Why Real Estate Shouldn’t Be Your First Investment

I’m a huge believer in real estate. I’ve seen firsthand how buying the right property at the right time can set you up for long-term financial growth, consistent cash flow, and even early retirement. Real estate is tangible, leverageable, and can be an incredible wealth-building tool.

But here’s the thing:

It shouldn’t be your first move.

Real estate investing has a lot of advantages—but it also requires risk tolerance, liquidity, and the ability to weather unexpected repairs, vacancies, or market shifts. And before you get into it, there are a few financial priorities I believe you should knock out first.

Let’s walk through what I consider the ideal investment order of operations—the foundational steps that set you up to make smart, strategic real estate investments down the line.

1. Pay Off High-Interest Debt

If you’re carrying credit card debt or anything with an interest rate over 7%, make paying that off a top priority. It’s nearly impossible to beat that return through investments, and becoming debt-free puts you in a much stronger position overall.

2. Build an Emergency Fund

Before you invest, make sure you’ve saved 3–6 months of living expenses in a high-yield savings account. Whether you’re buying a rental or investing in the stock market, having this buffer keeps you from panic-selling or going into debt when life throws something unexpected your way.

3. Contribute to Your 401(k) (At Least to the Match)

If your employer offers a match on retirement contributions, take it. That’s free money, and nothing beats that kind of return. At minimum, contribute enough to get the full match.

4. Invest in a Roth or Traditional IRA

Individual retirement accounts offer tax advantages and long-term growth potential.

• A Roth IRA grows tax-free and withdrawals in retirement are tax-free.

• If you earn too much for a Roth, you can explore a Backdoor Roth IRA strategy.

It’s not flashy, but it’s a solid building block for your financial future.

5. Purchase Wealth-Building Assets (Real Estate + Brokerage Accounts)

Once you’ve built a solid foundation you’re ready to start putting your money to work in a more meaningful way. At this point, there are two main paths people often consider: real estate investing and taxable brokerage accounts. Both are powerful tools for building long-term wealth, and you don’t have to pick just one.

Real Estate

Real estate offers:

• Cash flow that can help replace your income over time

• Appreciation potential for long-term gains

• Leverage that allows you to create gains on money borrowed

• Tax benefits like depreciation and write-offs

It’s hands-on, but for the right person, it can become both an income stream and a wealth engine.

Taxable Investment Accounts

Brokerage accounts offer:

• Flexibility (no early withdrawal penalties or income limits)

• Access to stocks, index funds, ETFs, and other market-based investments

• Diversification 

• Simplicity and liquidity

These accounts are great for mid- and long-term goals—especially if you want access to funds before traditional retirement age.

The Power of Diversification

Here’s the truth: You don’t have to choose. In fact, having both real estate and market-based investments can give you balance and flexibility in your portfolio. Real estate can generate monthly income and long-term equity, while your brokerage account gives you market exposure and liquidity. Together, they create a well-rounded approach to building wealth.

7. Advanced Strategies

These may not be for everyone, but they can be great additions once you’ve built momentum:

• HSA (Health Savings Account) – triple tax-advantaged if you qualify

• 529 Plans for education savings

• Annuities or whole life insurance (use sparingly and with caution - these make sense for some very high net worth individuals but have very high fees and should generally be avoided)

• Private investments or business ownership Investing in startups or your own business can offer big rewards—but with high risk and little liquidity.

My Philosophy

I don’t just talk about this—I live it. Real estate is a powerful path to wealth, but it’s not a shortcut. I’ve seen real estate transform lives and portfolios. But I’ve also seen people jump in too fast and get burned because they weren’t financially prepared.

The best real estate investments happen when you’re ready and patient—not when you’re scrambling or overly optimistic.

Curious if you’re ready to invest in real estate? I offer strategic consulting for individuals and business owners who want to make smarter real estate decisions. Let’s chat and make a plan that works for your goals.