Real estate has always intrigued me, but it wasn't until I started actively educating myself on the subject that I realized its true potential as an investment strategy. After years of working as a software engineer and recently taking on real estate as a new passion, I decided it was time to make my first property investment. The more I learned about wealth-building strategies, the more I realized real estate offers a unique path to financial independence.

My decision to invest in Cleveland, Ohio, came after thorough research and a careful evaluation of market conditions. Cleveland stood out as a city with affordable properties, solid rental demand, and promising growth potential. In this blog, I’ll walk you through the steps I’m taking to prepare for my first real estate purchase and what I’ve learned along the way.

Step 1: Educating Myself

The first step in my journey was to equip myself with knowledge. To invest confidently, I enrolled in the UCLA Extension Certificate in Real Estate Investment and Finance, which provided me with a strong foundation in property analysis, financing, and market dynamics. This program has been invaluable in helping me understand the nuts and bolts of real estate, from analyzing property values to mastering the complexities of financing options.

But my education didn’t stop there. I’ve also been devouring books, podcasts, and online resources related to real estate investing. Some of the most helpful books include Rich Dad Poor Dad by Robert Kiyosaki and The Millionaire Real Estate Investor by Gary Keller. I also listen to podcasts like BiggerPockets and The Real Estate Guys, which share firsthand stories from successful investors and offer strategies for everything from managing rentals to leveraging tax benefits.

Through this educational phase, I’ve learned key lessons that are critical for first-time investors:

• Location matters more than the property itself. Finding areas with growth potential and rental demand is key.

• Financing is complex, and understanding mortgage options and interest rates is crucial to ensure you don’t over-leverage.

• Property management can make or break your experience. If you can’t manage the property yourself, a reliable team is essential.

Step 2: Developing a Financial Plan

Before jumping into my first investment, I needed a strong financial plan. My goal is to save $60,000, and I’ve already saved $30,000 so far. To reach my goal, I’m contributing 100% of the income from my church music job to my savings while continuing to save a portion of my salary from my primary software engineering job.

I’ve decided to save in a high-yield savings account (HYSA) instead of paying down student loans because I believe the returns from real estate will outweigh the benefits of reducing my student loan debt. The HYSA allows me to grow my funds at a rate of over 4% annually, which provides a solid return while keeping my savings accessible for the down payment.

My cash flow goals for the first property are modest but strategic. I’m aiming for a property that will generate positive cash flow after covering all expenses (mortgage, taxes, maintenance, etc.), with an initial focus on long-term appreciation rather than immediate, high cash returns. My target is to keep the property sustainable while building equity.

Step 3: Market Research

Cleveland quickly emerged as my top market choice for several reasons. First, the city's job growth in the healthcare and tech sectors has created a demand for rental properties. Second, property values in Cleveland are far more affordable than in other large cities, making it a feasible option for first-time investors like myself. Third, the city’s overall economic outlook is improving, and the cost of living is low, which makes it attractive for renters.

I rely on tools like Zillow, Redfin, and Realtor.com to monitor real estate trends and property values in various Cleveland neighborhoods. These tools help me evaluate different areas based on historical price trends, rental demand, and projected growth. I also use city-data.com to analyze neighborhood crime rates, school quality, and overall livability, which is crucial for targeting areas with long-term value.

My UCLA real estate certificate has played a pivotal role in guiding my market research. The program taught me how to assess a property's investment potential, calculate expected returns, and recognize emerging markets. This knowledge is critical as I navigate the complexities of the Cleveland market and ensure my investment will provide both short-term and long-term gains.

Step 4: Building an Investment Team

Real estate investing isn’t something you do alone. One of my biggest priorities is building a strong local team that can help me manage the property, especially since I’m investing out of state. Having a local real estate agent who understands the Cleveland market is essential to finding the right property, so I’ve been vetting agents who specialize in investment properties.

Since I’m based in Los Angeles, finding a reliable property management team is equally important. A good property manager can ensure the property stays in good condition, handles tenant relations, and deals with any maintenance issues that arise. I’m reaching out to property management firms in Cleveland, asking for references, and reviewing their management agreements to ensure they align with my goals.

Networking has also been crucial in this process. I’ve joined real estate investment groups on BiggerPockets, where I’ve connected with other out-of-state investors. I’ve also found it helpful to attend virtual meetups, where I can ask for recommendations on contractors, lenders, and attorneys. These connections are helping me build a trustworthy team without being on the ground.

Step 5: Planning for the Purchase

When it comes to financing, I’m working with a mortgage broker to understand the best rates and terms for my situation, and I’m preparing for the down payment and closing costs that will accompany my first property purchase.

I’m also making sure to manage my expectations. Real estate is not without its risks, and I’m prepared for the possibility that things might not go as smoothly as planned. My long-term goals are clear: I want to build a portfolio of rental properties that generate passive income and appreciate over time. If things go wrong with this first property, I’m ready with contingency plans, including refinancing options or selling if necessary.

Conclusion

I’m incredibly excited about taking the next steps in my real estate journey. The process of preparing for my first property investment has been challenging but rewarding, and I know that the knowledge and team I’m building will set me up for success. If you’re thinking about getting into real estate, my advice is simple: start small, educate yourself, and plan methodically. The journey is long, but the rewards are worth it.