How should I get started?

Question

I am in my mid 20s and have been wanting to get into Real Estate investing for quite some time mainly so I can have a secondary source of income and not be so dependent on my day job (long term I want to try and do this full time) . The main issue I have is I don't know if I'm effectively evaluating potential properties in the DC/ Maryland/ Virginia area (I recently moved down to DC) especially in terms of vacancy rates, whats allowed in terms of STR vs LTR, etc... I have read The Book on Rental Property Investing, but would like some help and guidance especially on purchase my first property. I've got some decent savings and have access to more capital if needed, but would ideally like to start on the smaller side, prove the concept/ investment then grow.

Ty Ash · Answer

Hi @Alex Johnson!

I'd recommend that you keep/start learning! Podcasts, Books, and Mentors you find by networking.

I'd pick up a copy of Set for Life by Scott Trench as it has a good framework for financial independence, especially for a newer investor. Real Estate is just a part of your total financial picture so don't become too focused on just real estate. You'll want to learn more ways to increase your income now and in the future, keep your expenses low, and take the difference to invest into assets, real estate/business.

In my opinion, a house hack will probably be one of the best strategies for you to get started and take action while giving you a great return because of the low % down needed to get started. Once you get to this point, make sure to run your numbers for both while living in the house hack (lowering your living expense to less than what it would be to rent in your area) and post move out where you need to be at least break even after accounting for your monthly payment + maintenance, capex, vacancy, property management.

Best of luck getting started! Here for you with any questions you have along the way!

Nathan Gesner · Answer

1. Start with BiggerPockets Ultimate Beginners Guide (free). It will familiarize you with the basic terminology and benefits. Then you can read a more in-depth book like The Book On Rental Property Investing by Brandon Turner or The Unofficial Guide to Real Estate Investing by Spencer Strauss.

2. Get your finances in order. Get rid of debt, build a budget, and save. The idea that you can build wealth without putting any money into it is a recipe for disaster and the sales pitch of gurus trying to steal your money. A wise investor will not try to get rich quick with shortcuts. If you can't keep control of your personal finances, you are highly unlikely to succeed in real estate investing. Check out my personal favorite, Set For Life by Scott Trench , or The Total Money Makeover by Dave Ramsey.

3. As you read these books, watch the BiggerPockets podcasts. This will clarify and reinforce what you are reading. You can hear real-world examples of how others have built their investment portfolio and (hopefully) learn to avoid their mistakes.

4. Now you need to figure out how to find deals and pay for them. Again, the BiggerPockets store has some books for this or you can learn by watching podcasts, reading blogs, and interacting on the forum. There is a handy search bar in the upper right that makes it easy to find previous discussions, blogs, podcasts, and other resources. BiggerPockets also has a calculator you can use to analyze deals and I highly recommend you start this as soon as possible, even if you are not ready to buy. If you consistently analyze properties, it will be much easier to recognize a good deal when it shows up. Find Brandon's videos on YouTube for the "four square" method of analyzing homes and practice. It doesn't take long to learn how to spot a good deal.5. Study the market. You can learn to do this on your own or get a rockstar REALTOR to lead the way. I highly recommend a well-qualified REALTOR that works with investors and knows how to best help you.

6. Jump in! Far too many get stuck in the "paralysis by analysis" stage, thinking they just don't know enough to get started. The truth is, you could read 100 books and still not know enough because certain things need to be learned through trial-and-error. You don't need to know everything to get started; you just need a foundation to build on and the rest will come through experience and then refining your education.

You can build a basic understanding of investing in 3-6 months. How long it takes to be financially ready is different for everyone. Once you're ready, create a goal (e.g. "I will buy at least one single-family home, duplex, triplex, or fourplex before the end of 2019") and then do it. Real estate investing is a pretty forgiving world and the average person can still make money even with some pretty big mistakes.

Tim Johnson · Answer

If you have no personal or family reasons to prevent it, why not house hack to begin quickly, even if this means just renting out a room of a SFR? Helps you jump in with less risk as you're learning more and meeting up with other investors in your area.

Alex Johnson · Answer

Cheers mate! My biggest question with STR is how do you go about forecasting demand/ vacancy rate? I was thinking of either getting a place on the water or out in the country that I could try and AirBNB.

Drew Sygit · Answer

@Alex Johnson buy a 2-4 unit, live in one of the units and rent out the others.

You will gain a ton of experience!

Conner Olsen · Answer

Absolutely, shoot me a message and we can set up a time.

Aj Parikh · Answer

Hi Alex, I am also in the Northern Virginia area. I invest primarily out of state because of the high prices in our area. If out of state investing is something you want to explore, feel free to reach out.

Robin Simon · Answer

great advice here

Alex Johnson · Answer

Yea I thought about it but the Fiancé isn't up for that and multifamily homes are too pricy $1.5m+

Joshua Messinger · Answer

I would recommend using Pricelabs to calculate the demand/vacancy rate. My team and I use this on a daily basis as it allows you to make comp sets based on comparable Airbnbs which will give you the most accurate rates on the demand and occupancy. Hope this helps!

How should I get started?

Most Popular Reply