Dipping her toe at 22
Fresh out of college, Cayetano didn’t have the capital or income to qualify for a mortgage on a house in the Bay Area — where the average home price sells for over $1 million.
Instead, she settled on the thriving city of Cincinnati, Ohio, where home prices were lower and cash flow opportunities were better.
“While other people [my age], maybe it was normal for them to go out, to party and to travel — for me, it was normal to invest in real estate,” she told Marketwatch ‘Money Matters’.
The young investor bought a two-bedroom, one-bathroom single family home for $98,000 with a $20,000 down payment — significantly less than the approximate $200,000 she’d need for a 20% down payment in the Bay Area.
She spent $15,000 on renovations, including turning the living room into a third bedroom, and quickly boosted the property’s value.
“I did what’s called a BRRRR in the real estate world: buy, rehab, rent, refinance and repeat,” she explained. “It’s a way to force equity in a house so that you can refinance, pull out most of your money and use that money to buy your next house.”
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Catching 'the bug of real estate'
That first successful deal was all it took for Cayetano to catch “the bug of real estate.” Social media allowed her to both share her experience and connect with other investors. From there, her business grew quickly.
Within two years, she’d bought 27 units and was brigning in around $10,000 in total per month. Since the Marketwatch interview was filmed, she’s turned 25 and invested in another 12 houses, an office building and an apartment block.
While the dollar signs may be appealing, Cayetano admits that there have been many bumps along the road.
“I’m not going to lie, it’s really difficult,” she told Marketwatch. “Things go wrong every single day. I’ve had houses broken into, stuff stolen, people ghost me, tenants not pay, [I’ve had] to do evictions — and it’s all just part of the journey.”
Other ways to invest in real estate
If you’re inspired by Cayetano, but the costs and hassles associated with buying a physical property, maintaining it and possibly even renting it out don’t appeal to you, there are other ways to invest in real estate.
For example, you can invest in a residential real estate investment trust (REIT). REITs are publicly-traded companies that collect rent from tenants and pass that rent to shareholders in the form of regular dividend payments.
As they're publicly traded, you can buy or sell shares any time and your investment can be as little or as large as you want. It’s not like buying a house, which normally requires a hefty down payment followed by a mortgage.
You may also want to consider a crowdfunding platform. These allow everyday investors to pool their money to purchase property (or a share of property) as a group.
If you don’t want to make investment decisions on your own, investing apps and online platforms can help you invest in diversified real estate portfolios that will maximize your returns while keeping your fees low.
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