Forums » Starting Out » advice from broker buddy

advice from broker buddy 6 posts by 6 users

Tony S.

Posted: 04/14/2008 at 12:06AM

A buddy of mine in college became a broker and we recently reconnected.

I asked him about real estate investing and told him I am looking strictly for bargains, etc.

His advice was " always buy your own place first before you start investing in rental property. It will get you familiar with the business" .

I rent a very cheap place right now and am looking to save as much cash as possible for inivestment properties. I kind of like renting at this point since it is so cheap and allows me to relocate easily if possible (I do not have kids). Also, I live in california and it would take massive capital to get involved with my own house here as a first investment. I would rather not " get pregnant" with a house here and a huge loan...I can always buy a dream house once the investments pay out. At the same time, renting always puts money into someone else's pocket. Any thoughts for a first investment?

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Kyle G.

Real Estate Investor
liberty township, OH

154 posts

Posted: 04/14/2008 at 03:06AM

i am sure you will get MANY responses to this one so here is my 2 cents for what it is worth....

1) everyone is lookin for " BARGAINS" ... look for what deals are good for you and what you want to do.

2)Talk to more " seasoned" people.. And by seasoned I mean older than someone in college. Your buddy might be a good guy and know what he is doing... But the best school anyone can go to is the school of hard knocks.

3) This comes from my education at HKU (hard knocks university) It is better to practice on rental property than your own property... Especially if you plan on buying a fixer uppper for your first property.

and lastly some advice i got from some pros in cleveland... " dont buy property, buy deals"

Bob M.

Developer
Hoboken, NJ

174 posts

Posted: 04/14/2008 at 05:45AM

Something to consider would be doing both... purchase a property that you want to flip and live in it while you do. I have seen a number of people on this board that have advocated this method... It's something to think about anyway...

Jimmy T.

6 posts

Posted: 04/14/2008 at 07:29AM

I don't know what your schedule is, but if you go the fixer upper route then you will need to apply alot time to it. You just need to either be there doing all the work or be there watching expenses and making sure hired help is doing what they are suppossed to.

So like suggested above, living in your first property and fixing it up at the same time may be something you look into.

But to answer your question, I bought my house before any investment property.

Jason C.

Real Estate Investor
Katy, Texas

501 posts

Posted: 04/14/2008 at 08:18AM

Not sure his advise is right. He is a broker, not an investor.

Why not rent while you start to manage rentals?

In fact maybe you will run across a nice 4 plex that you can rent out 3 and live in the other. Basically paying for your place to live.

Nothing is set in stone, do things how you feel they need to happen. If you want to invest while you are still renting I see abosolutely nothing wrong with that.

Ned C.

108 posts

Posted: 04/14/2008 at 10:05AM

Two points

1) Buying your own home is often a good investment, but it is not ALWAYS a good investment. If you are going to live there short term (under two years ~ ~) the transaction costs will kill you. If you can rent for much cheaper and save and invest the difference you may be better off.

If I was starting over I think I would live in a trailer park. It is about the cheapest houseing you can possibly get. It also puts you in a position to do " Lonnie deals" which ar very profitable. It brings real estate investing to a level anyone can afford.

2) Your buddy may be a great real estate agent but he may know almost nothing about real estate investing. Most agents are good at dealing with retail homeowners. They don't understand investing at all. They think 10% below market is a good deal. That is a BAD deal for an investor.