When brothers Kelly and Chris Edwards bought their first house for $88,000 in Raleigh, North Carolina, in 2002, they didn’t know much about real estate investing.
How do they decide what to add to their holdings?
Before anything else, the Edwardses make sure the numbers work out.
When the brothers first started investing, they went to a local meeting in Raleigh to meet, and hopefully speak to, a local residential real estate investor who now owns over 2,000 units in the area. They invited him to dinner, and he accepted.
“Ultimately we went to work for him for two years and saw everything there is to know for what our area of real estate, from fires to new construction to tear downs,” Chris says. “One of our favourite books is ‘Rich Dad Poor Dad,’ and he’s that guy to us: the rich dad, if you will. If there’s a problem, we still call him. That definitely has been the most important thing contributing to our success.”
And he had a lot of wisdom to impart. “No matter what you read on the internet, our mentor told us one thing: Buy where the numbers work,” Kelly explains. “You buy property for cash flow, not speculating ‘This will appreciate 6% over the next 10 years.'”
When the market tanked in 2008, the brothers’ friends from banking would come by, asking if they were OK. “We told them as long as our cash flow is working, we couldn’t care less what the market is doing,” Kelly says. “Over the long, long term we’ll see that appreciation. If you’re flipping homes, that’s great, but to be a property manager you have to buy where the numbers work.”