How can I get started - No student loans or home or auto payments

Question

Hey everyone, I'm really thankful this platform exists. My parents paid for my school. I have minimal debt, just  CC usage for a medical procedure for my child. I'm in my early to mid 20's. I would a traditional 9-5 and want to work towards not working a traditional job within 5 years. SO what steps can I take to purchasing a rental property and break into that market. Thanks in advance!

Eliott Elias · Answer

Take advantage of your FHA and buy your first rental with 3% down.

Nathan Gesner · Answer

You need to pay off the debt first. At the same time, you can find some side hustles, work extra hours, and sacrifice to save up while educating yourself a little and preparing for the jump. You need financial discipline, a little money, and a little knowledge to start from a strong foundation.

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.

Troy Green · Answer

To start you'll need to build your credit in order to qualify for a loan. From there you'll need pre-approval from a qualified lender. As someone said earlier make sure you do your research on the area you want to invest in. I recommend buying 20-30% below market medium to help protect yourself from a recession (like the one we are currently headed into). Another option which I'm sure you've heard of is an FHA loan where you can put down as little as 3.5%. If you go this route I highly recommend buying either a duplex, triplex, or quadplex. Remember quadplex and under is still considered a residential home (everything larger becomes commercial). You can then live in one unit and rent out the others to pay for your mortgage or even cash flow. When the time comes and the rates lower you can refinance, rent out the unit you have been living in, and then use the cash out refi to purchase your next investment home. Hopefully this helps

John Mathew · Answer

Hey Victoria! I know buying a rental property can be as exciting as buying your own home, but that doesn’t mean that you should rush before you have done proper research. Though you don’t need to be an expert in real estate investments or even in real estate, you have to do your homework properly. Start answering some simple questions to determine the best investment property for you:

What kind of investment property do you want to buy? If it’s your first time buying a rental property, start small and simple. Look for an apartment, a duplex, or a small apartment building. Buying a large income property sounds tempting because of the expected higher profits, but it is also more costly and will require more work. Remember to not overwhelm yourself by starting bigger than you can manage or afford. Real estate investing is to a large extent learning-by-doing. After you have learnt the basics of it and have started making profit, you can think about expanding your rental property business by either replacing your first rental property with a bigger one or buying a second investment property.

Dave Skow · Answer

@Victoria Avelar-  1)  locate a lender and  complete a  free  loan pre approval  for  whatever  scenario you want  2) this will  help  you learn and  become  familair with the  financing  process and  help you  understand what  steps  you need to take (  saving a  down payment /   qulaifying  details  etc )

Lou Della Fera · Answer

Hey Victoria - I'm in a similar situation and can relate to just starting out. I've found that putting myself around people who have already been successful in REI has been a HUGE help. I've done this by using my personal network to connect me with other real estate investors. I also suggest trying to be a sponge and soak up all the information you can in this beginning period -reading, watching webinars and videos etc. Really anything you can do to put yourself around real estate investing information. I really like the book "The Millionaire Real Estate Investor" by Gary Keller. I've found it's easy to read and extremely informative for those of us just starting out. Hope that's helpful!

Victoria Avelar · Answer

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