Starting out; Disgruntled

69 Replies

Hey all. 
I recently heard of someone who has acquired a lot of property recently. Some main st village type property, mixed use with store fronts etc. I heard through the grape fine that he had recently started “scooping up” properties here and there and shes going to be starting in this next area soon. 
As a young man and young investor, I’m having trouble with a few things.

1)finding a property with a decent return. 
2) finding a primary residence that doesn’t cost and arm and leg (rent or own). 

I feel a lot of young investors are possibly in my position. For starters, they are having trouble even keeping there cost of living low while starting new families. Secondly, trying to achieve wealth through over priced real estate markets seems impossible.

If I can do one thing, one daily lever to pull, how can I be the guy I described in the beginning?

I love real estate so much but I can’t even get in, and my dream is to be the guy improving property for the good of the world. Any thoughts?

Thanks to anyone that responds.

First thing to NOT do, is compare your journey with anyone else. Everyone has different circumstances and goals. Secondly, keep hunting (don't let off the gas in running numbers on properties you like) and eventually you will come across some that financially make sense. 

Consider expanding your markets you are looking in so you have exposure to more properties, and if you haven't already, engage with a RE agent who specializes in investment properties so you may have some insight to properties before they hit the market. 

Originally posted by @Brendan M Brown :

Hey all. 
I recently heard of someone who has acquired a lot of property recently. Some main st village type property, mixed use with store fronts etc. I heard through the grape fine that he had recently started “scooping up” properties here and there and shes going to be starting in this next area soon. 
As a young man and young investor, I’m having trouble with a few things.

1)finding a property with a decent return. 
2) finding a primary residence that doesn’t cost and arm and leg (rent or own). 

I feel a lot of young investors are possibly in my position. For starters, they are having trouble even keeping there cost of living low while starting new families. Secondly, trying to achieve wealth through over priced real estate markets seems impossible.

If I can do one thing, one daily lever to pull, how can I be the guy I described in the beginning?

I love real estate so much but I can’t even get in, and my dream is to be the guy improving property for the good of the world. Any thoughts?

Thanks to anyone that responds.

 So if it was easy everybody would be in real estate investor. ( read this often.)

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Originally posted by @Joe S. :
Originally posted by @Brendan M Brown:

Hey all. 
I recently heard of someone who has acquired a lot of property recently. Some main st village type property, mixed use with store fronts etc. I heard through the grape fine that he had recently started “scooping up” properties here and there and shes going to be starting in this next area soon. 
As a young man and young investor, I’m having trouble with a few things.

1)finding a property with a decent return. 
2) finding a primary residence that doesn’t cost and arm and leg (rent or own). 

I feel a lot of young investors are possibly in my position. For starters, they are having trouble even keeping there cost of living low while starting new families. Secondly, trying to achieve wealth through over priced real estate markets seems impossible.

If I can do one thing, one daily lever to pull, how can I be the guy I described in the beginning?

I love real estate so much but I can’t even get in, and my dream is to be the guy improving property for the good of the world. Any thoughts?

Thanks to anyone that responds.

 So if it was easy everybody would be in real estate investor. ( read this often.)

 This reminds me of a line from the movie A League of their Own, said by Tom Hanks character.

"Of course it's hard.  If it was easy, everyone would do it.  It's the hard that makes it great".

@Brendan M Brown I hear that same story often when people approach me for mentoring.

As Danielle said: It's a journey. I call it the "Investor Journey"

Here is the sequence I suggest:

1. Identify what your mindset is (victim or creator)? I wrote a mindset manual to find out and then work on it

2. Get clarity of your true financial situation and any hidden earnings potential

3. Set your goals (I use the GROWER model in our mentoring sessions)

4. Familiarize yourself with the due diligence criteria and true performance variable (we do this with as litle as $50 analyzing real properties and execute real purchases)

5. Develop a path to the first investment in a full-size, well-performing rental property to get the first cash flow "workhorse" in place. 

Recheck #4 every so often and keep repeating #5 until you reach your Time Freedom Point # where your passive income meets or exceeds your goal set in #3. 

There are millions of properties in this country. There is one for you, trust me. You may have to start out low, you may have to move, you may have to beg, borrow or steal money, but there is a way in for you and the dream is still alive...this is still the U S of A.

Hint - Forget the 'saving the world' crap and focus on getting a successful business going.....that's the way to help yourself, your family and eventually others in your community.

Readjust your expectations. They are not abnormal....but it is the same feelings that every person at all points in history has thought...they think real estate is too expensive and too hard to acquire.  When I bought my first property, prices were literally half what they are today, and I thought the same things you are thinking today, that it is so expensive.  Real estate is always expensive.

Investing isn't for everyone for many reasons-one being money.  Also remember times and situations change.  You may have higher costs right now with childcare, but once your kid(s) start school, those costs will go down and you can start saving that money for a down payment.  

If you don't own your own home yet and are thinking of buying, look for something with a rental suite or a duplex.

If only it was as simple as "learning just one thing".  Since you want it to be as easy/quick as possible, I'll give you three things you need to learn...as a starting point:

1 - How to Analyze Markets to find the Micro-markets that are good to invest in.

2 - How Money Works, so you can develop an unlimited number of strategies which will allow you to be able to take advantage of as many opportunities as possible.

3 - How to design your own REI Plan by reverse engineering from your specific set of financial goals back to where you are now...then execute it by turning around and just following the breadcrumbs.

4 - (OK, I said it wasn't as easy as "just one thing")...Learn what the meaning of the number sequence "1073751824" means, and how to base EVERY decision you make on the meaning of that number sequence.

5 - Learn why it's so important to follow the 2 Golden Rules of REI, of which GR#1 is: NEVER, under ANY circumstances, ever, EVER, spend your seed money (your starting cash).  Use it to infinity, but NEVER spend it.

6 - Learn to stop looking for deals, and instead look for opportunities...and why.

7 - Learn what makes a deal.

8 - Learn why the smallest down payment you can make on a deal is so important

9 - Learn why there is a huge difference between "your" cost and the "total" cost of a property, and why they should NEVER be equal.
1 0 - Learn...a lot more.

It depends on your personal situation, how much extra money do you have saved every month that you can spend to purchase properties. It sounds like your finances are tight as a young professional with a family, I'd advice work on increasing your W2 income, with more education or training. What is never said enough on this site is real estate investing is much easier for people with money, and the best first investment you can buy is an investment in yourself, up to a certain point ofc, before it's not worth it to overwork yourself and instead "parallelize" income with other properties/businesses. You can always do REI on the side before making it your primary source of income.

I disagree with everyone, as usual. Sorry!!!

You are already motivated, pumped up and you definitely don't need any motivational advice.'

Academic teachings is totally senseless. You need to do this and you need to do that, but with NO HOW TO DO IT!!!

You say you are looking for real estate and not finding any good deals. How would you know a deal if it bit you in the butt if you don't have the skills to identify what a deal is. I will bet I can send you some great deal, but you won't have the ability to know they are deals because you don't have the experience to do the math.

The biggest problem both new and experienced investors have is nobody watches our backs because everyone has their own agenda and the greed more money.

What you need is to do is; rather than banging your head against a concrete wall, post the properties you are looking at, write as much detail about each property as you can including rehab costs, rental income, how much you can increase rents and then let people give you their opinions and advice.

Here is a serious problem with people who own their own business and then we wonder why some people are successful and why some are not. I've been in business, technically, since I was 13-years old going back to 1963. So, I have a lot of experiences with people who succeeded and people who failed. I know many people who were so hungry to earn money it was sickening and ad the same time those same people were so lazy it was even more sickening. My point is; when in your position, if you want to be successful and have the 'want' then you need to put in the hard work to achieve what you want. 

Then, when you want to achieve something, don't ask what to do. Ask for specifics in regards to HOW TO DO IT. I can tell you that the best leads are properties that were on the market, did not sell and you need to go after those leads. So, even if you agree you still don't have a clue regarding how the best way is to obtain those leads and you don't know what the best method is to contact the owners of those properties. I would like to see people on BP provide more inclusive information instead of one-line suggestions. I would also like to see different types of threads and different types of meetups that are not The Blind Leading The Blind and at these meetups the investors are provided with very inclusive instructional information.

Example. Come to my office with your concerns and I will personally set you up with everything I can give you so all you need to do is follow a recipe like you are getting on-the-job training. I did this for several contractors absolutely free and this free service benefits me in several ways since I learn from others and some of those contractors gave me some fairly large jobs they could were not qualified to do.

End of my long story. Start asking how to do what you need to do vs. asking what you need to do and maybe you will learn faster. You are most-likely already seeing great deals, but cannot identify them. Start learning the math.

Read the books:

50 Real Estate Investing Calculations

What Every Real Estate Investor Needs To Know About Cashflow (This book is great for beginners).

Keep your money in a super safe place until you are so positive about what you are doing you don't have to ask others for advice and wait until you can give advice rather than having to ask. Money is too hard to earn and easy to lose.

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@Brendan M Brown I notice you mentioned you are looking for a primary residence and you want to invest in real estate. Have you been looking for house hack opportunities?

I know I get outbid on a number of properties by people who plan to owner occupy since they are analyzing the numbers slightly differently. While I agree with Joe V about never spending your seed money, often times your first deal is not going to be a home run. But if it gets you your primary residence and your foot in the door to becoming an investor then spending a little extra isn’t the end of the world.

Don’t forget that the market is continuing to appreciate, that means you will be able to charge more for rent next year than you are this year. But your mortgage will stay the same. Keep that in mind when running your numbers.

It’s tough out there, but it’s very possible. You might have to look in areas outside your market.

For example, I live in Raleigh NC, one of the hottest RE markets on the US right now. It’s impossible to pick up cash flowing property due to elevated prices. So I went to Fayetteville NC where the rent to price ratio was great. I was 26 when I started and now I’m 28 with 13 units cash flowing 5K/month.

Couple things you can do:

1) Network with as many wholesalers and real estate agents to start building your pipeline of deals.

2) Can you send out letters, cold call, door knock, etc to find deals? What kind of sales and marketing levers can you pull?

3) While your building your deal pipeline, do what you can to build up your cash reserves and personal cash flow. That way when there’s a deal, you can pounce on the opportunity.

Real estate deals comes down to two things: Finding deals and Funding Deals.

If you can’t build up the reserves, can you partner with someone? Be a mentee under someone in the game, add value to them by being their assistant, or doing a task involved in the deal in exchange for equity. Maybe there’s a family member that wants to join in with you.

It’s possible, just have to get creative and put in a little sweat work. Good luck!

@Brendan M Brown You arent gonna get it all at once . Investment property with good return , a primary residence not costing an arm and a leg  ,start a family etc .

Pick 1 , work hard at getting there , then hit on number 2  and move up the ladder . 

Your first house is your first investment , if done right it becomes your first rental . You live in it , grab a few roomates , bank some cash , when a deal happens , buy your second property . 

I worked 12 hours a day for years to make bank , didnt start a family till I was in my late 30's . havent bought a new car in my life . Lived cheap for years , ( still do ) . 

My first house was expensive , rates were high , it was $51K in 1984 . Its now $300 K . I could barely afford it . Lived there 10 years , saved money , looked for years for a deal , one fell in my lap , I jumped on it , lived there for 10 years , its now worth 4 times what I paid . Leveraged those 2 and then bought 4 more . 

It takes time , sacrifice , and hard work . 

Easy ?    Not 

@Brendan M Brown

The good news:

A quick Zillow search of multi family properties in Rochester brought several properties under 200K.  A 3 unit for under 200K is a great starter home that will pay for itself while you live there and save up for the next one.  A 200K purchase price will require about 7K in down payment and you'll need reserves.  Many of these properties I saw had been on the market for several days, so seller contribution should cover the closing costs.  Rochester appears to be a great market.

The bad news:

I don't know your financial situation and I might be out of line, but if you haven't been able to amass 7K, you should reconsider getting into buying a house.  Things break.  People don't pay rent.  Mortgages cost money.  There's a right time to do things and buying property when you're not prepared can lead to financial disaster. 

If you have the money, go with FHA for a multi unit property for your first property.

Best of luck

Stephanie

Originally posted by @Russell Brazil :

Readjust your expectations. They are not abnormal....but it is the same feelings that every person at all points in history has thought...they think real estate is too expensive and too hard to acquire.  When I bought my first property, prices were literally half what they are today, and I thought the same things you are thinking today, that it is so expensive.  Real estate is always expensive.

This is a really good point. Perhaps you need to readjust your expectations and become more realistic. I would bet that most older successful investors here took a big risk on their first investments and probably couldn't afford to even do it.

For example, my first purchase was $88k, interest then was 15%. I was paying $200 mo in rent and the new loan payment was  $900+. I could NOT afford to do this, but did it anyway. It was a huge struggle and the house was almost lost a few times. I waited for appreciation to kick in, sold it for a huge profit and moved up ( I thought). I lost the next house and all the equity in it.

So there is no easy way, this is not a safe game, it is very very risky. Might not even be the game for you.....?

What do you do for a living? If your day job isn't real estate-related, is it possible for you to make a career change? If so, there are plenty of high-paying real estate-related jobs that could help you learn the business further, network with others in the industry, and potentially even help you find deals that make sense. 

@Brendan M Brown

Rochester can be a little weird with locations, so you'll want to be mindful of your target tenants with the sub 150k duplexes.  

Stephanie is right about Rochester being great.  I wish I had started with a duplex.  

-Make sure your financials are all set and well documented for your lender so that you can close quickly.  There are a number of great ones in town. 

-work with a realtor that does investment properties. Use their knowledge to help you select the neighborhoods that meet your near term goals.

There are plenty of opportunities out there, keep analyzing properties so you know a good opportunity when you see one. 

good luck!

@Brendan M Brown   you have a super advantage over older folks - time....  you have your entire life ahead of you and getting wealthy is (generally) a long term process.....  if I had the opportunity to do it all over again I would live as cheaply as possible and save as much as possible. work as many jobs as possible...  you get the idea... save save save until you have at least one downpayment and one years worth of expenses saved up.  Then you have the ability to buy and weather storms. 

The reason REI is so great is (generally) the prices trend upward... you just have to understand inflation happens and dont look at what was happening 5 years ago -it ids not important to your goals.

This will sound vapid, but one of the most important tools we each have is our ow minds and having positive self talk...  none of this "oh poor me" crap....  always look to see how any situation will advance your goals... stay positive , dont allow your mind to talk negatively. It actually works. 

Dont allow yourself to get pulled into dodgy deals just because you fear missing out. stay focuses and you WILL succeed. 

@Brendan M Brown

The hardest part is pushing the snowball up the hill.

For most people this takes years probably a decade of hard work, slogging it through, before the thing starts to really take off.

BP podcast makes it sound simple, and allot of people here make it sound simple as well. But they leave out the risks they took and times things didn't work out well.

Most people started with something they lived in just so they can lower their living expenses and save more money, rent out the rooms or the other unit so your paying allot less in rent and mortgage.

Allot of people did the toilet replacements and maintenance themselves in the beginning because they didn't have the money to pay someone else.

So find a decent deal and buy it, just get started.

It's easy to see people who are at the mountain top or clearly letting their snowball roll down that hill and miss the decade(s) of wading through the swap to get there.

All you can do is learn as much as you can from them and just try to roll your snowball a little further up the hill.

Your profile says you live in Rochester, NY is that your target market?  You can buy a dump two family in Rochester for well under $60K.  That's a mortgage payment of like $500 a month if someone will lend on it. Rent one side out to friends for $400 and get a roomate for $200 and your living for free and banking $100.  Use your savings from not paying rent to buy another property within the next few years and your on a role.  Lots of people would kill to be in markets where you could pick houses up that cheap!  In my market a dump two family is 4X that.

These no difference between your generations and others.  The numbers are the best they will be for years to come.  The question is how much are you willing to sacrifice to make this work for you.  Personally I have lived inside without heat or plumbing for months. floorings plaint insulations those were things I bought weekly as I could afford them.  This business isn't for the faint of heart and it's not a get rich quick scheme.  It takes a lot of hard work and a lot of money but overtime is very forgiving!  It kind of like fight club except you get to talk about it.