How to get started investing in real estate.

Question

Hello everyone, I want to get started in a career of investing in real estate and I'm most interested in the Buy and Hold Strategy. Any advice and tips are greatly appreciated.

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.

Brock Mogensen · Answer

Education and networking are a great place to start. Consume podcasts and books daily on real estate. Look up local real estate networking events. Try to go to one every week. Do that for 3-6 months and you will be ready to buy a deal.

Wale Lawal · Answer

@Joseph Matsushima

If you don’t already know how to invest in real estate, breaking into the industry can be intimidating. It can take several years before an investor feels comfortable and confident in real estate. That’s why beginner-friendly investing strategies are a great place to start. While they are suitable for investors with little to no experience, they can still be highly profitable when managed correctly.

Starting in a beginner-friendly investing niche is a great way to learn the ropes before taking on more complex investments. By starting with an accessible strategy, investors can get to know their local market, build a network, and learn how to raise capital without committing to a deal they may not be able to handle. Investors can then use their experience and profits to transition into other strategies down the line.

Here are some real estate investment strategies for beginners to use as a starting point:

Wholesaling: This strategy allows investors to act as a middle man between sellers and buyers. Wholesalers will identify and secure a property under market value, and then assign that contract to an end buyer.

Prehabbing: Prehabbing is the process of positioning a property for resale by adding minor cosmetic updates. The property is then often sold to an investor who will complete a full rehab.

REIT Investing: A real estate investment trust (REIT) is a company that owns and manages income-producing properties. Investors can then purchase shares in REIT and benefit from the profitability of real estate without owning physical properties.

Online Real Estate Platforms: Online platforms help to connect investors with real estate developers. The investors help finance real estate projects in exchange for monthly or quarterly repayments, including interest.

Purchasing Rental Properties: Buying rental real estate is a great way to secure a monthly income stream, especially if you’re ready to be a landlord. If you don’t want to be a landlord, you can hire a property manager instead.

Real Estate Syndication: Real estate syndication is a form of crowdfunding, but with a team oriented approach. Investors pool resources and skills to buy large-scale properties and split the profits.

House Flipping: Flipping house is one of the most popular strategies to get started in real estate. In real estate, the term flipping refers to the process of buying, rehabbing, and then selling a property for profit.

Real Estate Investment Groups (REIG): A real estate investment group is a business that focuses most of its business on real estate. It pools capital from multiple investors to invest in multi-unit or commercial properties.

All the best!

Mason Weiss · Answer

Hey Josh, I always say make it a goal to connect with one new individual in the Real Estate space every day. Whether it be an investor, agent, or lender, by the time one year rolls around you will have created a powerful network to help you accomplish your goals and overcome obstacles.

Patrick Drury · Answer

@Joshua MontgomeryThe best way to get started is by house hacking a duplex locally with minimal down and occupying one unit while renting the other unit out. If you are unable to invest locally then the best choice would be to look at out-of-state markets like the Midwest. I would specifically recommend checking out Columbus OH first. It's a great place to start.

Eric Fernwood · Answer

Hello @Joshua Montgomery,

Having gone through the process myself, I recommend a three-step process outlined below.

Location - Choosing the right location is crucial. The location defines all long-term income characteristics for the life of the property. This includes appreciation and rent growth. Rent growth that keeps pace with inflation is critical, as rising rents offset the increased cost of living. In addition to the appreciation and rent growth rate, other factors to consider include minimum population size, state and metro population growth, operating costs, and rental regulations.

Target tenant segment - A property is no better than the tenant who occupies it. Choose a tenant pool segment with a high concentration of what I call good tenants. A good tenant stays for many years, pays all the rent on schedule, and takes care of the property.

Property selection - If you want people from your target tenant segment to occupy the property, buy properties similar to what and where they rent today.

The process is straightforward. At each decision point, there are clear metrics so you know you're making the right decision. I know this process works because we’ve delivered over 470 investment properties following it, and all have performed well.

If you have questions or want more details about the process, DM me.

Noah Bacon · Answer

When I was starting out, I also was most interested in the Buy and Hold Strategy as well. I would recommend surrounding yourself with additional strategies on how to acquire a property with the intent to hold it long term.

Brandon Turner's Rental Property Investing would be great place to start. This book will show you different routes to acquiring your first property, and help you get more familiar with the language and terminology in real estate investing.

Harrison Chow · Answer

Hey Joshua! It's great to hear that you're interested in real estate investing! As with any new endeavor, it's important to take small steps before tackling bigger challenges, and real estate is no exception. Starting with a small investment and scaling up as you gain more experience is a wise approach. I suggest targeting properties that require minimal repairs or only cosmetic upgrades for your first investment.

In identifying a market for investment, I think the first point to consider is your budget. Would your budget allow you to invest locally or would you need to look out of state? Next would be to determine what you're looking for in an investment: appreciation, cash flow or a mix of both.

In searching for properties, connect with investor friendly RE agents in the area to gain insight into the local market and find potential deals. They would also be able to help in identifying profitable neighborhoods to invest in.

It's also important to have a solid financial plan in place, including determining your budget for purchasing properties and factoring in ongoing expenses such as maintenance, property management fees, and insurance.

Hope this helps and let me know if you'd be willing to explore the Midwest particularly Ohio. Best of luck in your real estate journey!

Marc Rice · Answer

I always recommend house hacking in your local area to start, it gets your feet wet, saves on rent, and has some great low money down loan products.

Alex Evans · Answer

Hey @Joshua Montgomery

One of the most important things to decide when you are looking to start investing in Real estate is the location in which you want to invest. Often times it is more advantageous for someone to invest out of state due to the home prices where they are from. Investing out of state can lead to much higher cashflows, and the opportunity to grow your portfolio faster. I work with OOS investors every day to find incredible properties in the Memphis Metro area. I would be more than happy to speak with you about this!

How to get started investing in real estate.

How to get started investing in real estate.

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