BP Members (specifically you veterans out there, or, real estate rookies who are finding success):
I have been a BP member for a few months now. My initial intentions of being a dedicated, self-educating member failed. Wha' happened? Work. Life. You know, responsibilities. Just graduated college, and entered the work force. Determined to learn more about real estate and how I can access financial freedom through investing with business intentions (not just a few SFR units - I want an army, dang it!).
I have a goal of reaching a net worth of about ~45k by the end of this year (probably will only be $35-$40k). I want to buy some property with some of that, dang it! I don't care about a new car, new clothes, etc. I want to grow as an individual (mostly financially right now). So...for all you people finding success in real estate...I have some questions if you have the time!
(1). How did you find the cajones to invest in a real estate property? What made you do it? How did you come out victorious in your internal battle of debate? Did you have a business plan for yourself, defining what your goals are (one property, two properties...fifty properties, etc.)?
(2). How the heck do you deal with all of the uncertainties? I.E. -
Housing market declining for the area; inability to find tenants; ability to find TERRIBLE tenants; sudden requirement to move due to job relocation (wtf do I do with this rental property now?!); having to default; not being able to sell the property, etc...
(3). Are there certain ratios one should use in order to measure whether or not a real estate investment is wise? Sounds obvious, right? I know. No time for not asking dumb questions though.
(4). How do you go from having one or two SFR rentals to owning an army of rental properties? What makes you decide you have the ability to even do that? Are there some magic tricks I don't know about? I read some of these individuals in their mid-20s, late 20s, and young 30s, with all kinds of real estate success stories. After I finish rolling my eyes and vomiting, I find myself itching to learn more and how the heck I can do it.
(5). What are all the expenses besides the mortgage payment for the month? Insurance fees; property taxes; handy-man for maintenance; legality fees for tenant contracting; credit checks; lawn maintenance; renovation requirements, etc. All of these expenses seem to be just squeezing at your margins.
(6). How much money do YOU think you should have put away BEFORE investing in real estate for rental purposes?
(7). Are there any benefits from creating a legal entity and investing through that entity, rather than investing as an individual?
So many more questions, but I'll save them. I feel that this is a very complex, dynamic, and volatile industry. Not to mention, extremely competitive. Any feedback would be super cool! I promise to involve myself more with this community filled with badassery.
P.S. - Would any real estate investors in Midland, TX be willing to meet and discuss more in depth? If so, let me know! I'll buy the coffee (or meal - expect something average though. I'm a college graduate, not an oil tycoon).
@Account Closed Do you currently own your own residence or rent? I believe the best way to enter REI as a young investor is to start out with a a duplex, live in one side and rent out the other. There are multiple post about this here on BP.
Study everything, and start with The Bigger Pockets Ultimate Beginners Guide to Investing and listen to the Podcasts
1) You have to start, period. Lets say you decide to go the duplex route. Start researching what it would cost you to acquire a duplex. Figure out some financing and how much it will cost you out of pocket to close on one. Then start saving towards that goal.
REI is a get rich slowly type of industry, because it is typically very cash intensive.
2) Uncertainties are just fear of the unknown. The more you learn the less these uncertainties will creep into your mind. Identify what scares you the most about REI and then use the search function here on BP and read everything you can on that subject.
3)When it comes to the math and ratios, create or DL spreadsheets and practice until you feel comfortable.
4) There is no magic to growing a real estate business. Although having investors can help a person grow faster in some cases, fast growth is not always a good thing. Learn a specific area of REI, come up with an investment strategy that works for your individual desires and concentrate on building your company in that direction.
5) Different types of expenses will apply to different types of properties. Reading the link above will give you a better understanding.
6) I would suggest a new investor have the money for a good down payment, and at least 3-6 months expenses for the investment property saved up.
7) As for legal entities, I will differ this question to lawyers. Its my opinion that the tax benefits are the main reason for LLC and Corps.
Finally, remember one thing. No one can teach desire. Your results will depend solely on your efforts and desire to learn and succeed.
Thanks @Chris Adams I'm surprised I even got one reply on this lengthy post. I appreciate it.
Congrats on your pursuit of West Texas real estate in Midland. Contact me if you wish and I can give u my spiel on Midland and its real estate potential. Additionally, there is a real estate investment club meeting on March 20th at Johnny's Bar B Q in Odessa at 630pm. Attending this type of meeting will develop your real estate IQ.
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