New to Real Estate · DFW, TX · Member since 2021 · 2 posts · 0 votes
I'm wanting to start investing in real estate at the first of the year, and I have a few questions.
I live 15 mins from the DFW area in Texas.
I'm mainly wanting to focus on 1-4 unit rentals, but I am considering other things to speed up the process and to also have diversity. My main focus would be on; long Term Rentals, Arbitrage, and novation flipping.
I don't have much capital to invest initially. I work at Walmart and barely make 25k/yr, so I'm looking more into creative finance at the moment.
I know I want to start an LLC first. I was wanting to know if I need any licenses, permits, or insurance to buy/rent property, or for arbitrage, or novation, when I'm working under my company name?
I want to research more in to Sub To, seller finance, and novation agreements. I was wondering what contracts I would need, and if I could purchase generic contracts to download? Or if I have to make my own what are some things to consider? Also do I need an attorney or lawyer to look them over? And do I need a notary public to sign the contracts?
I have researched only online, I'm trying to avoid taking classes right now, I'm just wanting to get started as soon and as cheep as possible. I'm looking at every source of research I can get my hands on. I have so many more questions but I'll limit myself to these for now, any advice or constructive criticism would absolutely be appreciated.
Real Estate Agent · Dallas, TX · Member since 2018 · 63 posts · 43 votes
4y
Before you go doing any of that, have you considered finding a job that pays better than $25k a year? Everything you just mentioned is a ton of work, and if you've got the work ethic to do that you could easily find something where you could make $40k-$60k+ by just shopping around for a better job and moving up in something.
I'd even consider finding a Property Management firm to go work for and get some real world experience in this industry. Or you could even look at getting your mortgage brokers license, becoming an insurance agent, contractor, etc and learning about the industry at the same time. There are so many different ways to make a good living without going down the path of trying to find people to seller finance or doing subleasing, both investment strategies that are full of snakes and usually involve one party taking advantage of another if I am going to be completely honest.
Someone else who gets involved in subleasing could probably answer better on that but many cases I have seen of it involve someone doing it behind the landlords back, and seller financing will often be the result of the seller getting the buyer to pay significantly more than a property is worth (especially in this hot of a sellers market, every instance I have seen of a seller soliciting seller financing was with a property that was $100k overpriced), unless you find a property owner who just takes kindly to you and doesn't mind giving you a start with it I would definitely recommend getting a third party BPO or Appraisal before you sign any agreement with a seller on seller financing.
I'm not saying these aren't workable strategies and I know of people who have made a killing doing subleasing especially in places like New York city, but even among those many of them are doing it without disclosure and exposing themselves to a lot of legal liability in the process, and the work required to set these systems up is as difficult if not more difficult than building a fully above board business.
For the contract stuff you should talk to a lawyer about that and someone already utilizing the strategies you are discussing, know the risks of the strategy you want to implement before moving forward and maybe try to shadow someone already doing them.
Again my initial recommendation is that you put your work ethic and drive toward something with a more predictable payout, stop wasting hours working for Walmart, bring your earnings up and continue learning about this industry and then make a move for something bigger once you have a nest egg built up and have taken the time to develop enough skills to make it in whatever you decide to pursue.
New to Real Estate · DFW, TX · Member since 2021 · 2 posts · 0 votes
4y
Thank you Corin Prendiville, for your advice.
On the subject of finding a job that pays better than 25k, I've been working with my dad trying to work for the company he works for that would pay me 40k+ it's a cad designing job basically drafting. I mostly was looking at that because he said " I could walk right in to it." But apparently not. I've been waiting for months and nothing has happened.
I was planning to look in to a property manager job after the holidays. I have some experience in property managing, I didnt mention my parents have owned a rent house for most of my life, so I've gotten a small taste of what it is like managing and fixing things as well as small renovations between tenants. I know it's not all I need to know, there's still so much more I have to learn and I know that.
As far as creative finance strategies involving " one party taking advantage of another" I don't see it that way. Im sure there are a lot of people who have a price in there head of what they think their property is worth. And they have everyone else coming to them offering them 10k-30k less than what they should be getting, because they have to consider closing costs and financing. But with these strategies, that money you will be paying anyway will be going in the sellers pocket instead of all these other people. So in effect, I may end up paying the same either way but the seller is happy because they get the price they want and I'm happy because I don't have to deal with paying all these closing costs, making a large down payment, and applying for a mortgage. I'm sure there are people trying to take advantage of everybody, they are just going to be no matter what you do.
What's most important to me right now is starting something, even if I don't get a deal for months or if no apartment owner will let me sublease. I won't be mad about it because I tried and if I realize then that I need more experience, or maybe more connections, that's fine. As some of the biggest names in this community say all the time " You miss 100% of the shots you don't take" (Wayne Gretzky) I just want to take that shot, and if I miss I didn't loose anything. I just don't want to waste even another year of my life getting ready for something I could do now. I know it's harder and maybe even impossible, I'm not going to just quit my job and hope this works. But If it doesn't work out I'll know what I need to do to make it work.
I'm 20 years old I think I have time to miss a couple shots that I can learn from. I know this is what I want to do, no matter what it takes. I refuse to waste my entire life working for someone else. I want to live my life how I want, working for myself. Time is my most valuable asset, we all only have a limited supply of it, we can't extend it and we can very easily waste so much of it. I don't care about the money, I care about the use of the most valuable asset, time.
What I'm getting at is that I know your right, I'm not disagreeing with you, but if I make a mistake I can learn from, it will help me more than if I never try at all.
Thank you again for your advice, I will consider everything you said and I'm sure it will help if this doesn't work out like I hope. and even if it does work out, I'm sure it will help me with something else.