Best Strategy for Starting Out in Real Estate
Most Popular Reply
Nicholas L.Pro Member
Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votesstart with a house hack that needs a little bit of work. fix it up. then repeat.
44 Replies
- New to Real Estate · Miami, FL · Member since 2024 · 1k+ posts · 441 votes1y
Hey Doug,
It’s great that you have a solid financial foundation and ambitious goals. To balance aggressive growth with risk management, a solid strategy is to start by spreading your capital across a few properties, ideally 2-3, to diversify. This allows you to build equity while mitigating the risk of concentrating all your resources into one property. You can focus on properties that have strong rental potential to generate steady cash flow, helping you pay down the mortgages over time.
Once you’ve established a solid cash flow and built equity, you can scale by adding more properties gradually. Keeping some reserves will protect you against potential market shifts or unexpected costs. Given your goal of leaving your W-2, prioritize cash flow properties while leveraging financing smartly, rather than aggressively paying down debt right away.
As for the economy, maintaining flexibility by having multiple properties with moderate leverage can give you options to either sell or refinance if needed.
Let me know if you need help with financing strategies. Happy to help!
Best,
Drago - Member since 2024 · 48 posts · 23 votes1y
Quote from @Doug Kirk:
Newbie in the North Central Ohio area (Lucky me) who hopes to have about somewhere around 6 digits near the new year to start out with and cannot decide which way to go. I make good money and am single. Goal is to try for 8-10 Properties and try to leave my W-2 in 3-5 years. I can't decide whether to be aggressive on buying and paying down one or spread on a couple and pay down slower. I want to limit my risk as not knowing where the economy may be going.
I'm in a similar boat, also 50 with good paying W-2 looking to build a portfolio to help replace that sooner than later. Appreciating everyone's advice and wish you the best moving forward Doug!
- Member since 2024 · 27 posts · 34 votes1y
Quote from @Karina Busch:
Quote from @Doug Kirk:
Newbie in the North Central Ohio area (Lucky me) who hopes to have about somewhere around 6 digits near the new year to start out with and cannot decide which way to go. I make good money and am single. Goal is to try for 8-10 Properties and try to leave my W-2 in 3-5 years. I can't decide whether to be aggressive on buying and paying down one or spread on a couple and pay down slower. I want to limit my risk as not knowing where the economy may be going.
I'm in a similar boat, also 50 with good paying W-2 looking to build a portfolio to help replace that sooner than later. Appreciating everyone's advice and wish you the best moving forward Doug!
Thanks Karina. I wish you the best as well. Feel free to send a connection if you want to bounce ideas on the journey.
- 1yTravis TimmonsPro MemberRental Property Investor · Ellsworth, ME · Member since 2021 · 1k+ posts · 2k+ votes
I'd suggest looking into Wes Moss's work as guide to getting out of your W2. His theory is a paid off mortgage on your primary, $500k in liquid assets, and more than 1 source of income (real estate, social security if of that age, retirement, part time job, etc.). You can get there, but it's hard. Real estate is tough when you are trying to live off of the cash flow/income. It's like the house knows you need the money and something breaks.
Good luck and feel free to reach out if you think that I can be a resource. I think that you are on the right track thinking of paying off mortgages. The only real way to get enough cash flow to live off of that I have found is a paid off long term rental, a property you've owned for 5-7+ years, or a more hands on strategy like short term or mid term rentals.
- Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes1y
You want to grow your portfolio wide, before you grow it deep. In order to harness as much of the effects that add to your net worth you want to buy as many assets as you can, and as much quality as you can afford.
It is very tempting to go into cheap neighborhoods, but especially with the old housing stock we have in the Midwest capex will exceed cash flow over time and you are not building equity.
Consider your first deal a proof of concept. You don't need to make all your money on your first one, that will come later. But you want it to be in a good neighborhood and not a huge rehab. Low risk deals are more expensive, but if your first deal goes south there will never be a second one.
- Investor · Fort Washington, MD · Member since 2014 · 1k+ posts · 1k+ votes1y
So may newbies come in with their spreadsheets, calculations and declarations about firing their boss in 3 years. Rarely does that ever happen. From what I see, if people ever do that its way down the line. There are so many dynamics and moving parts to this that must go right just to be half *** successful. If you dont like the idea of house hacking Id say maybe start with a duplex or something and maybe work up to a small multi unit. Its easy to map these things out on paper but hard to execute because its a hard business. If the average person could give up their W2 in 3 years most would do it. Start small, learn to manage and operate, then you can see where you are eventually in the viability of firing your boss. If that is your primary focus it could convolute thinking and force unnecessary errors, in an already error prone business with a very high failure rate. I want you to win. Best of luck. REI is usually a long game in regards to building wealth. A great high functioning portfolio along with a decent W2 goes a very long way to achieving your goals.
- Member since 2020 · 8 posts · 10 votes1y
Doug, I was in this situation 6 months ago. It depends on how actively or passively you would like to build your portfolio. I work a 9-5, am married, and have 2 kids under 3 years old so I don't have a ton of extra time to actively find, fix, and flip properties. I live in Denver, CO but I have found a great group in Kansas City that provides great single-family home properties that are newly renovated and turn-key for long-term rentals (I'd be happy to connect you). My rental already had a tenant in it by the time I took over ownership, and most of their properties have tenants in place from day 1. This is great because it cashflows starting day 1. All this to say starting is the biggest, hardest, most important step. Start with 1 property and scale as your time and finances allow it. My first property will provide me with monthly cash, appreciation of the home value, and depreciation on my taxes which will help me get to my second property much faster. Now that I've gone through all of the steps to get through my process, I'm that much more knowledgeable and confident going into my 2nd deal which I'm already working on.
Good luck and hope this helps!
- Member since 2024 · 27 posts · 34 votes1y
Quote from @Bobby Cofield:
Doug, I was in this situation 6 months ago. It depends on how actively or passively you would like to build your portfolio. I work a 9-5, am married, and have 2 kids under 3 years old so I don't have a ton of extra time to actively find, fix, and flip properties. I live in Denver, CO but I have found a great group in Kansas City that provides great single-family home properties that are newly renovated and turn-key for long-term rentals (I'd be happy to connect you). My rental already had a tenant in it by the time I took over ownership, and most of their properties have tenants in place from day 1. This is great because it cashflows starting day 1. All this to say starting is the biggest, hardest, most important step. Start with 1 property and scale as your time and finances allow it. My first property will provide me with monthly cash, appreciation of the home value, and depreciation on my taxes which will help me get to my second property much faster. Now that I've gone through all of the steps to get through my process, I'm that much more knowledgeable and confident going into my 2nd deal which I'm already working on.
Good luck and hope this helps!
Appreciate it and will do.
- 1yJake AndronicoBusiness MemberRealtor · Reno, NV · Member since 2019 · 1k+ posts · 938 votes
Congrats!! You're in a great position to house hack. Cannot recommend it enough to start out.
I did it at 22 and it's completely changed my life. Here's what I learned and regretted:
https://www.biggerpockets.com/forums/922/topics/1133476-hous...
- 1yDebbie FalesBusiness MemberLender · Annapolis, MD · Member since 2018 · 141 posts · 47 votes
Have you considered a fix and rent approach? You could rehab a distressed property using a fix-and-flip loan and then refinance the loan into a long-term DSCR once the repairs are finished. That way you could unlock the equity quickly and deploy it on your next project. Rinse and repeat.
Good luck on your journey!
Navigator Private Capital4.620 Reviews - Member since 2024 · 27 posts · 34 votes1yI have looked into buying distressed properties, fixing them, and then renting them and will given the right opportunity. But as I stated, I want to aggressively pay down the loan so not looking to cash out ReFi or DSCR and just concentrate on clearing it. Using this, although slow at first, will build momentum on the back end to move quickly once the momentum builds, or at least as long as I keep the rails on the tracks. I am blessed with a good W-2 that will allow to assist with this as well. Of course I will talk to lenders and others with advice that can point out better options. But that is the current plan.
Quote from @Debbie Fales:
Have you considered a fix and rent approach? You could rehab a distressed property using a fix-and-flip loan and then refinance the loan into a long-term DSCR once the repairs are finished. That way you could unlock the equity quickly and deploy it on your next project. Rinse and repeat.
Good luck on your journey!
Thanks and good luck to you as well. - Member since 2024 · 27 posts · 34 votes1y
Quote from @Debbie Fales:
Have you considered a fix and rent approach? You could rehab a distressed property using a fix-and-flip loan and then refinance the loan into a long-term DSCR once the repairs are finished. That way you could unlock the equity quickly and deploy it on your next project. Rinse and repeat.
Good luck on your journey!
I missed you are a lender in my first post. I would love to hear your ideas.
- Real Estate Agent · Denver, CO · Member since 2022 · 68 posts · 31 votes1y
Quote from @Travis Timmons:
I'd suggest looking into Wes Moss's work as guide to getting out of your W2. His theory is a paid off mortgage on your primary, $500k in liquid assets, and more than 1 source of income (real estate, social security if of that age, retirement, part time job, etc.). You can get there, but it's hard. Real estate is tough when you are trying to live off of the cash flow/income. It's like the house knows you need the money and something breaks.
Good luck and feel free to reach out if you think that I can be a resource. I think that you are on the right track thinking of paying off mortgages. The only real way to get enough cash flow to live off of that I have found is a paid off long term rental, a property you've owned for 5-7+ years, or a more hands on strategy like short term or mid term rentals.
“its like the house knows you need the money and something breaks” 😂😂😂 that is painfully true
- Lender · Clermont, FL · Member since 2020 · 168 posts · 87 votes1y
Quote from @Doug Kirk:
Newbie in the North Central Ohio area (Lucky me) who hopes to have about somewhere around 6 digits near the new year to start out with and cannot decide which way to go. I make good money and am single. Goal is to try for 8-10 Properties and try to leave my W-2 in 3-5 years. I can't decide whether to be aggressive on buying and paying down one or spread on a couple and pay down slower. I want to limit my risk as not knowing where the economy may be going.
Have you looked into becoming a lender? I honestly wish I had done that before accumulating 30 doors.
- Member since 2024 · 27 posts · 34 votes1yNot really. I may look at that option down the road. But for now, just want to get good at the one strategy first.
Quote from @Jonathan Chan:
Quote from @Doug Kirk:
Newbie in the North Central Ohio area (Lucky me) who hopes to have about somewhere around 6 digits near the new year to start out with and cannot decide which way to go. I make good money and am single. Goal is to try for 8-10 Properties and try to leave my W-2 in 3-5 years. I can't decide whether to be aggressive on buying and paying down one or spread on a couple and pay down slower. I want to limit my risk as not knowing where the economy may be going.
Have you looked into becoming a lender? I honestly wish I had done that before accumulating 30 doors.
Thanks - Lender · Clermont, FL · Member since 2020 · 168 posts · 87 votes1y
Quote from @Doug Kirk:
Not really. I may look at that option down the road. But for now, just want to get good at the one strategy first.Quote from @Jonathan Chan:
Quote from @Doug Kirk:
Newbie in the North Central Ohio area (Lucky me) who hopes to have about somewhere around 6 digits near the new year to start out with and cannot decide which way to go. I make good money and am single. Goal is to try for 8-10 Properties and try to leave my W-2 in 3-5 years. I can't decide whether to be aggressive on buying and paying down one or spread on a couple and pay down slower. I want to limit my risk as not knowing where the economy may be going.
Have you looked into becoming a lender? I honestly wish I had done that before accumulating 30 doors.
ThanksOf course. Feel free to reach out if you ever have any questions about lending. Happy to share experience along with do's and don'ts to make sure your money is protected.
- Member since 2024 · 27 posts · 34 votes1y
Quote from @Jonathan Chan:
Quote from @Doug Kirk:
Not really. I may look at that option down the road. But for now, just want to get good at the one strategy first.Quote from @Jonathan Chan:
Quote from @Doug Kirk:
Newbie in the North Central Ohio area (Lucky me) who hopes to have about somewhere around 6 digits near the new year to start out with and cannot decide which way to go. I make good money and am single. Goal is to try for 8-10 Properties and try to leave my W-2 in 3-5 years. I can't decide whether to be aggressive on buying and paying down one or spread on a couple and pay down slower. I want to limit my risk as not knowing where the economy may be going.
Have you looked into becoming a lender? I honestly wish I had done that before accumulating 30 doors.
ThanksOf course. Feel free to reach out if you ever have any questions about lending. Happy to share experience along with do's and don'ts to make sure your money is protected.
Sounds great. Will do.
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