“The following conversation was conducted over email and edited for flow and clarity.”
The Key Resource is an online platform and community created by Kendra Barnes. Kendra is a savvy real estate investor who is passionate about encouraging and empowering millennials to invest in real estate. On her site and through online courses, she shares her story about how she and her husband started investing in real estate and shows you how to get started too. Read more about her story below.
WN: What is in your real estate portfolio?
Kendra Barnes: Right now my husband and I own two multi-family buildings, two condos and one single-family home in D.C. and Maryland.
WN: What inspired you to become a real estate investor?
Kendra Barnes: I actually never even considered investing in real estate until one day my husband and I randomly played the game Cash Flow, and it changed our lives forever!
Cash Flow is a board game similar to Monopoly but better. The object of the game is to get out of the rat race of life. The Rat Race = living paycheck to paycheck, being burdened by debt, working a job you hate, etc. The only way to get out of the rat race and end the cycle is to make smart investments so that your passive income is greater than your expenses.
The game opened our eyes and we realized that we were living well, but not building wealth.
We had great jobs, a nice house, two cars and we traveled often, but our money was not making money at all. That sudden realization sent us on the hunt for our first investment property, and we’ve been addicted ever since!
WN: How did you find and purchase your first home?
Kendra Barnes: Although we had a real estate agent, we actually found our first rental property on our own. We happened to be browsing through one of the popular real estate listing sites and we saw this duplex at an amazing price and we thought, “Oh wow it’s like getting two rentals for the price of one!” Keep in mind, we knew nothing about multi-family rentals, we knew nothing about being landlords and we hadn’t really saved up much money to invest.
Though we really didn’t have the cash in our accounts for the down payment, we really wanted to get into the real estate game so we ended up borrowing the money from our retirement account.
Most finance gurus cringe when I tell them this story, but it actually ended up working really well for us! We made more money on that money than it would have made in our retirement accounts, and now that we are building a real estate empire we are not exactly dependent on that traditional retirement account as our sole source of income in retirement.
Word to the wise: If you decide to invest using money from your retirement [account]:
- Make sure it makes sense for your goals.
- Run the numbers.
- Talk to a financial advisor.
Once we purchased the property, we rented out one unit to a long-term tenant and we rented out the other on Airbnb! We still own the property to this day!
WN: What was the hardest part about doing your first investment?
Kendra Barnes: The hardest part was that we were so unprepared and didn’t even know it! There were basic questions that we didn’t even know to ask that tripped us up with that first investment.
For instance, the duplex that we bought already had a tenant in one of the units so we basically inherited a tenant, but we never asked the seller if we could see the lease for that tenant before moving forward with the purchase.
Now, that is a deal breaker for me. If I’m buying a property with tenants already in it (we’ve purchased three at this point) I need to see the contract (lease) that I’m buying as well.
This is why I am so passionate about teaching and allowing others to learn from my mistakes. There’s no need for you to make the same mistakes that we did!
WN: So what was the greatest lesson you learned while investing in real estate?
Kendra Barnes: You do not have to be rich to invest in real estate. You can start right now, with what you have.
Want to own a rental but can’t come up with a 25 percent down payment? Try House Hacking.
Don’t have any money to put towards a down payment for a rental property? Try wholesaling.
Don’t have enough time to wholesale? Try investing in tax liens.
There’s room for everyone at the table. Pull up a seat!
WN: You are very passionate about this. Why do you believe in investing in real estate? What’s the one thing you like the most?
Kendra Barnes: I love real estate because there are so many ways to get in the game, and there are just so many options and opportunities with ownership.
WN: Interesting. What is your current investment strategy?
Kendra Barnes: I’m a buy and hold investor, but I’m going to start putting more energy towards wholesaling in 2019.
WN: Who do you think real estate investing is a good fit for?
Kendra Barnes: Real estate investing is perfect for anyone who is willing to make short-term sacrifices to reach long-term goals. It took me a while to realize that building wealth from the ground up requires stepping outside of your comfort zone!
If you plan to invest in real estate using a mortgage, you will need to have good credit, stable income and a favorable debt-to-income ratio. If you’re lacking in any of those areas, don’t fret! There are alternative financing options like seller financing, hard money loans, private money loans, etc.
WN: Thanks for sharing so many options to help someone purchase an investment. What additional advice do you have for people trying to decide if they should invest in real estate?
Kendra Barnes: Do what’s best for you and your goals!
If you are on the fence about real estate, get out a pen a paper and write out these three things:
- Your why: Why do you want to invest in real estate? Don’t do it because you saw someone talk about it on Instagram. What do you want?
- Your money goals: These need to be specific! Example: I want to make $750 in passive income per month. Or, I want to stop paying rent and build equity instead.
- One thing you are willing to do today to get one step closer to your goal.: Action is key!
WN: What advice do you have for people getting ready to make their first investment?
- Map out your goals.
- Learn from others
- Research trends in your area.
- Find a great real estate agent. (I can help with that.)
- Once you’ve found a potential property, stalk the neighborhood and talk to neighbors!
- Do what’s best for your market and your goals.
- Don’t let others project their fear onto you.
WN: Do you invest by yourself or with partners?
Kendra Barnes: I’ve never invested with partners, but I’m open to it!
WN: Sounds like you are a busy investor. Are you a full-time real estate investor?
Kendra Barnes: I currently work full-time for the government as an international economist, and I invest in real estate on the side, even though real estate can be a full-time job as well sometimes!
WN: You also have an online platform where you help people learn more about real estate investing. Tell our readers a little more about The Key Resource. What do you offer followers on your website?
Kendra Barnes: For first-time home buyers I have a group called the First Time Home Buyer’s Society where I offer weekly guidance and support. It’s an amazing group! If you’re a first-time home buyer you do not have to go through it alone. You can join our group here.
For investors, I have self-paced online courses available.
And you can always find me dropping some knowledge on my Instagram page!
WN: Thanks again for taking the time to speak with me and share your story with Wealth Noir. One last question: Do you have any new ventures you want to tell our readers about?
Kendra Barnes: I’ve just opened up enrollment for my House Hacking Masterclass! Check it out here.
Acquania Escarne is the creator of The Purpose of Money, a community of women building generational wealth for their families one dollar at a time. As an entrepreneur, real estate investor, and licensed insurance agent, Acquania has always been passionate about financial literacy. On her website, Acquania blogs about ways to help you improve your money habits, create wealth, and invest in real estate. Follow Acquania on social media for daily tips.