condos as a viable option. Depending on your circumstances, this can be a great way to start.
cash flow with furnished units
Jessica also focuses on furnished units and rents them out as medium term rentals (MTRs). If you haven’t heard of MTR yet, it combines the benefits of short-term rentals with those of long-term tenants. After experimenting with everything under the sun, here’s what Jessica learned and why she landed the medium-term rental:
- time efficiency: Jessica found that the high turnover associated with short-term rentals was time consuming. To optimize her efforts, she turned to medium-term rentals. By targeting tenants staying for a few months to a year, it reduced the frequency of turnover and reduced the time and effort required to manage the property.
- IIncrease in earning potential: While long term rentals can provide steady income, Jessica recognized the higher earning potential of short/medium term furnished rentals. The lack of hotels in Boston, combined with the demand for hospitals and schools, created a niche market for temporary housing. By meeting this demand, Jessica tapped into a lucrative segment and was able to reduce the high rental rates for its furnished units.
By focusing on medium-term furnished rentals, Jessica optimizes her timing, taps into a demand-driven market and provides a tailored solution for tenants. This, of course, resulted in tremendous success.
financially flexible
After investing for more than a decade, Jessica is in a very good financial position. She loves the ever-changing landscape of real estate in Boston and plans to build her brokerage and investment business there. By following in their footsteps, you too can make life-changing choices. Start living your life on your own terms with these learnings.
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Note by BiggerPockets: These are the views expressed by the author and do not necessarily represent the views of BigPockets.
