Beginner looking for coaching/guidance/mentorship
Member since 2024 · 3 posts · 8 votes
Beginner looking for coaching/guidance/mentorship
Most Popular Reply
Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes
2yOkay, I don't know if everyone posting here has been living under a rock, you are setting a young guy up for failure by supporting absolutely unrealistic expectations.
In order to clear $120k of net income in the Midwest you need a RE portfolio to the tune of 8 million. At current rates probably 30% down to get to a 1.2 DSCR.
As an OOS investor, you have a huge disadvantage compared to local investors and you are cost burdened by paying a PM. You are also likely to pay more for contractors and get a lower-quality install because you are not there to supervise.
Midwest housing stock is old. You can ignore capex for a while, but the financial liability just keeps quietly getting bigger. At some point you need a new roof, plumbing, windows, HVAC, etc - setting aside 5% of rent may cover a new water heater, but very few components of a house last more than 50 years.
It's 2024: books written in 2015 or 2018 are based on the market conditions in year 5 years before they were written. Milwaukee home prices have doubled since 2015 and interest rates are now 7.5% - 8.5%. The unicorn years are in the past.
REI is back to what it used to be historically: a long-term equity play to preserve and grow wealth. The years of free BRRRR cash flow with basically infinite returns are gone. We all wish we could get back ten years and buy some more.
For the record, I continue to grow our portfolio, because I think in 10 years from now I will be happy for every property that I have bought in 2024. (Just like I am happy today for every property I bought in 2014).
But let's be real: the cash flow you can currently squeeze out of properties is barely enough to keep the lights on and do some maintenance while you watch equity grow.
The worst advice we can give a newbie is to keep hammering "just find a deal where the numbers work" and thereby pushing them into low-income neighborhoods with run-down housing stock and management challenges that most seasoned investor run from.
I absolutely encourage young investors to buy real estate, but look at it as a long term INVESTMENT, which means you are putting money in, not taking money out. As for cash flow, buy or start a business. The whole point of a business is cash flow. Whether you are starting an online service or buy a food truck, endless possibilities.. But that is a much better shot at cash flow than REI.
Okay, now I'll get off my salt box.
43 Replies
- 2yAbel CurielBusiness MemberReal Estate Agent · Queens, NY · Member since 2016 · 2k+ posts · 1k+ votes
Quote from @John Thomas:
Hi BP Community. I'm 25yo and motivated to grow my rental portfolio so I can replace my W2 income. I make $120k - $150k per year and am based on the west coast. I am looking to invest out-of-state as a long-term, buy and hold investor in the lower cost, higher cash-flowing markets of the midwest and southeastern US.
I'm looking for some beginner advice on how I can get started growing my team and buying my first few properties. Ideally, I'd love to work with someone who started in the last several years and have scaled their portfolio to 10-20+ units.
Given experience, feel free to share where you would you start if you were in my shoes and if you're willing to have a further conversation to help me get going!Hello John, welcome to the BP community!
Before growing your team, I'd first recommend zeroing in on a target location. Living in the high-priced West Coast, most OOS investment opportunities may seem great on paper compared to your market.
You'll want to focus on areas:
- With multiple drivers to the local economy (not just 1 industry)
- Steady population growth (demand)
- Increasing median rents
If I were in your shoes, I'd begin conducting research on different cities of interest. Check out Zillow and other property sites to see what is currently listed, what has recently sold (and for how much), and what recent rental units have been leased for.
I'd also try to make it out to as many Local Investor Meetups as I can to have conversations with new and experienced investors near you. Some of them may have already made the jump to OOS investing.
All the best!
Abel
REbuild Team - eXp Realty5234 Reviews - Real Estate Agent · Pittsburgh, PA · Member since 2024 · 86 posts · 51 votes2y
Hello John!
I happen to work with quite a few experienced realtors who are looking to take on and help more investors grow their portfolio! I can even get you in touch with some renovation teams and PM if you're interested in that!
I'll send you an message with some more information :)
- Investor · Arroyo Grande, CA · Member since 2014 · 1k+ posts · 1k+ votes2y
Hey John, I'm happy to share some of my journey.
I'm in CA but own 12-doors in Detroit. I started in 2019 and am still adding (albeit at a slower pace). I'm also building an ADU here at my primary residence that we'll operate as a STR.
Of my Detroit doors, 3 are Section 8 and one is operated as a STR. So I have a lot of experience with a wide range of stuff.
- 2yMark MunsonBusiness MemberLender · Orlando, FL · Member since 2022 · 440 posts · 300 votes
Hey @John Thomas
. Welcome To BP! Feel free to reach out, I'd be happy to give you some feedback. I think before you start narrowing down your team, you need to narrow down your markets. You'll need to do the latter to properly create the former.
- Real Estate Agent · South West Florida · Member since 2022 · 6 posts · 1 vote2y
Welcome John,
I would love to share some options with you here in SWFL. We have a few builders that we work with on new construction for SFR that once completed you have the option to rent out or sell at a retail value as a build-to-flip option. Our area is experiencing tremendous growth & plenty of opportunity here for investing depending on what you decide. Check out my page, I'm new to BP but have linked our social media & I enjoy working with investors like yourself.
Happy hunting
- 2yMichael SmytheBusiness MemberReal Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes
Recommend you first figure out the property Class you want to invest in, THEN figure out the corresponding location to invest in.
If you apply Class A assumptions to a Class B or C purchase, your expectations won’t be met and it may be a financial disaster.
So, when investing in areas they don’t really know, investors should research the different property Class submarkets.
Here’s our OPINION for the Metro Detroit market (use as a template for your target area!) that we’ve learned in our 24 years, managing almost 700 doors across the Metro Detroit area, including almost 100 S8 leases.:
Class A Properties:
Cashflow vs Appreciation: Typically, 3-5 years for positive cashflow, but you get highest relative rent & value appreciation.
Vacancy Est: Historically 10%, 5% the more recent norm.
Tenant Pool: Majority will have FICO scores of 680+, zero evictions in last 7 years.Class B Properties:
Cashflow vs Appreciation: Typically, decent amount of relative rent & value appreciation.
Vacancy Est: Historically 10%, 5% should be applied only if proper research done to support.
Tenant Pool: Majority will have FICO scores of 620-680, some blemishes, but should have no evictions in last 5 yearsClass C Properties:
Cashflow vs Appreciation: Typically, high cashflow and at the lower end of relative rent & value appreciation. Can try to reposition to Class B, but neighborhood may impede these efforts.
Vacancy Est: Historically 10%, but 15-20% should be used to also cover tenant nonpayment, eviction costs & damages.
Tenant Pool: majority will have FICO scores of 560-620, many blemishes, but should have no evictions in last 2 years. Verifying last 2 years of rental history very important! Also, focus on 2 years of job/income stability.
Class D Properties:
Cashflow vs Appreciation: Typically, all cashflow with zero or negative relative rent & value appreciation
Vacancy Est: 20%+ should be used to cover nonpayment, evictions & damages.
Tenant Pool: majority will have FICO scores under 560, little to no good tradelines, lots of collections & chargeoffs, recent evictions. Verifying last 2 years of rental history and income extremely important to find the “best of the worst”.Make sure you understand the Class of properties you are looking at and the corresponding results to expect.
Logical Property Management4.9446 Reviews - 2ySamara HuntleyPro MemberInvestor · Charlotte, NC · Member since 2020 · 124 posts · 189 votes
Hey John! Congrats on looking to start in Real Estate.
I started around 3 years ago, have flipped over 20 properties personally and helped my investors BRRRR/flip another 50 or so. I'd say first step is to pick what type of investment you're looking to do (i.e BRRRR, Flip, Buy and Hold, etc.) then find a market that supports that strategy. Once you pick a market connect with an local agent, PM, contractor etc in the area.
As a born and raised local, I love the Charlotte and surrounding sub cities market due to many things. Population and job growth, appreciation and much more. Charlotte is a little tough to get a good deal in anymore due to growth but I am having great success in the submarkets where there is still "deals" to be had. Gastonia, Kannapolis, Concord, Monroe to name a few! Just completed a Free BRRRR last month in Monroe.
Feel free to reach out if you have any questions at all, would love to be a resource. Congrats again and good luck!
- 2ySamara HuntleyPro MemberInvestor · Charlotte, NC · Member since 2020 · 124 posts · 189 votes
Hey John! Congrats on looking to start in Real Estate.
I started around 3 years ago, have flipped over 20 properties personally and helped my investors BRRRR/flip another 50 or so. I'd say first step is to pick what type of investment you're looking to do (i.e BRRRR, Flip, Buy and Hold, etc.) then find a market that supports that strategy. Once you pick a market connect with an local agent, PM, contractor etc in the area.
As a born and raised local, I love the Charlotte and surrounding sub cities market due to many things. Population and job growth, appreciation and much more. Charlotte is a little tough to get a good deal in anymore due to growth but I am having great success in the submarkets where there is still "deals" to be had. Gastonia, Kannapolis, Concord, Monroe to name a few! Just completed a Free BRRRR last month in Monroe.
Feel free to reach out if you have any questions at all, would love to be a resource. Congrats again and good luck!
- Member since 2024 · 14 posts · 18 votes2yHey Tyler,
Quote from @Tyler Kinney:
Welcome John,
I would love to share some options with you here in SWFL. We have a few builders that we work with on new construction for SFR that once completed you have the option to rent out or sell at a retail value as a build-to-flip option. Our area is experiencing tremendous growth & plenty of opportunity here for investing depending on what you decide. Check out my page, I'm new to BP but have linked our social media & I enjoy working with investors like yourself.
Happy hunting
im down in swfl as well, I’d love to see what you have in terms of small multi family properties as well as any flip properties. - 2yPreston DeanBusiness MemberRealtor · Fort Worth, TX · Member since 2021 · 779 posts · 368 votes
Hi @John Thomas
As far as investing out of state/out of your market:
This website is a good starting point for figuring out areas for in-state and out of state investors. Type in the address and use my classification for each score. It takes in account just about everything to give you a livability score.https://www.areavibes.com/
Here is my rating & classification for each livability score.
80 and above A+
78/79 A
76/77 A-
74/75 B+
72/73 B
70/71 B-
68/69 C+
66/67 C
64/65 C-
60/63 D
59 and below FSecondly,
When it comes to building a team one thing to remember when you are getting into RE investing is to have your team of people or as Brandon Turner from the Bigger Pockets Podcast calls it your CORE 4
1. Your contractor
2. Your deal finder (agent/wholesaler)
3. Your property manager
4. Your Lender
My suggestion to find #2 & #4 would be to go to the top of this page and click on FIND AN AGENT & FIND A LENDER. There you will be asked your criteria and then after answering a few questions you will be matched with 3-5 agents or loan officers in your area. My suggestion would be to select someone with the most forum posts or most reviews. That way you know they are active in the BP community!
United Real Estate DFW Properties 565 Reviews - 2yTodd AndersonPro MemberReal Estate Agent · Cape Coral, FL · Member since 2023 · 392 posts · 175 votes
John,
Welcome to the BP community. It great that you are looking to start your Real Estate journey.
I have been investing in Real estate for over 30 years in most every sector of the industry. At your age and income level, I would suggest looking into new construction long term rentals. Then you can own less of better quality. Look in a growing area where the growth and appreciation is obvious.Feel free to contact me with any questions.
- 2yMin ZhangBusiness MemberReal Estate Agent · Member since 2022 · 1k+ posts · 1k+ votes
Hey John! Welcome aboard! I recommend reading “Long-Distance Real Estate Investing: How to Buy, Rehab, and Manage Out-of-State Rental Properties” - I found it to be very helpful when I got started investing 2.5 years ago. I invest locally in Columbus and Cleveland. Here is a summary of the book.
https://www.nateliason.com/notes/long-distance-real-estate-investing-david-greene
The book also mentions the importance of having a rockstar Realtor, contractor, lender, and property manager.
Let me know if you need assistance!
- 2yManny VasquezBusiness MemberReal Estate Agent · Orange County · Member since 2022 · 317 posts · 293 votes
John- Welcome to the BP community! This is the best place for all things real estate related. This is what I recommend for you to get started in your real estate journey:
1. Keep saving as much as you can. Depending how much you earn you can step up those savings by getting a side-hustle. It could be any side-hustle you want just as long as you like it and your able to save some extra $$$.
2. Read as many RE books as you can get your hands on. Here are a few I recommend: "Rich Dad, Poor Dad" by Roberto Kiyosaki; "Set for Life" by Scott Trench; "The Unofficial Guide to Real Estate Investing" by Spencer; "The BiggerPockets Ultimate Beginners Guide" found here on BP; "The Book on Rental Property Investing" by Brandon Tuner. This will give you a good starting point.
3. Buy a property as soon as you can. The earlier you start in your RE journey, the better off you will be in the future. Almost everyone here on BP will tell you that they wish they had started earlier, myself included.
4. House-hack, house-hack, house-hack. You're doing this already so Congratulations! If possible, keep doing this into your next property that you purchase. This will give you several benefits. The most obvious is that you will be able to offset your mortgage with renting out a few rooms. You will then have a few options with that rent money....you can put it into principal or you can start saving it to purchase yet another property. House hacking will also give you some personal "property management" experience. This will come in handy as you begin to scale.
5. Decide which game you want to play. Do you want to be a house flipper? BRRRR? General Contractor? Buy and Hold? Do you want to LTR, MTR, or STR? Or maybe you want to do a combination of the above?
6. Attend meetups and meet as many people in RE as you can. You will meet people from different walks of life that will give you different perspectives on real estate investing. You might also meet someone that could be a potential business partner. Or you could buy a property from another person at the meetup. Keep an open mind and try to meet everyone at these meetings. I've developed some great relationships and also a business partner from these meetings. As they say, your network will be your net-worth.
7. Timing the market does not work. However, time in the market makes all the difference in the world!
8. Take Action! None of the above works unless you take action and put it into practice. Don't wait for the perfect deal to come up, the most important thing is to get started. Just like everything else in life, get started, keep honing those skills (i.e. keep reading, keep learning, keep attending the meetups) and watch yourself get better and better witch each property you buy.
I hope this helps and good luck on your real estate journey!
- Rental Property Investor · San Francisco Bay Area · Member since 2022 · 1k+ posts · 1k+ votes2y
Welcome to BP John! That's great that you're getting started at a young age!
I'm not sure where you are on the West Coast but I do know a few California investors who scaled their portfolio to over 30 units (in-state and out of state) and were able to replace their W2 income. They started out by house hacking in CA.
I invest in the Bay Area and Indianapolis metro area. I currently have 5 properties, 4 SFHs solely owned and 1 apartment building (11 units), co-owned. I've learned a lot in the past 2 years. I can share my experiences, positive and negative. Feel free to DM me :) Good luck!
- 2yStuart UdisPro MemberAttorney · Philadelphia · Member since 2018 · 2k+ posts · 3k+ votes
@John Thomas This is a losing formula: I am looking to invest out-of-state as a long-term, buy and hold investor in the lower cost, higher cash-flowing markets of the midwest and southeastern US.
You do not want to focus your investment thesis on cash flow and low barrier of entry markets. Unless there is a strong thesis as to why these markets will appreciate its a losing formula.
- 2yRemington LymanBusiness MemberReal Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
Quote from @John Thomas:
Hi BP Community. I'm 25yo and motivated to grow my rental portfolio so I can replace my W2 income. I make $120k - $150k per year and am based on the west coast. I am looking to invest out-of-state as a long-term, buy and hold investor in the lower cost, higher cash-flowing markets of the midwest and southeastern US.
I'm looking for some beginner advice on how I can get started growing my team and buying my first few properties. Ideally, I'd love to work with someone who started in the last several years and have scaled their portfolio to 10-20+ units.
Given experience, feel free to share where you would you start if you were in my shoes and if you're willing to have a further conversation to help me get going!Can you do a house hack? After you do a few of those you should level up to out of state investing
- Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes2y
Okay, I don't know if everyone posting here has been living under a rock, you are setting a young guy up for failure by supporting absolutely unrealistic expectations.
In order to clear $120k of net income in the Midwest you need a RE portfolio to the tune of 8 million. At current rates probably 30% down to get to a 1.2 DSCR.
As an OOS investor, you have a huge disadvantage compared to local investors and you are cost burdened by paying a PM. You are also likely to pay more for contractors and get a lower-quality install because you are not there to supervise.
Midwest housing stock is old. You can ignore capex for a while, but the financial liability just keeps quietly getting bigger. At some point you need a new roof, plumbing, windows, HVAC, etc - setting aside 5% of rent may cover a new water heater, but very few components of a house last more than 50 years.
It's 2024: books written in 2015 or 2018 are based on the market conditions in year 5 years before they were written. Milwaukee home prices have doubled since 2015 and interest rates are now 7.5% - 8.5%. The unicorn years are in the past.
REI is back to what it used to be historically: a long-term equity play to preserve and grow wealth. The years of free BRRRR cash flow with basically infinite returns are gone. We all wish we could get back ten years and buy some more.
For the record, I continue to grow our portfolio, because I think in 10 years from now I will be happy for every property that I have bought in 2024. (Just like I am happy today for every property I bought in 2014).
But let's be real: the cash flow you can currently squeeze out of properties is barely enough to keep the lights on and do some maintenance while you watch equity grow.
The worst advice we can give a newbie is to keep hammering "just find a deal where the numbers work" and thereby pushing them into low-income neighborhoods with run-down housing stock and management challenges that most seasoned investor run from.
I absolutely encourage young investors to buy real estate, but look at it as a long term INVESTMENT, which means you are putting money in, not taking money out. As for cash flow, buy or start a business. The whole point of a business is cash flow. Whether you are starting an online service or buy a food truck, endless possibilities.. But that is a much better shot at cash flow than REI.
Okay, now I'll get off my salt box.
- 2yJimmy LieuBusiness MemberReal Estate Agent · Columbus, OH · Member since 2019 · 3k+ posts · 2k+ votes
Quote from @John Thomas:
Hi BP Community. I'm 25yo and motivated to grow my rental portfolio so I can replace my W2 income. I make $120k - $150k per year and am based on the west coast. I am looking to invest out-of-state as a long-term, buy and hold investor in the lower cost, higher cash-flowing markets of the midwest and southeastern US.
I'm looking for some beginner advice on how I can get started growing my team and buying my first few properties. Ideally, I'd love to work with someone who started in the last several years and have scaled their portfolio to 10-20+ units.
Given experience, feel free to share where you would you start if you were in my shoes and if you're willing to have a further conversation to help me get going!Hey John, I moved to Columbus a few years ago (from Portland, Oregon which was super expensive) to become a full time real estate investor, and ever since, I've completed quite a lot of BRRRRs, flips, and own a successful rental portfolio here in Columbus Ohio. There's so many catalysts for population and job growth (Intel, Honda, Amazon, Nationwide Hospital, etc). I can definitely tell you there's still a lot of positive cash flowing and 1% rule deals and you get amazing appreciation. As an investor and agent here in Columbus Ohio, if you have any questions or want to connect, definitely reach out!
Jimmy Lieu, Red 1 Realty4.9120 Reviews - Specialist · Portland, OR · Member since 2010 · 3k+ posts · 1k+ votes2y
@Marcus Auerbach amazing Marcus and you are an agent. That is a first for agents around your area. Bring on the truth!
INVESTMENT, which means you are putting money in, not taking money out - Real Estate Broker · Charlotte, NC · Member since 2016 · 569 posts · 351 votes2y
@John Thomas, welcome to BP! Everything you need is available here for free or for a small fee. Please don't fall for coaching/guidance/mentorship in Real Estate classes. Invest into yourself self by treating your future RE Investment career as a business from the first day. There is no need to set up an LLC, but get your business registered and open business accounts and bank accounts for later lines of credit. Secure financing next choose a few target markets and research them thoroughly. Look for areas with strong economic growth, job opportunities, and a growing population and build a team.
- 2yWale LawalBusiness MemberReal Estate Broker · Houston | Dallas | Austin, TX · Member since 2018 · 5k+ posts · 2k+ votes
If you want to develop your rental property and reach financial freedom with real estate investments then begin early following these basic steps: research, network with professionals, look for a local market, put together a team of experts in this field, assess your financial situation, specify the criteria for investments, adopt baby steps, get to know all the details about the area where you want to invest money, then invest them or take part in any riveting event after thoroughly examining it.
Put together a group of pros—people like farm operators, land agents, building firms' representatives, lawyers who handle real estate law issues or litigators dealing with real estate disputes, loan officers. Assess your financial situation, create investment guidelines and purchase houses that suit them. Monitor your investments on a regular basis; keep track of costs and profits; watch the market trends to enhance your portfolio.
Good luck!
NETWORTH BUILDERS5236 Reviews - Investor · Fort Washington, MD · Member since 2014 · 1k+ posts · 1k+ votes2y
The majority of post like this are thrown up and they never return. If they do, it may be one or 2 comments/questions then they are ghost forever. Does this frustrate you all?
- 2yNicholas L.Pro MemberFlipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
yes!
1000 votes / likes for your post
if you're still here -
read this: https://www.biggerpockets.com/forums/12/topics/1171104-the-m...
start with a house hack
then house hack again
good luck
- Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes2y
Quote from @Nicholas L.:
yes!
1000 votes / likes for your post
if you're still here -
read this: https://www.biggerpockets.com/forums/12/topics/1171104-the-m...
start with a house hack
then house hack again
good luck
Agree 100% Nicholas. House hacking is the best and most viable path in 2024 to get started. Hands down. It makes financially a ton of sense, it eliminates your biggest living expense - rent. And probably most importantly it gets you a deal under your belt, some experience with contractors and being a landlord 101. And all that with very little risk, because you are physically there to make sure everything is well.
- Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes2y
I would start by reading some books on the value of real estate investing, how to analyze investments, and how to manage investments. At the same time, I would spend some time getting real clear on your goals. If you don't know where you want to go, it's impossible for us to give you directions.
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