Getting Started in Real Estate
"Ninety Percent of Millionaires become so through owning real estate.” - Andrew Carnegie
Let’s talk real estate! One question I hear all the time is, "How do I get started in real estate?" So, let me share a bit of my journey. I’ve bought 13 properties, which has given me the financial freedom to travel, purchase my dream truck, and live life on my terms.
I left the military at 23 and bought my first house while going back to school at Arizona State University. I didn’t want to pay rent, so I found a house a few miles off campus with four bedrooms and a pool. My plan was simple: rent out the rooms to cover the mortgage. This allowed me to live for free during college while also cash flowing $500 a month! Over a year, that added up to $6,000 in profit, and over four years, $24,000—all while the house appreciated in value and I got to live with my best friends.
After selling that property (for a $78,000 tax free profit), I purchased a second one in Scottsdale with a guest house in the back. I rented out the guest house and two rooms, which brought in $1,000 a month in cash flow, covering all expenses, while the property’s value continued to rise.
Over the years, I’ve built a real estate portfolio by fixing and flipping Airbnbs, primary homes, and now expanding into commercial properties. When I first got into flipping Airbnbs, I discovered an untapped niche in my market, allowing me to stay ahead in an exploding industry. I completed six highly profitable flips, with an average return of $271,000 per property.
One of my biggest wins came from a property I purchased for $500,000. With a $60,000 renovation, I converted it into a high-performing Airbnb. In just six months, I recouped my entire renovation cost through short-term rental income before selling the property for $950,000—a $450,000 gain beyond my purchase price. And yes, that return doesn’t even factor in the Airbnb cash flow. I’ll dive deeper into my Airbnb investing strategies in another blog.
Today, I’ve shifted into full-scale house flipping, purchasing properties entirely in cash, renovating them, and reselling for maximum profit. Buying in cash changes the game—it eliminates financing delays, increases negotiation power, and opens up high-value opportunities that others can’t access. This next phase of my real estate journey is all about strategic, high-return investments, and I’m excited to share what I’ve learned along the way.
Getting into real estate can be incredibly rewarding, but it does come with risks. Knowing where to start is crucial to increasing your chances of being profitable and successful in the real estate game.
With that said, here is how you can get started in Real Estate. I have broken this down in a very easy and understandable way. It make look like a lot at first glance, But it if you're really serious about real estate you need to read this.
1. Understanding Debt-to-Income Ratios (DTI) and How It Affects Your Buying Power
What is Debt-to-Income Ratio (DTI)?
Your DTI ratio is a simple calculation that compares how much debt you have to how much income you earn. Most banks will allow a maximum DTI of 40%, meaning your total monthly debts should not exceed 40% of your average monthly income when applying for a mortgage.
Example Scenario: Calculating Your DTI
Let’s break this down with a real-world example. Keep in mind that banks calculate your average monthly income over the last two years:
2023 Income: $5,000 per month = $60,000 per year
2024 Income: $6,000 per month = $72,000 per year
To find your average monthly income, banks will add both years together:
$60,000 + $72,000 = $132,000 total income
Now, they divide that by 24 months to find your average monthly income:
$132,000 ÷ 24 = $5,500 per month
How Much Debt Can You Have?
With a 40% DTI limit, the maximum amount of debt the bank allows is:
$5,500 × 0.40 = $2,200 per month
This means that your total monthly debt payments (including your future mortgage) cannot exceed $2,200.
Factoring in Existing Debt
Let’s say you already have the following monthly debt obligations:
Car Payment: $350
Student Loans: $250
Credit Card Payment: $150
Total Existing Debt: $350 + $250 + $150 = $700
The bank will subtract this from your $2,200 maximum allowable debt:
$2,200 - $700 = $1,500 available for a mortgage
What Home Price Can You Afford?
With $1,500 per month available for a mortgage (including principal, interest, taxes, and insurance), and with current interest rates at 6.6%, you would likely qualify for a home priced around $150,000.
Understanding your DTI ratio helps you realistically plan for your next real estate investment and ensure you’re financially prepared before applying for a mortgage!
2. Start with the "Primary Property" Strategy
Real estate is expensive, and with today’s interest rates, jumping straight into flipping properties isn’t realistic for most people—especially if you don’t have the cash to buy investment properties outright. The best way to get started? Purchase your primary home first. This is the smartest, most affordable entry point into real estate investing while keeping your long-term financial goals in mind.
Why Start with a Primary Home?
Buying a home you plan to live in comes with key advantages:
Lower down payments (typically 3-5% with conventional loans, or 0% if you qualify for a VA loan).
Better interest rates compared to investment property loans.
The ability to "house hack"—reducing or even eliminating your living expenses.
What to Look for in a Primary Property Investment
When choosing your first home, don’t look for your dream house. Instead, focus on a property with:
✔️ Dated but fixable features – Kitchens, bathrooms, and flooring that haven’t been updated in decades are opportunities, not deal-breakers. Old carpet in the bedrooms? Perfect. Over the next two years, you can slowly renovate and build equity. With YouTube and DIY resources, you can handle most of the updates yourself and hire out the big jobs when necessary.
✔️ An ideal location – Buy in a high-demand, rentable area where property values will appreciate.
✔️ Ample space for rental income – A guest suite, mother-in-law unit, or extra bedrooms can help offset your mortgage by renting out the space. Every home I’ve ever purchased was in a strategic location where I could cash flow enough to cover my living expenses.
By renting out extra space, you can eliminate your monthly housing costs and reinvest that money into improving the property. Over time, you build equity while keeping your expenses low—this is the real estate hack that lets you grow wealth while others are just paying rent.
House Hacking: Short-Term Sacrifice, Long-Term Gain
I know it might not sound glamorous to have roommates or rent out part of your home, but if you’re serious about building wealth through real estate, short-term sacrifices lead to long-term freedom. If roommates aren’t for you, prioritize properties with guest houses or separate suites that you can rent out while still maintaining privacy.
The bottom line? Be strategic. Start small, invest wisely, and let your first property work for you—not the other way around.
3. Pay Your Taxes – The Smartest Way to Build Wealth in Real Estate
If you follow the Primary Property Strategy, one of the biggest advantages is the tax benefits when selling your home. The IRS allows homeowners to sell their primary residence tax-free if they’ve lived in it for at least two years. Here’s how it works:
If you're single, you can keep up to $250,000 in profit tax-free.
If you're married, that doubles to $500,000 tax-free capital gains per sale.
Real-World Example
Let’s say you’re single and sell your home for a $300,000 profit. The IRS only taxes profits over $250,000, so you’d only pay capital gains on the extra $50,000. If you're married, you’d still be under the $500,000 threshold, meaning you pay zero taxes on your profit.
What If You Don’t Want to Sell?
Keeping a property as a rental is another great strategy, but many new investors make the mistake of not reporting rental income to avoid taxes. However, paying taxes on rental income actually helps you in the long run.
Why Reporting Rental Income Helps You Scale
Real estate is a pay-to-play game—the more income you show, the more lending power you have. If you report your rental income, banks will offset your mortgage from your debt-to-income (DTI) ratio, making it easier to qualify for future properties.
Example Scenario:
Using our previous DTI example, let’s say your mortgage is $1,500/month, meaning you’ve already maxed out your DTI. This means banks won’t approve you for another mortgage.
Now, imagine you rent out two rooms for $750 each—bringing in $1,500/month in rental income. If you report this on your tax return and provide a lease to the bank, they will count that income to offset your mortgage.
Old DTI Calculation: Your $1,500 mortgage limits your ability to get another loan.
New DTI Calculation: The bank cancels out your mortgage with the rental income, freeing up $1,500 of new borrowing power for another property.
By doing this every 1-2 years, you can qualify for a new primary residence while keeping the previous home as a rental.
How This Strategy Builds Long-Term Wealth
Over 10 years, this process could help you acquire 5 rental properties, each paying for itself through tenant rent while simultaneously gaining value through appreciation. Even if you’re just breaking even on rent and expenses, your tenants are paying down your mortgages, and you’re steadily building equity in multiple properties.
Final Takeaway: You’ve Got to Pay to Play
Real estate investing is all about strategy and patience. Paying taxes on rental income, leveraging your primary residence, and using smart financing techniques allows you to build a scalable, cash-flowing portfolio over time. The short-term sacrifice of paying taxes now can lead to financial freedom later—if you play the game the right way.
4.Real Estate is a Long Game – Trust the Process
Real estate takes time. It’s not a get-rich-quick scheme, but a long-term wealth-building strategy—especially if you're starting out with limited cash flow. Success in real estate doesn’t happen overnight. It requires patience, strategy, and the willingness to play the long game.
I’ve been in real estate since 2015, and every deal, flip, and rental has been a stepping stone to where I am today. From house hacking my first property to flipping high-return Airbnbs and now investing in full-scale flips, I’ve learned that the key to success is consistency.
Trust the process. Use smart strategies like the primary property method, leveraging tax benefits, and compounding your investments over time. Each property you acquire, renovate, and rent out is another step toward financial freedom.
Enjoy the journey, stay disciplined, and keep building. The Compounder’s way isn’t about instant gratification—it’s about creating a life of wealth, freedom, and opportunity, one smart investment at a time.
Getting in to real estate can feel overwhelming. There is a lot to know. You don't have to do it alone.
First: Schedule a call with me and I can help answer your questions, help you strategize, and coach you through your real estate journey.
Second: Join the Ranger to Real Estate Community for more helpful articles on how to crush it in the real estate game.
Become Apart of the Ranger to Real Estate Community:
"Make the choices today, that your future self will thank you for tomorrow." - Coach Justin U.S. Army Ranger
Check Out My Full Video: How To Get Into Real Estate
Before and After of My Latest Property...
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