How does one actually “start”?

[Christine Krevalin]

Hi! I’m Christine. 
I need help. I decided almost 10 years ago that I wanted to become a REI. My grandfather had multiple rental properties and at a young age I understood the benefits and was intrigued. No sooner had I made my decision, I learned of my husbands infidelity and began the long, ugly divorce process. Once the dust settled this is what I was left with: single, marital house foreclosed, homeless, four kids under 10, jobless and flat broke. No 401k, no cash or assets anywhere.

Through these past ten years, I moved myself and my kids in with a friend, found a job (during ex’s affair and divorce I was in school to become a registered nurse), found a rental property to rent, then worked on my credit and saved for a house.

In 2019 I bought a house! I was so focused on getting a home for me and my kids the REI plan was on hold but let me tell you, when I was looking for a home to buy, I was so tempted to buy a multi-family. I even looked at a bunch. Unfortunately, with four kids, I struggled finding something suitable. In the end, I bought a single family colonial. Life was good… until covid hit and some various health conditions left me out of work, depleting saving and racking up debt. My credit was 720 and is now low 500's.

Here is what I have done so far to rectify this mess:

I am currently paying a law office to assist me with settlements or payoffs to these creditors and medical bills.

I am not using credit cards.

I can save $1k a week from my normal pay. If I work one extra shift a week (4, 12 hour shifts instead of 3) I could save closer to $2k per week depending on how much is taken out for taxes. 

I am educating myself, sticking my neck out asking questions, and networking.

So where do I start? Do I just save and then start once I have enough money saved? Do I speak to a financial advisor about these details and come up with a plan of action or something? Do I stop looking at real estate until I have sufficient cash on hand? 

The small multi-family properties in my state, Connecticut, are, well, a lot. 2 unit homes are closing around $280-$300k. I feel like this is an impossible climb. I do not want to sell my current home. I can’t refinance to take out the approximate 100-110k equity I have in it- (lousy credit).

I feel like a deer caught in headlights. I don’t even know what to really ask help for so any insight, advice, tips etc is welcomed.

Oh, I am 46, I have zero retirement saved. I know I’m a mess and a bit embarrassed posting here exposing myself to all of you. I’m determined to changing my financial situation. I will not be that 80 year old nurse still working. Please be kind.

[Cory J Thornton]

@Christine Krevalin - Any of my thoughts below are not meant to be prescriptive especially since we only know a small part of your story. Hopefully something will lead to an idea, then an action item, and help you get started. 

1) DSCR loans look less at the investor and more at the investment. From a buisenss standpoint, if the property makes sense, then the focus on someone's personal financial statement is reduced. I wont say eliminated, but it may be a way for you to do deals while your credit is healing. Banks hate people without a W2 income, which I have not had since 2019, and we were able to use DSCR loans to get started.

2) If your grandad is still around, tell him what you just told all of us and see what he says. If you are willing to take over one of his headache properties, then maybe he would owner finance it for you. If your grandfather has passed, did the houses go to family? 

3) Who do you know that is actively investing in real estate? Do they know your goals? 

4) Most financial advisors I know focus on market based products, not real estate. If you talk to one, just know that they are likely incentivized to get you to invest in some index fund and may not be looking at how to help you get to your end goal of being an REI.

5) Involve your kiddos in the process. If they are old enough, have them read Rich Dad Poor Dad. As a family, try to become aligned around the idea that you are busting out of the cycle that perpetually keeps everyone working and no one building wealth. If the kids are involved not only will that be an awesome education for them, but it may make next steps a little easier with the hole crew understanding the end goal. My wife and I have four littles ages 8 and under. They are all very involved in our rental business. On father's day last year, the girls, without their mom knowing about it, pooled the change they had and gave it to me to go buy another rental. Even if I can't built the portfolio I want to build, I am trying to make sure my kids love the investing process and are equipped to build their own one day. 

6) If you do not have people in your circle who invest actively in real estate, then see what you can do to make some new connections. 

7) Time is our most valuable resource. When actively working and taking care of a family, that resource is limited. If there are things taking your time that are not in some way moving you towards your goal, it would be worth evaluating if the time drain can be removed. 

8) You have an amazing W2. That's a great high demand foundation to start with. Is there something you could do to leverage your skill set and increase your pay, without it taking more of your time? 

46 is an awesome time to start building wealth. If you continue to focus on educating yourself, driving your income, protecting your time, and building investor relationships, I imagine Christine 20 years from now will have an awesome story to tell. 

Best of luck! keep us all posted on your learning and investing journey. 

[Jon A.]

@Christine Krevalin You've certainly been through hard times. Kudos to you for keeping your spirits up.

What stands out most to me in your post is the part where you say you don't want to sell your home. I assume that means you also don't want to move from your home (i.e. convert it to a rental property). There are investors who come from or have access to money, and so don't have to make great sacrifices to get started. But every investor I know who didn't start out with some advantage - myself included - made great sacrifices to scrounge up the capital to get started.

Your single family home is comfortable, I'm sure. But for someone who is concerned about improving themselves financially, it may be holding you back. Owning a single family certainly makes more financial sense than renting, but your house is a liability, not an investment. Or, at least, it's a losing investment bc it requires that you, the owner, cover all of its costs.

If you stay in your single family home, you will have to come up with a 25% down plus closing costs for an investment property. According to your numbers, that's more than $75k. If you sell or convert your home into a rental, you can purchase a primary residence with 5% or $15k down plus closing costs.

By far, the hardest part of my real estate journey was saving up the initial $30k I needed for my first property. It took me six years. (Much more than six years if you count the years I spent paying off student loans before I even saved a dollar.) Everything after that $30k has been much easier. Not easy but easier.

Barring some gift from your grandfather's portfolio, how long it takes you to get started will depend on how uncomfortable you're willing to get.

[V.G Jason]

Honestly, I'd feel absolutely reckless telling you to go into REI. And you're going to the wrong forum, you need help with financial planning and management. You'll get advice to go put 3.5% down FHA on something or DSCR loan, or what not. That's not the recipe you need right now. That's a disaster brewing.

And don't feel embarrassed. You've had a tough last decade or so, you need to get out of debt, have an emergency savings, and prepare for retirement in it's most liquid form first then can diversify into RE assuming you can hold that long. 

Given you're 46 with zero retirement and I'm presuming limited to no savings? I do not need to know how much you make, but the first thing I'd do is rack up about 4 months of worth of pay in a savings account before anything else. After that, I would contribute 20% of my pay to retirement(that means 401k and IRA) and continue to put 5% monthly into your savings account. I usually would tell someone 10-12%, but you're 46 with zero. You need to play catch-up. After that's done for some time, you can elect to make the choice to save your kids college funds or put funds aside for investing. If you're investing, I always recommend liquid assets first but that's your choice. Personally, I've set aside funds for my kids college's but I've learned that's each to their own.

I won't be reckless enough to tell you to go get leveraged on a property, without any footing. That just screams for a disaster to where you'll have to sell any asset you have to pay for any issue. Also, credit cards are not the devil just abusing them are. It's not plastic money, do not spend what you do not have.

[Nathan Gesner]

Welcome to the BiggerPockets forums!

You have to get your finances in order first. Invest from a position of strength, not guesswork or panic about your future. No debt, a personal emergency fund to cover 3-6 months of living expenses. Then you can start saving for investments. Start with a strong foundation and you are more likely to succeed.

I started getting serious about investing at age 46. I am now 53 with 33 rentals, 135 storage units, and could live a very comfortable life without ever working again. I'm in a market where the median price of a single-family is $370,000 so it can be done. It will be a little harder now that the market has changed, but there are still opportunities. 

Take this time to get your finances straight and educate yourself by reading books, listening to podcasts, interacting on the forums, and networking with investors in your area. Go to NETWORK at the top of your screen and you can search for other investors and investment groups in your area. You can also check meetup.com or search facebook for real estate investment groups, clubs, or meetings in your area.

[Nate Sanow]

For starters: good job. You seem to be doing right by your kids, working hard to provide, and that is commendable. 

I think there's a balance to find between "going for it" and taking your time. It seems like YOU aren't sure which one you really WANT. I don't think your personal finances have to be perfect. But they need to not feel paralyzing. Investing is not pure ROI, it can so often be full of loss and step backs. YouTube and Instagram and even a quick highlight from the BP podcasts can show the best parts and not the parts where contractors run off with money or crack heads break into your "investment " property that is now a loss…

I’m not at all discouraging pulling a trigger but I am saying, take your time , take a breath, you’ve got this, it will work out soon. Get some reserves. 6 months for personal and another 6 for business. Then consider an acquisition. Also, look for a partner. I have heard good things about the “InvestHer” meetups and maybe there’s another woman in your area who wants to do a flip with you. Or a rental etc. (I’m not saying you can’t partner with a man, but just a thought given the divorce, and I know a few ladies local to me killing it in those groups). Partnerships are not as rewarding as solo adventures but they are also not as risky. Find the right one and you don’t need to bring money or credit to the table.

Good luck. 

[Steve Vaughan]

You've certainly been through a lot, Christine.  Thank you for sharing.

I'd do Dave Ramsey baby steps 1 -3 and work at my great w2 as much as possible.

1.  Save $1000 as an emergency fund.

2. Knock out all consumer debt. Try to settle old debt for $.20 to the dollar.

3. Save 3 months of take home income as further reserves.   Then,

4. Begin to invest: a) 401k up to match , then b) max Roth IRA (index funds) then, c) househack with MIL or ADU (luxury househack vs plex-ville. What I've had for 14 yrs).

[Justin Fox]

Get your savings/debt in order like @Nathan Gesner and @Steve Vaughan mentioned and then at least get your 6,000.00/year into a good fund in a Roth IRA.

Nothing wrong with using CCs to make money back on things you were going to buy anyway.  We make between 1.5% and 5% on anything and everything we buy now.  You can get the Capital One Walmart card and get 5% back on your groceries through grocery pick-up.  2% in-store.  The Capital One Savor card is 4% back on food and entertainment and 3% back on streaming services.  Sparks is 2% back on every business purchase and Quick Silver is 1.5% on every purchase.  Amazon card is 2% back on gas and 5% for amazon purchases.  Right now any savings you have will get a ~3.30% return in a high-yield savings account.  Budgeting is a must though.

We started young but our first 'investment' was just paying our home off.  Once we were ready to move, it was our first rental with zero leverage.  After everything went okay and renting wasn't the super risky/scary endeavor everyone told me it was (with appropriate screening that is), we leveraged it and built two more rentals.  Harvey came, wiped out 2 of our 3 rentals and our personal home.  So, it's not always sunshine and rainbows.  However, we persevered, got them back in order and sold.  We've build a multitude of specs (on little mountains haha!), a couple customs and have acquired more rentals/land since then.

The best of luck to you!

[Carlos Ptriawan]

Quote from @V.G Jason:

Honestly, I'd feel absolutely reckless telling you to go into REI. And you're going to the wrong forum, you need help with financial planning and management. You'll get advice to go put 3.5% down FHA on something or DSCR loan, or what not. That's not the recipe you need right now. That's a disaster brewing.

And don't feel embarrassed. You've had a tough last decade or so, you need to get out of debt, have an emergency savings, and prepare for retirement in it's most liquid form first then can diversify into RE assuming you can hold that long. 

this is very sincere advice.

Don't enter this field if you dont have substantial savings as the surprise is huge and a LOT.

[Jim K.]

@Christine Krevalin

Christine, please have a look at this photograph:

I hope it gives you some comfort during this difficult time. It's given me immeasurable comfort over the years.

Congrats on getting the loser you were married to out of your life. I really think you can't put a value on that.

You've received a lot of advice here. It may seem overwhelming. So what I would do if I were you is to take a small step to start with. Commit to reading at least one book on personal finance every year. That is the first piece of advice Dave Ramsey (who's been mentioned in this thread by @Steve Vaughan) offers. Message boards like these are great, but the most substantial and vetted advice you'll get on real estate investing is from books as well. I hope this helps.

[Bruce Woodruff]

@Christine Krevalin Don't feel bad, a lot of us have been through what you went through.

1) I would stay away from credit cards.

2) I would absolutely save up as much as you can as soon as you can.

3) Do not start off by being focused on multi-family, look at anything and everything, especially single family fixers.

4) Keep taking care of your family, they're all you have when the SHTF

You can do this, stay on the forum and ask away...!

[Brittany Minocchi]

@Christine Krevalin it sounds like you're moving in the right direction! My first piece of advice would be to cut out the law office, save your money and reach out to the creditors yourself. Been there, done that. Back in the day as a teenager, my husband had some health issues and ended up with bills in collections since he didn't have health insurance. We called each agency and negotiated much lower payments. If you can commit to paying a lump sum instead of setting up payments, you might be able to get a bigger reduction.

If you choose to go this route, you should ask for a pay to delete. Just because you pay off a bill in collections doesn't mean it won't remain on your credit, but if you ask for this letter, there's a chance you can get it wiped off. Also keep in mind that you're closing an account and while it's great to pay off those debts, that will have an effect on your credit score as well. This whole process will take some time, do not be in a rush. 

There are different types of loans depending on the situation. DSCR loans, for example, look at the cash flow of the property and don't require income documentation from the borrower like you'll find with a traditional loan. However, most lenders will want to see a score of 640 for this loan, and even then, your rate and terms won't be great. 700-720+ is ideal. These days, you'll likely need at least 20% down and they have more fees than a traditional loan.

You can look at conventional financing, but your income, DTI, credit, job history, etc. will all be considered. For a single family, you'd need 15% down. MFHs 25%. You can't get an FHA loan on an investment property unless you plan to move into a MFH and live in one of the units, then you can get away with FHA and 3.5% down. Don't forget to account for title fees, inspections, appraisal and other closing costs on top of down payment. I recommend that people have at LEAST another 5% for closing costs. It could be higher, could be lower, but that's a good starting point.

Credit cards aren't bad IF you use them properly. They are a great way to help build your credit back up. I usually tell people just to use it for a necessity, like gas, and then pay it down or off. To avoid paying interest, you could split it into 2 payments and still show a balance on your credit reports. For example - if you have a balance of $50, you can pay $25 before your statement end date. Then when you get your bill for the remaining $25, pay it off. This way, a $25 balance will be reported instead of $0, and it shows that you are able to manage your debt instead of always holding a $0 balance and you aren't charged interest.

Your income is good - work on a personal emergency fund and an REI fund. Don't wrap up all of your money in an investment and put yourself and your kids in a tricky situation.

Save up, get your accounts settled and work on repairing your credit. You don't want to buy a property and kick yourself because your tenant didn't pay rent, and now you can't make the mortgage payment. Or worse, your own mortgage payment because all of your money is wrapped up in your investment. Things can and will go wrong, you just don't know when, so preparation is vital. I'm happy to discuss anything I've mentioned in more detail if you need me to, otherwise good luck on your journey! 

[V.G Jason]

Quote from @Justin Fox:

Get your savings/debt in order like @Nathan Gesner and @Steve Vaughan mentioned and then at least get your 6,000.00/year into a good fund in a Roth IRA.

Nothing wrong with using CCs to make money back on things you were going to buy anyway.  We make between 1.5% and 5% on anything and everything we buy now.  You can get the Capital One Walmart card and get 5% back on your groceries through grocery pick-up.  2% in-store.  The Capital One Savor card is 4% back on food and entertainment and 3% back on streaming services.  Sparks is 2% back on every business purchase and Quick Silver is 1.5% on every purchase.  Amazon card is 2% back on gas and 5% for amazon purchases.  Right now any savings you have will get a ~3.30% return in a high-yield savings account.  Budgeting is a must though.

We started young but our first 'investment' was just paying our home off.  Once we were ready to move, it was our first rental with zero leverage.  After everything went okay and renting wasn't the super risky/scary endeavor everyone told me it was (with appropriate screening that is), we leveraged it and built two more rentals.  Harvey came, wiped out 2 of our 3 rentals and our personal home.  So, it's not always sunshine and rainbows.  However, we persevered, got them back in order and sold.  We've build a multitude of specs (on little mountains haha!), a couple customs and have acquired more rentals/land since then.

The best of luck to you!

Damn, that's rough.

[Jeannie Pitt]

Hi Christine. Just wanted to reach out and say hello. I just posted my very first thread myself and I resonate with a lot of what you said here. And some of the answers/advice given were helpful and encouraging. I had to chuckle when you said you weren't really sure even what to ask for help. Same same. I just sort of threw myself in and hopefully can make some forward progress with some advice. If you are as determined as I am to jump into this and change the course of your life and your kids lives, I'm positive you'll get there and I can't wait to hear your story in a few years when you own a bunch of investment properties! We can do this, girl. High five! 

[Chris Allen]

@Christine Krevalin, I think everyone here has given some pretty solid advice. I am in a completely different stage of life and situation compared to you, so I can't imagine everything you have had to go through. But here are a couple of recommendations. 

1) I am a nurse as well, you have a great job with great potential. 48hr/wk is not that bad, but with our line of work, you can get burnt out quick if you are not careful. Find ways to increase your pay (OT vs different position/job). Really take advantages of your working relationships. You are surrounded by lots of high-income earners. 

2) It sounds like for you, the Dave Ramsey approach might be a great starting point. So go through the baby steps, maybe do Financial Pease University. But realize that Dave is more for savers and passive investors, not for entrepreneurs. 

3) Few Book recommendations. @Scott Trench's "Set for Life". "Lifeonaire" by Steve Cook are great books. Set for Life is a great manual to how to be financially intelligent, and Lifeonaire is a great book to maybe change how you look at "financially secure" and retirement. 

4) If investing in real estate is something that you feel you are truly passionate about, then find a way to get involved. I would say you should have your own financial house in order before using anyone else's money (banks or private), but that does not mean you can't get involved another way. Go to networking events/meetups, keep listening to podcast on real estate and finances, talk about it. 

[Cliff H.]

Hi @Christine Krevalin you’ve taken the first step in reaching out here. Having spent many years investing (and both winning and losing my shirt) in Connecticut I would never go back. I’m sure there’s plenty of folks out there who can share their success stories as a counter-narrative, but my experience is that that your impression of multi families in the state is 100% correct: over-priced, poor appreciation, and minimal returns. If I took what I invested in CT and it put it into either Boston or NYC during the same time, my returns would have been 5x. Happy to share an insights from my XP there if it is at all helpful, so please don’t hesitate to reach out and connect here on BP. The myth about buying in your backyard keeps countless people from moving beyond the fools gold of small M/F homes atop 3-5% down payments to real wealth-building investments. Take field trips to other areas and compare prices to what you see back home. It’s eye opening and will help build a pricing instinct that will guide you well in the years to come. 

As anyone here will tell you, there's plenty of ways to get started in real estate that do not have to involve your own money or even your own investments. Spend some time finding and working with other investors. See how they work and think. Take the good and bad and choose for yourself how you'd like to invest. Learning anything as complex as real estate takes an enormous amount of time and effort and active participation. There's nothing passive about it. I spent years leasing out apartments for an investor nobody's ever heard of because he was too busy doing the work versus showboating on REIA speaker circuits. That experience was invaluable and I would likely have been way better off had I listened a bit better to what this individual shared with me in those early days. Instead I jumped in before I was ready at the worst possible time.

Once you get more comfortable with what you’re seeing, consider partnering with an experienced, trusted colleague on a deal. Never mind the siren’s call of Lone Ranger sunset successes with your first property. Everyone screws up on that first property. It takes time to build processes you need to do well. That’s no different than the hard work and training you’ve invested into education around nursing. 

Be patient with yourself and your education. There’s no rush to reward that did not incur greater penalties along the way, especially in this market. 

Hope this helps and glad to have you here. Please don’t hesitate to reach out to any of the incredibly knowledgeable folks that have posted back here already. 

[Brandon Rush]

Hey Christine!

Definitely wait until you have a good amount of money in the bank before taking on any kind of real estate purchase. Being in your position, the last thing you want to do is take on a massive miscalculated risk and have to start over again. I recommend going one step at a time. If you are interested in real estate, start with surrounding yourself with other real estate investors. See what others are doing and see how you can provide value to them. Maybe start attending REI meetups in your market (Such as mines!) and make that one of your first steps.

I would highly recommend you add a financial advisor to your arsenal and making this one of your first steps as well. An advisor is like a doctor, many don't want to go to them because they will need to face the truth.

Keep your head up and good luck on your journey!

[Mohammed Rahman]

Hey @Christine Krevalin - wow, thanks for sharing and happy to hear that you're in a much better situation now than before (I mean owning your own home and on track to financial freedom). 

Don't beat yourself up over being in the situation you are at 46. You have a lot of great experience to make up for it and a 46yr old starting where you are will beat a 21yr old starting in the same position — your life experiences make it easier for you to connect the dots and move quickly. 

In terms of "where to start" - you already have, by asking that question and being here! My next step would be to start educating myself as much as possible, because it will help you get a clearer picture of what YOU want to do and it's also the cheapest thing to do rn. 

Here's how you start learning: 

- click on BOOKSTORE at the top of the page, and read at least one of the books BP offers. It's helped me a lot in order to figure out if I even really wanted to be a landlord, because you get exposed to a lot of different new information you weren't privy of before. 

- attend at least 1 real estate event in the next few months. Meeting even 1 agent, or investor, or lender at the event will give you the confidence you need and will also teach you more about the landscape. 

The goal shouldn't be to start working in deals, the goal should be to figure out your unknown unknowns. 

Good luck! 

[Brian S.]

@Christine Krevalin

Hey Christine, I got started house hacking after catching some infidelity and a divorce so you’re not alone. I think once you’re in a better spot that would be the way to go, buy a sfh or duplex for a year and then buy another and rent the other one out and continue repeating. There’s also nothing wrong with renting a budget place to save even more.

Also, don’t get stuck on multifamily. In my area, there’s a low percentage of multi family homes and sfh make more sense once you do the math. Always trust the math. Numbers don’t lie, only exes.

Also, dont get FOMO. A lot of people experience fomo and make poor investment purchases. I don’t know your market but waiting to invest may be worth looking into.