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Updated 20 minutes ago on . Most recent reply

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New Here - some of my biggest questions & info on me

Posted

Hello everyone - was hoping to ask some questions of the vets in the room. will also share some facts about me for context:

-looking to buy and do house hacking or BRRRR. looking for Single family homes. trying to avoid multi-family or condos, etc. Foreclosures are interesting as I suspect there could be good deals there.

-love the idea of using forced appreciation by turning a 2 bed into a 3 bed

-I downloaded all the free resources, worksheets, and guides from BP - also read Brandon Turner's book on rental property investing. awesome read! 

1) what is the best way to analyze a deal? I've been browsing Realtor.com and Zillow - but what am I really looking for? 

2) Should I assemble all the members of my real estate team before I start making offers? 

3) best practices/rough guidelines on how to secure financing for your first property? 

4) where does one go to research the laws and landlord/tenant rules?

5) I read everywhere that I should get linked up with local real estate clubs in my area - but how does one find these clubs? 

Thanks for all your help and wisdom! 

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Randall Alan
#4 Buying & Selling Real Estate Contributor
  • Investor
  • Lakeland, FL
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Randall Alan
#4 Buying & Selling Real Estate Contributor
  • Investor
  • Lakeland, FL
Replied
Quote from @Christian Martinez:

Hello everyone - was hoping to ask some questions of the vets in the room. will also share some facts about me for context:

-looking to buy and do house hacking or BRRRR. looking for Single family homes. trying to avoid multi-family or condos, etc. Foreclosures are interesting as I suspect there could be good deals there.

-love the idea of using forced appreciation by turning a 2 bed into a 3 bed

-I downloaded all the free resources, worksheets, and guides from BP - also read Brandon Turner's book on rental property investing. awesome read! 

1) what is the best way to analyze a deal? I've been browsing Realtor.com and Zillow - but what am I really looking for? 

2) Should I assemble all the members of my real estate team before I start making offers? 

3) best practices/rough guidelines on how to secure financing for your first property? 

4) where does one go to research the laws and landlord/tenant rules?

5) I read everywhere that I should get linked up with local real estate clubs in my area - but how does one find these clubs? 

Thanks for all your help and wisdom! 

@Christian Martinez

Congratulations on being excited by real estate!  I can try to answer a few of your questions.

Analyzing a deal comes down to.  “What’s left over for me at the end of the month after principle, interest, taxes , property insurance, and maintenance reserves (which can be broken up into short term and longer term capital expenses).  Very quickly you will realize that for many deals there is  “nothing” left over after accounting for all the above- listed expenses…. And that is what you would call an upside down deal… or perhaps just “a bad deal”.  The main reason you will see this so much is that interest rates are higher than they used to be, and real estate prices ran way up during the COVID era and really haven’t come back down.  So finding a good deal that cash flows can be tough depending on where you live.  

As for looking for those deals (if that is what you mean by analyze) … one way that I like to share with people is to use Redfin.com and to search the particular area that you were looking for in what I believe they call “list view.” This will give you a table of all of the properties in that particular area. The cool part about redfin is that the table column headers are sortable and also include a dollars per square foot column. By clicking and sorting on dollars per square foot, you will actually able to look at the cheapest properties per square foot in a particular area. This of course tells you nothing about their condition, but it does tell you about the value of the property based on its size. You then have to go through and filter those for condition and  “would  I want to buy that?”  It’s a quick way to find cheaper properties… maybe it helps you out? 

For house hacking you should expect to have to put 3.5% of your own money in a deal, and for non-owner occupied properties probably 20%.  Both require qualifying for the loan and usually take 30-45 days to do with a conventional lender. 

As a beginner, having a real estate agent t help you find properties is probably easiest.  There are other sources… getting on wholesale lists, etc… but being new the agent is probably the easiest for finding an on-market deal.  But you need to have yourself positioned to be able to act.  You don’t want to waste an agents time if you aren’t able to actually close the deal (money, credit, etc)

For a brand new beginner I'm not a huge fan of the BRRR process as a track for you. There's nothing wrong with the process itself, but being a beginner, you lack a lot of the skill set required to be successful in doing a renovation (and they take funds to do) and at this point you probably don't even know if you're going to like being a landlord. I think it would be better if you start off more simple, find an on-market property that is turn-key and get comfortable with being in real estate and a landlord before trying a more advanced approach. (This is presuming you want to hold the properties.)

You can google “landlord tenant laws” and “your state” (Illinois?) and your states laws will pop right up…. They are in your states legal statutes.  In Florida you can read them in about 15-30 minutes.  Usually pretty basic stuff. 

Foreclosures are all cash deals typically (although it can vary where you live…) but most require you to show up the next day with ALL the funds… so those usually aren’t to well suited for beginners or those that require financing (there is no time to line it up typically.)
As for financing, my suggestion would be to find an independent mortgage broker… Not just one that works for one particular bank/lender. If you go to the bank, they will simply offer you their one product that their particular institution offers. Whereas an independent mortgage broker typically represents dozens of different lenders who can find you a better rate, and often have different acceptance criteria, which can help you secure a loan more easily.

You say that you were looking to do house hacking, but then you also say you want to do single-family homes. That starts to sound more like you are looking to rent rooms inside your house.  I have a friend who does this, and does very well at it. But for me personally, I would rather have a duplex or triplex where the tenants are living on the other side of the wall and not living with me in the same unit.  But to each their own. 

I think your journey needs to start off with the question: what is my goal in getting into real estate; and realize that real estate is usually a get rich slowly process where you will make more money on long term appreciation than you will on $200-300/month cash flow.  So you have to figure out what the best approach is for you, but realize the game is usually measured in terms of years, so it is about being disciplined, and buying good deals. 

As for investment groups, I didn’t see anything online for Aurora, but there are tons of them in Chicago, which looks like it is 40 minutes from you. I would probably start off driving to Chicago group and just meeting people there. From there, they can probably point you towards a more local group if anyone exists.  If you Google.” Chicago real estate investment groups” You will see a number of them.

All the best!

Randy

  • Randall Alan
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