I am new but ready.

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I am new but ready.

Donna Yu

Member since 2024 · 5 posts · 11 votes

How much capital do you need to have to start and where did you find your first deal that is successful? Thank you.

Ready to learn from all of you. :)

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Jonathan GreeneBusiness Member

Real Estate Consultant · Madison, NJ · Member since 2016 · 6k+ posts · 7k+ votes

What @Chris Seveney said. It's not an amount of actual cash because that changes depending on where you want to invest, but a percentage. Basically, 25% down plus 6 months in reserves and then another pot of money so you don't toss all of your savings into a new investment.

If you are planning on house hacking, you can cut the downpayment percentage way down.

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Chris SeveneyBusiness Member
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Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
2y
Quote from @Donna Yu:

How much capital do you need to have to start and where did you find your first deal that is successful? Thank you.

Ready to learn from all of you. :)

What are you looking to invest in? Assuming you are investing in single family home - I would recommend starting with 25% down payment and having monthly cash flow from a W2 to cover the mortgage for several months in case it sits vacant or needed repairs.
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Jonathan GreeneBusiness Member
Real Estate Consultant · Madison, NJ · Member since 2016 · 6k+ posts · 7k+ votes
2y
What @Chris Seveney said. It's not an amount of actual cash because that changes depending on where you want to invest, but a percentage. Basically, 25% down plus 6 months in reserves and then another pot of money so you don't toss all of your savings into a new investment.
If you are planning on house hacking, you can cut the downpayment percentage way down.
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Nathan GesnerBusiness Member
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Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
2y
Quote from @Donna Yu:

How much capital do you need to have to start and where did you find your first deal that is successful? Thank you.

Ready to learn from all of you. :)
There are a lot of variables. In general, you will want 25% of the purchase price to buy the property, but you should also maintain a reserve to deal with unforeseen expenses like vacancies, maintenance, etc.
Before you even begin, I think you should focus on a little education.
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. NETWORK!!! Get out of your comfort zone. Stop hanging out with your deadbeat buddies that spend all day drinking, talking sports, and otherwise wasting away. Go to BUILD YOUR TEAM at the top of the screen and look for local investors or meetups in your area. You can also find real estate investing groups through meetup.com, facebook, or a Google search. Birds of a feather flock together!

5. 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. A handy search bar in the upper right 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, recognizing a good deal will be much easier 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.

6. Study the market. You can learn to do this independently or get a rockstar REALTOR to lead the way. I highly recommend a well-qualified REALTOR who works with investors and knows how to help you best.

7. Jump in! Far too many get stuck in the "paralysis by analysis" stage, thinking they just don't know enough to get started. You could read 100 books and still not know enough because certain things must be learned through trial and error. You don't need to know everything to get started; you 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 forgiving world; the average person can still make money even with some big mistakes.
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Andrew SyriosPro Member
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Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
2y
Quote from @Donna Yu:

How much capital do you need to have to start and where did you find your first deal that is successful? Thank you.

Ready to learn from all of you. :)
Welcome aboard Dona, and best of luck investing!
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Donna Yu
OP
Member since 2024 · 5 posts · 11 votes
2y
Thank you all for your response. I have about $250k that i am ready to start with including reserves. I have read the basic and beginners guide. Super informative. Now i have to find the courage to really scout for a place to invest with. I am open to out of state as California is not a landlord friendly state. I am more interested on passive rather than flipping or fast turn around. And building my portfolio and growing it as time goes by.
Would you have recommendation of the best place to start rental properties?
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Jake AndronicoBusiness Member
Realtor · Reno, NV · Member since 2019 · 1k+ posts · 938 votes
2y
Quote from @Donna Yu:

Thank you all for your response. I have about $250k that i am ready to start with including reserves. I have read the basic and beginners guide. Super informative. Now i have to find the courage to really scout for a place to invest with. I am open to out of state as California is not a landlord friendly state. I am more interested on passive rather than flipping or fast turn around. And building my portfolio and growing it as time goes by.
Would you have recommendation of the best place to start rental properties?
Donna, you'll likely get a lot of responses pushing their areas. There are people making money in RE across the country.

But that doesn't mean it's necessarily right for you, and only YOU can decide that.

I grew up just north of San Francisco and moved to Reno, NV to live and invest. I invested long before I became an agent here.

I wanted somewhere close to Nor Cal but much more friendly tenant/landlord laws, 4th lowest property taxes in the Nation, rent growth, job growth, population growth, strong appreciation, limited land, close to Lake Tahoe, etc.

We see a ton of investors from CA. $250K is a reasonable amount to cash flow here on a quality asset.

Happy to connect and share ideas.
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Account Closed
Real Estate Agent · Chattanooga Tn. · Member since 2024 · 46 posts · 15 votes
2y
Quote from @Donna Yu:

Thank you all for your response. I have about $250k that i am ready to start with including reserves. I have read the basic and beginners guide. Super informative. Now i have to find the courage to really scout for a place to invest with. I am open to out of state as California is not a landlord friendly state. I am more interested on passive rather than flipping or fast turn around. And building my portfolio and growing it as time goes by.
Would you have recommendation of the best place to start rental properties?

Chattanooga Tn Market is a great market to invest in. I have several clients in California who are doing very well in both with single family and multi-family. If you would like to hear more about the area and chat with lenders and PM's reach out anytime.
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Travis Biziorek
Investor · Arroyo Grande, CA · Member since 2014 · 1k+ posts · 1k+ votes
2y
Quote from @Donna Yu:

Thank you all for your response. I have about $250k that i am ready to start with including reserves. I have read the basic and beginners guide. Super informative. Now i have to find the courage to really scout for a place to invest with. I am open to out of state as California is not a landlord friendly state. I am more interested on passive rather than flipping or fast turn around. And building my portfolio and growing it as time goes by.
Would you have recommendation of the best place to start rental properties?

Donna, I'm also in CA but invest in Detroit. I've been investing there since 2019 because, at the time, I was living in the Metro Detroit area and saw the progress unfolding downtown.
Folks are starting to realize it now after seeing the NFL Draft there the other month and the population is now officially increasing again. It's pretty exciting and we're still in early innings.
Happy to discuss the market there and share some resources about the progress, my own portfolio's performance, etc.
1 Reply
John Oks
Real Estate Agent · Pembroke Pines, FL · Member since 2024 · 39 posts · 20 votes
2y
Quote from @Donna Yu:

How much capital do you need to have to start and where did you find your first deal that is successful? Thank you.

Ready to learn from all of you. :)

Welcome Donna.....how much capital you need depends on your interests. Let us know what you are leaning towards so we can help.
1 Reply
Drew SygitBusiness Member
Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
2y
@Donna Yu you'll get a LOT of recommendations with that question!
In alphabetical order: Cleveland, Columbus, Detroit, Indianapolis, St Louis, Texas and more.
Before deciding you should do some research and learn about property Classes.
Most investors naively assume all properties & tenants are the same and mistakenly only focus on best rent-to-price ratios.
The reality is that lower Property Classes also mean lower Tenant Classes and corresponding bigger challenges!
As an example, what do you expect a tenant credit score to be?
-The correct answer is, it depends on the Class of the property.
BTW: there is no industry standard for Property & Tenant Classes, so the definitions are fluid depending on the location and investor opinion.
We're in the Detroit market and if you'd like to know more about it, please PM us.
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Brad S.
Investor · Pasadena, CA · Member since 2017 · 613 posts · 523 votes
2y
Hey @Donna Yu!

You obviously know real estate and are a successful realtor, so you are in a great position to start focusing on your real investing goals. You have plenty of money to start and most likely have plenty of RE knowledge to rely on as well.

My first recommendation is to have a relatively clear idea of what your goals are. You already mentioned you want more passive long-term investments, and possibly in a more landlord friendly state. Further clarification would be how much cash flow are you wanting? How long are you hoping it will take to get there? How leveraged or conservative are you interested in being? Do you need/want the monthly income soon or are you willing to work toward a greater income later and leverage off future appreciation? Are you going to focus on sfr's, 2-4 units, 4+ apartment projects, industrial, commercial, etc?

These are not meant to be a comprehensive list of questions, but just a start to tickle the brain. You may have answers to some of these questions already, but it is a good exercise to have some clarity on those goals, then you can forge the path to get there.
**********************************
As to your other questions:
My first very successful deal was through a family member contact that knew of an investor that was selling one of their local rentals. And, I should've held on to that one. A good piece of advice is to hold on to all your good stuff and transfer any marginal or questionable stuff into better stuff.

My best deal was from the mls. I just recognized a great deal and potential when only a few others could see it.

I've had out of state rentals since 1997, and started by following others that had already done all the research and ground work - there was no reason to reinvent the wheel. Where to start depends on your goals, etc. If you want to maximize cash flow that would dictate where to look, if you want more appreciation potential, that would direct you to other areas, etc.

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Donna Yu
OP
Member since 2024 · 5 posts · 11 votes
2y
Quote from @Brad S.:

Hey @Donna Yu!

You obviously know real estate and are a successful realtor, so you are in a great position to start focusing on your real investing goals. You have plenty of money to start and most likely have plenty of RE knowledge to rely on as well.

My first recommendation is to have a relatively clear idea of what your goals are. You already mentioned you want more passive long-term investments, and possibly in a more landlord friendly state. Further clarification would be how much cash flow are you wanting? How long are you hoping it will take to get there? How leveraged or conservative are you interested in being? Do you need/want the monthly income soon or are you willing to work toward a greater income later and leverage off future appreciation? Are you going to focus on sfr's, 2-4 units, 4+ apartment projects, industrial, commercial, etc?

These are not meant to be a comprehensive list of questions, but just a start to tickle the brain. You may have answers to some of these questions already, but it is a good exercise to have some clarity on those goals, then you can forge the path to get there.
**********************************
As to your other questions:
My first very successful deal was through a family member contact that knew of an investor that was selling one of their local rentals. And, I should've held on to that one. A good piece of advice is to hold on to all your good stuff and transfer any marginal or questionable stuff into better stuff.

My best deal was from the mls. I just recognized a great deal and potential when only a few others could see it.

I've had out of state rentals since 1997, and started by following others that had already done all the research and ground work - there was no reason to reinvent the wheel. Where to start depends on your goals, etc. If you want to maximize cash flow that would dictate where to look, if you want more appreciation potential, that would direct you to other areas, etc.

Thank you. You’re absolutely right. Those questions were my questions to myself as well when i started to have an interest with real estate investing.

But my ultimate goal is to create a portfolio that will give me a comfortable monthly cash flow. And by that is really looking for a med- higher class properties with med- higher class tenants. I am a very empathetic person and i know i wont do well with lower classes as i give so much benefit of a doubt and help. Haha.

Thanks for sharing your success story. I am on a lookout for mls always but i wanna have a great formula to start with in terms of how my numbers should work.
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Donna Yu
OP
Member since 2024 · 5 posts · 11 votes
2y
Quote from @Drew Sygit:

@Donna Yu you'll get a LOT of recommendations with that question!
In alphabetical order: Cleveland, Columbus, Detroit, Indianapolis, St Louis, Texas and more.
Before deciding you should do some research and learn about property Classes.
Most investors naively assume all properties & tenants are the same and mistakenly only focus on best rent-to-price ratios.
The reality is that lower Property Classes also mean lower Tenant Classes and corresponding bigger challenges!
As an example, what do you expect a tenant credit score to be?
-The correct answer is, it depends on the Class of the property.
BTW: there is no industry standard for Property & Tenant Classes, so the definitions are fluid depending on the location and investor opinion.
We're in the Detroit market and if you'd like to know more about it, please PM us.

I understand about the property and Tenant Classes. That is actually a very good pointer. I believe on investing on good ones, so you’ll have higher chance of return. Thank you. And will definitely keep you in mind.
0 Reply
Gladimir Lobo
Real Estate Broker · Cleveland, OH · Member since 2023 · 218 posts · 83 votes
2y
Hey @Donna Yu!
Welcome.
The first letter in the real estate investing alphabet is "C" for Cleveland and Cashflow.
I'm not here to sell you on Cleveland. If you choose Cleveland, connect with me, and I will level set your expectations and introduce you to other California agents investing here.
0 Reply
Remington LymanBusiness Member
Real Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
2y
Quote from @Donna Yu:

How much capital do you need to have to start and where did you find your first deal that is successful? Thank you.

Ready to learn from all of you. :)

I spent $5,000 to buy my first duplex here in Columbus, Ohio. I did a house hack
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V.G JasonPro Member
Investor · Member since 2022 · 3k+ posts · 3k+ votes
2y
You're new but ready, and first question is how much money do I need?
Come on, come on. Do some damn homework. Get some diligence and studying in, and then you'll be ready and can ask serious questions.
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Patrick DruryBusiness Member
Real Estate Agent · Columbus, OH & Cleveland OH · Member since 2021 · 1k+ posts · 2k+ votes
2y
@Donna Yu
I put around 12k down on my first rental which was a single-family rental rented out via section 8 here in Columbus OH. It depends on what location you are looking to invest in and what the strategy is
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Nicholas L.Pro Member
Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
2y
@Donna Yu

are you in a position to house hack? Not everyone is. but it's a great and powerful way to get started.

if you're looking to invest out of state, read these 3 threads first.

https://www.biggerpockets.com/forums/48/topics/1159104-overl...

https://www.biggerpockets.com/forums/12/topics/1171104-the-m...

https://www.biggerpockets.com/forums/48/topics/1193623-rent-...

with interest rates where they are, you just aren't going to 'cash flow' meaningfully on your first, or first few properties, for your first few years, if they are 'traditional' LTRs.

with that said, if you're serious about picking an OOS market, i'd recommend going to your chosen market in person, probably multiple times, to set up your team. if you just pick something online and buy it - you will lose money.

I like @Jake Andronico's post because he's recommending a higher cost, closer area. higher cost means less competition. there are plenty of $100K houses on the MLS for sale ready for you to buy and lose tons of money on.

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Nicholas L.Pro Member
Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
2y
@V.G Jason
whenever I see "California" and "looking out of state" I try to jump in. Maybe I'll start just cutting and pasting in a canned response but for now I'm still customizing for the OP. =)
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Marcus R.
Real Estate Agent · Denver CO · Member since 2019 · 210 posts · 332 votes
2y
First rental was a small studio condo bc that's all I could afford.
Second rental was a live-in flip bc HGTV makes it look easy.
Got lucky the 2nd time and now I think this is the best way to start. Grab something that needs cosmetic updates and slowly update over 2 years. After 2 years sell and keep the gains tax free or decide if you can make it work as a rental. Gain a lot of experience in learning about the trades and working with contractors.
Bonus points if you can find something with a convertible garage, basement unit, etc... that can be it's own separate unit. Be realistic about what this will fetch on the market and you may be able to lower your cost of living while building equity through loan paydown and updating cosmetically.
1 Reply
Jimmy LieuBusiness Member
Real Estate Agent · Columbus, OH · Member since 2019 · 3k+ posts · 2k+ votes
2y
Quote from @Donna Yu:

How much capital do you need to have to start and where did you find your first deal that is successful? Thank you.

Ready to learn from all of you. :)
Hi Donna, it depends on whether you're looking to BRRRR, flip, or buy and hold! If you want the easiest way to go about it, I typically recommend doing 20% down with a positive cash flowing investment deal. If you're looking to flip or BRRRR, you can use a hard money loan which finances both the purchase and renovation. For my personally, I love Columbus Ohio and as someone who works with a lot of out of state investors - there's so many catalysts for why you should invest here. Specifically, there's job growth (Intel, Honda, Amazon, Nationwide, etc) and the population is growing (unlike Cleveland or Cincy). I really see Columbus Ohio as an extremely safe bet for the next 10-20 years. Plus, there's still so many positive cash flowing and 1% deals here in Columbus Ohio. As a local investor and agent here in Columbus, let me know if you have any questions or want to connect!
[email protected]614-300-7535
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Donna Yu
OP
Member since 2024 · 5 posts · 11 votes
2y
Quote from @Patrick Drury:

@Donna Yu
I put around 12k down on my first rental which was a single-family rental rented out via section 8 here in Columbus OH. It depends on what location you are looking to invest in and what the strategy is

How is it going for you so far? I’m trying to know more about Columbus, Ohio.
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Mike PaolucciBusiness Member
Realtor · Columbus Cleveland Dayton, OH · Member since 2022 · 499 posts · 553 votes
2y
@Donna Yu For investments, you're looking at 20% down for a single family and 25% for multi-family. I'm originally from San Francisco and started off as an oos investor back in 2021 before moving to Columbus, OH. You're still able to find some deals that make sense by the numbers out here and it's a night and day difference compared to California with regards to landlord rights.

Let me know if you have any questions about what it's like as an OOS investor or about the Ohio Markets.
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Daniela Merida Taborda
Pompano Beach, FL · Member since 2024 · 11 posts · 15 votes
2y
Hi,

My first rental I bought it as a primary home. I live in that house for two years. I made some minor repairs and moved rent out the property with a rental company and I just bought my second property. Again as a primary house I will do some minor improvements and move again.

my second property is a new construction, I only put 25k with a 5.5% interest rate. I just close 30 days ago.
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Tanner Lewis
Lender · Austin, TX · Member since 2021 · 448 posts · 441 votes
2y
I would aim for a comfortable safety budget before starting! Your target market will really depend on your strategy, so I would nail that down before deciding on the location!
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