BiggerPockets

Some of your answers will depend on what strategy to buy and hold you want to use. For instance, you can buy homes that need work and are priced well under market. Then you can use a hard money loan or rehab loan and roll the cost of purchase, rehab, and closing into your loan. This strategy can get you into the property with very little out of pocket.

You could also buy turn key (larger down payment) or seek out properties with owner financing (you can negotiate all the terms) available. There are plenty of other ways to do it as well. I don't believe you should limit yourself to one strategy when there are several than you could employ. Which ones you want to do will dictate how you need to go about it.

You also need to decide if you are going to invest in your local market or one that is further away. This is something that would be a part of your business plan. In fact you may want to keep a generic plan on hand that can be tailored to your needs as you go.

As far as practicing closings are concerned I'm not really sure there is a way to practice. The best, imo, is to have a checklist of things you go through with your due diligence so that when the time comes, you will be ready and aren't leaving anything out.

Wow,
Sorry, but the advice to go after hard money for a buy and hold rental is just wrong and suicidal.
If you have to get a loan then get the lowest possible rate, not the high rates designed for a short-term flip (the hard money solution), and you should line up your financing before you make offers, just stay away from hard, expensive, money!
My advice is to make offers WAY BELOW the market on properties you are interested in, and you will eventually get a hit. Be super realistic when you look at properties especially in the rehab costs, baths, kitchens, ROOFS, all the major cost areas. How old is everything from heating/cooling, what are you local insurance company requirements, ask before you bid!
Watch your areas, watch the rental rates in Craigslist and the local papers and follow the oft mention 50% rule you will find mentioned here, just search.
You are new so until you have done a few renovation jobs, take your best estimates and double them, you will be wrong and WAY LOW on the first couple.
Remember, it is a rental, not your own home, renovate for low maintenance costs, again search and you will find advice on how to do this.
Also watch your areas, are the jobs leaving?, if so rents will be dropping, is it stable?, Be realistic in your view and watch the ads like a hawk, even chart them across the different rental groups,
two bedroom/three bedroom/studio, etc.
Watch the number of ads and be your own best source of info on your area because you are watching.
TAKE YOUR TIME. This is no loss of opportunity when you are learning before you toss your money into an albatross but there certainly will be when you have to take a loss of capital to get a bad one from around your neck!

GL

Thank you, Lucia!

Our money will be from us and my husband's family...they have been doing buy and holds for many, many years. They will also be guiding us. But, being my controlling self, I NEED to learn as much as possible on my own before I truly value their expertise or even know what questions to ask them.

I have been studying the 50% rule and how to use that to calculate an offer price. Sure wish I would have known this 3 years ago, but I was blind then.

I believe the area is stable, but I will do more checking on this since a couple big manufacturers have been laying people off.

I have not been tracking current ads. I will be doing that starting tonight. It seems so obvious...I should have been doing this for awhile!

Yes, your FIL should set up an LLC. I assume you will only borrow that money temporarily until you can get permanent bank financing.

Think twice about borrowing from family. If things go wrong, it can make for some tense family gatherings. Even if things go right, it can create tension.

You don't want to convince people to sell to you. Either they need to sell or they don't. Twisting someone's arm into selling is just going to cause problems. I like REOs because there is no emotion involved. If you're dealing directly with the owner, at some point its going to come down to "I'll pay X, take it or leave it."

Kari,

My apologies. I didn't completely clarify in my post this morning (got some great news mid post and was partially distracted) about the exit strategy from a hard money loan, which Gloria pointed out. HML's are never something you want to be in for more than a few months. I use them on my purchases because I'm buying rehabs as well. However, I also start the refi process immediately upon close of the hard money loan and get a 30 year fixed. Plus, I have a tenant in place by then which makes the process go much smoother since they don't rely as much on your income to carry the property.

I've done this several times and it has been a great strategy because my out of pocket is less than 3k per transaction and I buy stuff in the 30-75k range including rehab and loan costs. It MAY be a good strategy for you, depending on your financial situation, since you are also doing rehabs. If you are borrowing from family or friends, which carry there own risks, you can generally get better terms than you can from a lender.

Definitely make sure you are approved by a lender to do a refi before you take on any kind of debt like a HML or private money. Secondly, always buy way below market or the program won't really work. There is always risk, but you can minimize that by being sure of your market. Best of luck and sorry for the lack of explanation in the earlier post.

My recent experience is mostly with REO post auction. That's where you can buy really good deal if you know where to look for and you can have an initial visual inspection (Unlike the ones sold on the stairs of the court house).
Research the area or areas where you consider investing in. Ongoing prices, quality of the population, make sure that the area can cash flow, etc. Research is the key for any successful investment. My personal experience with wholesaler is that they are no deal real deals ( Of course, this is one person's experience... and you may find otherwise). Many of them are over priced. Be careful specially with those who offer an "Over optimistic" ARV.