Where do we even start?

Question

I’ve begun my real estate journey and currently working on my first flip. However, I still feel very lost in this process. I’ve read through many different posts, and everyone seems to provide the same guidance to people starting out: "read books, listen to podcasts, learn as much as you can before….” Which is not bad advice but does not provide a starting point and a guide path to follow. The amount of information on this site alone is overwhelming let alone trying to google something. So, has anyone developed a “step by step” beginners guide or anything along those lines that could be useful for us newbies?

Henry Clark · Answer

@Brad Fabian

Just noticed your military.

Hopefully your E5 or above.  Find out your BAH.

Buy the largest house you can get with your BAH annual payment.  If you stay in Base housing your just paying rent.  You should get this paid as a lump sum once a year up front.  That should be your down payment.

If you buy a house with your BAH tax free money, then when you sell you get Uncle Sams money.  Example:  You buy a house for $300,000.  Your BAH is $30,000 per year depending on Rank and station.  Pay the $30,000 against the debt every year.  Say 3 years.  Let's say you sell your house for $300,000 when you leave.  Yes, you pay commission.  But let's say you have paid down your loan by the $90,000 BAH and another $10,000 out of pocket cash.  Since you sold it for the same amount, you get $100,000 to buy your next house.  Buy even a bigger house.

Join a military REI group.

Some Military will keep their purchases at each Station and have a property manager manage.

Let's say you get stationed in Naples, Italy.  You get $30,000 per year and want to do Fix/Flip or BRRRR.  First year buy a house for say $50,000 and fix up.  Move out of it next year and buy another house and do the same thing each year.  Get another military person to come behind you and rent the units out.  Remember as you switch bases, your BAH payment goes with you.  If you leave properties behind you, you have to be able to cash flow them without the BAH.

Always look for Value Add properties beyond just the existing property.  If it has a large lot, can you subdivide and sale the extra lots?  If it is a 3/2 with a full basement, can you add 1/1 and make it into a 4/3?  Can you add a garage? Etc etc.

When you retire from the military, if your family is up for it, get a Civil Service position overseas. Again, do the BAH.  No BAH in the US for Civil Service.

REI is generally Cash Flow or Appreciation approach, could be both.  Your base assignments are going to be 2 to 4 years, so I wouldn't worry about Appreciation.  Cash Flow normally people are talking about $200 per door.  Your BAH strategy is safer and a lot less potential failure.

My brother did this initially with Mobile homes and made his startup money.  Plus, he didn't have to pay sales commission when he switched bases.

Join Military REI group and learn from them.

Nathan Gesner · Answer

Here's a little-known secret to success: buy a house and figure it out. Save up money and buy another house. Figure it out. Save up money and buy another. And figure it out.

Mom-and-pop investors in 1976 didn't spend months reading books, listening to podcasts, and asking questions on the internet. They worked hard, saved up their money, and bought a "cute house" in their local market. They knew nothing about cashflow, they didn't have quaint acronyms like BRRRR or ROI, they didn't have investor groups or bootcamps, no spreadsheets or software for tracking performance, and they probably had no clue that Landlord-Tenant laws existed. They bought a house and held onto it for 30 years.

That is all you need to know. Buy a decent house in a decent neighborhood that at least pays for itself (mortgage, taxes, insurance, and maintenance). Hang on. Rinse and repeat.

You can learn to do better as you go along.

Taylor L. · Answer

There are so many directions you can go, that's why people say read, listen, and learn. Those 3 exercises can help you pick a specific path (i.e. flipping vs wholesaling vs BRRRR vs multifamily vs land vs mobile home parks...on and on)

Have you decided which path you want to take? Finding a beginner's guide becomes more straightforward when you know which direction you want to go.

Eliott Elias · Answer

Drop the books and drop the podcasts. Get off this website and go learn in the field, impossible to be a good investor based off the forums.

Henry Clark · Answer

It's boring stuff, but you need checklists or a system.  You also have another post about What you don't know, you Don't know.  The following answers both of these.

Although I agree reading and watching podcasts and such are the starting point, it's time for you to jump ship and develop a system.  Don't be given it, you need to make it and own it.  Part of the learning process.

Develop a spreadsheet. As follows.  Keep adding to it, adding sections and subsections.  Then how do you eat an Elephant?

Deal Analysis:

A.  Financing

B.  Realtor

C.  Legal

D.  Financial targets

E.  Contractors

F.  Zoning

G.  Market

H.  Now the actual property:

- Landscape or curb appeal

- Location

- Roof

- Windows/Doors

- Flooring

- Foundation

- Hvac

- Plumbing

- Electrical

Example Subsections

External

Panel Box

Loads

etc.

- etc etc

I.  Contracts

J.  Property Management

K.  Exit strategy

Develop the list, make Sections and Subsections.  As you learn something or see someone elses mistakes as to it.

Your key is to identify the Big things that can hurt you (Your, don't know what you don't know).  The little things you will learn later, but they won't kill you.

Don't know your day job background, but the above already exists on what you're currently doing.  You just need to adapt it to Real Estate.

You should do the above on every deal analysis and property you do.  Keep improving it and adding to it from other people's mistakes.

Yes, it's boring and you want to be given the answer, but at this point you have to do the work, so you own the process.

You talked about sharing above.  Each deal or new analysis you do, post it in the Newby section and ask for people to analyze and improve.  That way they will learn also.  Start with your current Flip and post.

Start small and Make Your Big Mistakes Early.

Matthew Kwan · Answer

@Brad Fabian yeah doing wholesale, flip, BRRRR strategy, or even working for a property management is definitely a good start and gain momentum into the industry. I decided to do house hack and work in the mortgage industry to start off, because what better way to jump into the industry by learning and knowing debt side of real estate.

@Albert Bui @Carlos Valencia

Craig Fillion · Answer

If I was in that position, I would find an investor/mentor in your area to split the profit with who will guide or assist you. You could always hit up investor groups or even bigger pocket meet ups.

Taylor L. · Answer

Makes sense. BP Bootcamps seem to be popular, as others have mentioned, but I can't comment on those. BP does have frequent webinars and quite a few books, some of which are intended for new investors just starting to get their bearings.

There are also several groups for current and retired service members who invest in real estate. Networking is another key factor that hasn't really been discussed in this thread. You can learn so much by networking & building relationships with like-minded people. I'd suggest seeking out groups like that so you can get inspired and learn from others with similar backgrounds who are a few years ahead!

The truth is that there are numerous ways to make money with real estate and nobody is an expert at all of them. That may help explain why there are so few 30,000 ft view things out there.

Brad Fabian · Answer

I just saw today that registration is open, so I believe that I will be signing up for that. I will need to look into it a little more but I feel like it would provide good information.

Kunal Datt · Answer

Have you considered doing a BiggerPockets Bootcamp?

Where do we even start?

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