Hey BP community, I've gotten extremely lucky over the past year or two in the crypto space and am looking to diversify my portfolio into more "real" assets. Purchasing real estate (likely for rentals) is the market that I've been leaning towards getting into the most. But besides somewhat blindly purchasing my first house I'm pretty much clueless here :)
I'm looking for any tips, tricks, advice, incredible threads in the forum that I can use to further research the space. My primary goal is to build up a stable of rental properties, and continue to grow those properties with either the equity gained after sale or cash that comes from them. I also am currently in AZ, with my eyes on CO, but wouldn't necessarily be averse to purchasing in other locations.
My current financial situation: - Income is up and down as I quit my full time job to become essentially a crypto day trader late last year. I'm conservatively planning for my income to be around 90-100k annually going forward.
- Assets are:
- 750k-1 million that I plan to use to invest in real estate with
- Current house where I have around 125k-150k in equity
Have you thought about passively investing in real estate syndications? In my experience, it is difficult to passively invest in active real estate - i.e. owning the properties fully yourself and hiring a property manager. The first step might be to decide how active you want to be and then decide what type of investments from there. Do you want to spend all of your time managing assets and properties? If yes, invest actively. If you want to hire an asset manager to handle the PM and the day to day property needs, then think about passive syndications!
Well having upfront capital is great and it does allow you to have an opportunity of doing both short term and long term investing.
1st things 1st, get a good realtor. Research the market you are targeting, whether its buy & holds or flips.
Another thing you want to look at is looking into using your capital to obtain more capital. It's good to keep a certain number of your own in reserves.
Hey BP community, I've gotten extremely lucky over the past year or two in the crypto space and am looking to diversify my portfolio into more "real" assets. Purchasing real estate (likely for rentals) is the market that I've been leaning towards getting into the most. But besides somewhat blindly purchasing my first house I'm pretty much clueless here :)
I'm looking for any tips, tricks, advice, incredible threads in the forum that I can use to further research the space. My primary goal is to build up a stable of rental properties, and continue to grow those properties with either the equity gained after sale or cash that comes from them. I also am currently in AZ, with my eyes on CO, but wouldn't necessarily be averse to purchasing in other locations.
My current financial situation: - Income is up and down as I quit my full time job to become essentially a crypto day trader late last year. I'm conservatively planning for my income to be around 90-100k annually going forward.
- Assets are:
- 750k-1 million that I plan to use to invest in real estate with
- Current house where I have around 125k-150k in equity
- 60ish k in 401k
- no major debt besides the house
Any help would be greatly appreciated!!
- Jacob
I'm up north of you a couple of hours. Either market is good. Why you would invest out of state is unclear.
Anyway, first I'd meet with my CPA and find out what my tax liability is. Then I'd make a decision as to whether I want long term rentals, short term rentals, fix & flip, self storage, etc. Someone experienced with real estate, income producing properties, asset protection and taxes can help you here.
And, I applaud you. I've never seen "crypto" and "convservatively" in the same breath. Your comment "a crypto day trader late last year. I'm conservatively planning". These are two different realities.
Also find a good CPA as mentioned before but if you sold a position in crypto then you'll want to see if you can invest in ways to reduce capital gains taxes for yourself like opportunity zones.
Have you thought about passively investing in real estate syndications? In my experience, it is difficult to passively invest in active real estate - i.e. owning the properties fully yourself and hiring a property manager. The first step might be to decide how active you want to be and then decide what type of investments from there. Do you want to spend all of your time managing assets and properties? If yes, invest actively. If you want to hire an asset manager to handle the PM and the day to day property needs, then think about passive syndications!
Sounds like you're in a good position. I'd suggest starting with learning more about the REI space. Spend some time listening to podcasts and reading books on the fundamentals. Simultaneously start attending local real estate networking events. Building your knowledge will help you understand what a good deal looks like. Attending local meetups will build your network of realtors, bankers, etc..all things you will need to buy your first deal. That process should take 3-6 months. Then you will be much more confident to pull the trigger when a good deal presents itself.
Hey @Jacob Setzer, welcome to BP! As others have mentioned, if you are truly clueless about the subject, reading is the best thing I can recommend. Whether it's the forums, many of the books through BP, blogs, or whatever your preferred source, immerse yourself in as much knowledge as you can.
As @Sierra Johnson mentioned, a good Realtor is a great resource to have. Not only can they help you navigate the market, but if they are investing-savvy themselves, they can help guide you in that space as well. Finding your preferred market, and researching it on here can be a good start to find the right agent.
Additionally, don't be afraid to invest OOS. There are certainly benefits to investing locally: it's close, YOU know the area, you can physically see the property, etc. However, the biggest disadvantage of investing locally: if it doesn't meet your goals, you have no other options. With non-local investing, you can choose any market in the country to focus on. When going OOS, I can't emphasize enough the importance of a good agent.
You have the rest of the year to figure out what you're going to do that could help minimize your tax hit on your gains. But the sooner you do it, the more benefit you'll get from it.
It's sooo important to learn the right way to invest in real estate. You do not have to join an expensive mentoring program. But you do need to read and ask questions.
If you have any questions about long term rentals, which is a great way to build wealth and great for tax write offs, feel free to message me. That's my area of investing (I can answer some questions on other areas, but I'll probably be hit and miss)
Hey BP community, I've gotten extremely lucky over the past year or two in the crypto space and am looking to diversify my portfolio into more "real" assets. Purchasing real estate (likely for rentals) is the market that I've been leaning towards getting into the most. But besides somewhat blindly purchasing my first house I'm pretty much clueless here :)
I'm looking for any tips, tricks, advice, incredible threads in the forum that I can use to further research the space. My primary goal is to build up a stable of rental properties, and continue to grow those properties with either the equity gained after sale or cash that comes from them. I also am currently in AZ, with my eyes on CO, but wouldn't necessarily be averse to purchasing in other locations.
My current financial situation: - Income is up and down as I quit my full time job to become essentially a crypto day trader late last year. I'm conservatively planning for my income to be around 90-100k annually going forward.
- Assets are:
- 750k-1 million that I plan to use to invest in real estate with
- Current house where I have around 125k-150k in equity
- 60ish k in 401k
- no major debt besides the house
Any help would be greatly appreciated!!
- Jacob
Hi Jacob. I know what I would do, but I'm quite comfortable with leveraged debt. I would leverage the $750k-$1M with financing, and purchase approx $3M-$5M (1-5 SFH's) of STR's and you should be able to generate at least $180K profit per year + the crazy appreciation we are seeing right now. In my area, I'm doing this left and right for my clients and the numbers will likely be closer to $200k+ profit per year, when we're done.
Hey BP community, I've gotten extremely lucky over the past year or two in the crypto space and am looking to diversify my portfolio into more "real" assets. Purchasing real estate (likely for rentals) is the market that I've been leaning towards getting into the most. But besides somewhat blindly purchasing my first house I'm pretty much clueless here :)
I'm looking for any tips, tricks, advice, incredible threads in the forum that I can use to further research the space. My primary goal is to build up a stable of rental properties, and continue to grow those properties with either the equity gained after sale or cash that comes from them. I also am currently in AZ, with my eyes on CO, but wouldn't necessarily be averse to purchasing in other locations.
My current financial situation: - Income is up and down as I quit my full time job to become essentially a crypto day trader late last year. I'm conservatively planning for my income to be around 90-100k annually going forward.
- Assets are:
- 750k-1 million that I plan to use to invest in real estate with
- Current house where I have around 125k-150k in equity
- 60ish k in 401k
- no major debt besides the house
Any help would be greatly appreciated!!
- Jacob
Solid strategic move. Network your a$$ off. Leaving a job for less guaranteed income is going to prove difficult for financing. Nothing makes a bank feel safer than a w2.
Hey BP community, I've gotten extremely lucky over the past year or two in the crypto space and am looking to diversify my portfolio into more "real" assets. Purchasing real estate (likely for rentals) is the market that I've been leaning towards getting into the most. But besides somewhat blindly purchasing my first house I'm pretty much clueless here :)
I'm looking for any tips, tricks, advice, incredible threads in the forum that I can use to further research the space. My primary goal is to build up a stable of rental properties, and continue to grow those properties with either the equity gained after sale or cash that comes from them. I also am currently in AZ, with my eyes on CO, but wouldn't necessarily be averse to purchasing in other locations.
My current financial situation: - Income is up and down as I quit my full time job to become essentially a crypto day trader late last year. I'm conservatively planning for my income to be around 90-100k annually going forward.
- Assets are:
- 750k-1 million that I plan to use to invest in real estate with
- Current house where I have around 125k-150k in equity
- 60ish k in 401k
- no major debt besides the house
Any help would be greatly appreciated!!
- Jacob
Hey Jacob,
Congrats on doing so well, thats so awesome man!
There are endless possibilities to consider here. You could start investing in real estate actively, some people are really into the house hacking and BRRRR method. These take up a lot of bandwidth, which you probably have some of being a day trader.
You could also invest in real estate passively with a syndicator. You would effectively trust that company to be stewards of your capital and invest it in properties. Your biggest hurdle would be vetting 5-10 companies that are in the markets you believe in and finding out which one you most align with. This would be a thorough process where you comb over every possible detail of their business plan. You'll find you align with some, and others you dont!
Good luck and feel free to message me with any questions :)
Metro Detroit offers many options for meeting the 1% Rule and relatively high ROI.
Follow our "Deep Dive" series we're doing about Metro Detroit cities and City of Detroit Neighborhoods: https://www.biggerpockets.com/...
The two most common mistakes we see investors make, over & over again, are:
1) Not understanding and running their own ROI numbers
2) Not having a clear understanding of the type of asset a property is
In our opinion, your best team member should be your Property Management Company (PMC). They have to deal with any property you buy every month until you sell or terminate them. Everyone else on your team will be transaction-based and not really involved after a purchase.
We're in the Metro Detroit area, so you may want to follow our blog here on BP, but at least read the following posts:
1) Learn to "Maintain to the Neighborhood", not your personal standards
2) Tenant-Proof everything you can
Hard surface flooring, not carpeting (too easy to trash)
Same basic paint for everything
No garbage disposals for them to break
Only spring-type doorstops also with plate on the wall
Glue rubber mats under sinks to prevent water damage
Sheet aluminum on walls around stovetops, for easy grease removal
Towel racks - screw 1x3 to wall studs, then screw rack to that
Install low-profile downspout ext, not aluminum that always disappear
Plan on cleaning gutters and leaves up in the fall as tenants won't
Avoid garage door openers
3) Have a great application screening process:
Check credit for evictions & convictions, utility collections
Focus on employment/income stability
Require bank or debit card statement - you'll be surprised what they spend their money on!
Make surprise visit to their current home to see how they treat it - that's how they'll treat yours!
Deliberately have a few challenges in your screening process - it will weed out "entitlement mentality" problems
4) Allow payment plans, but create system to track when payments due, so they don't keep falling further behind
You will need to call them on due dates or they will fall further behind
Be prepared to give a strong NO when asked if you will change rent due dates to "make it easier" for tenants to pay rent based upon their SSI or paycheck dates. This shows total lack of budgeting and is a sign they will only fall further behind with more excuses.
5) Have a defined eviction process, but allow 3-5 days of flexibility for inevitable slow-pays.
6) Find handymen that live in an area only 1 Class higher than your property. Sending a Class A handyman to a Class C or D property will waste your money. Send Class B to C and Class C to D. They will also get along better with the tenants.
Hey @Jacob Setzer! Congrats on all your success in the crypto space!! So exciting. Definitely smart for you to diversify into some hard assets too for more long term stability. As everyone on this thread has already mentioned - you need to spend a lot of time educating yourself before diving in - being here on BP is a great way to get started. You should be listening to podcasts, watching YouTube videos, going to meetups, attending virtual webinars, following other investors on social, join FB groups, and networking like hell :)
Like @Collin Chan and @Lori Williams mentioned - definitely talk to a CPA immediately and figure out what you tax burden is so you can figure out the best way to shield. A lot of syndications do cost segregation analyses which accelerate depreciation and allow you to take more write-offs sooner...that combined with the fact that bonus depreciation is still in play can lead to some hefty write-offs in year 1 - think 50% paper loss (if you invest $100K you get a $50K write off in year 1).
Like @Brock Mogensen mentioned, syndication may be something for you to consider if you are looking for more passive ways to invest. In summary, syndication is when people pool capital and resources to purchase assets and everyone shares in the profits. There are two groups: GPs (general partners), who are experienced real estate investors and handle all the work - finding the deal, coming up with the strategy, implementing it, etc - and there are LPs (limited partners), who are passive investors that contribute capital to fund the down payment, closing cost, renovation and reserves, and get paid a return in exchange for their investment. So basically you would need to find and vet an experienced real estate investor who has a track record of success and trust them to make you a return, but you wouldn't be doing any of the heavy lifting yourself (besides making sure the person you are investing with is legit and making sure the deal/s you are investing in meet your investing goals) - no finding deals, being a landlord, managing construction projects, filling properties with tenants, handling maintenance issues - all that falls on the GP team. Even if you do want to be an active real estate investor, investing passively can be a great way to learn from other experienced investors. You will learn a ton by attending their investment webinars, digging into the underwriting, asking them lots of questions, getting access to their financials and management reports. Just one avenue for you to consider - and it doesn't have to be all or nothing - you can invest in syndication and also buy rental properties yourself...that's what I personally do!
First, consider your real estate strategy. Do you want to invest in c/d areas (more work, but more return) or a/b areas (less work but less return). Also, are you going to manage or have a pm? I recommend managing to start, then you can outsource Once you understand the business. Once you have a strategy, start finding areas you want to invest in. I recommend buying close to home first to learn the business. Once you know where you are buying, then find a invester friendly agent and make some offers (assuming the numbers work).
Hi @Jacob Setzer Congratulations! That’s wonderful. Unless you want to dive into real estate full time and become obsessed (like many of us), I’d follow @Jim Pfeifer’s advice above and go passive. Spend the time to due diligence on potential sponsors though!
I’d you go this route, I’d get @Brian Burke’s BP book The Hands-Off Investor as well as visit Left Field Investor’s, which is a great site to learn more and review some great investment opportunities. Happy Investing!
