Starting out: May be a stupid question to most but I hope you can answer it.

6 Replies

Ok so as it states on the subject of this post I am a newbie about to start investing in real estate. I want to dive in as soon as possible before I get cold feet. 

I am doing a lot of research and reading along with listening to many of the podcast. I am planning on asking someone I know to borrow 50k or maybe even 60k at 8% interest. Lets say we get that taken care of. I have the cash on my account, Can I start purchasing properties? Is it as easy as that?

I know I have to do extensive research on the properties before I buy but lets say i did all the research and I want to buy do I just message the person and make an offer?

Or is there more to it? Like hiring an inspector, any other fees?

To me it seems simple; you like it you offer a price, they accept, you send money and they send title and property is yours. Is that how it works?

Thank you in advance for your time. 

So what you are trying to do is buy proprieties without investing any of your money is that correct. If anything goes south how are you going to repay the loan.


Joe Gore

Well what I plan on doing is buying my first single residential with a loan from the bank. And possibly borrow 80k to buy maybe 2 properties (30k each) and get cash flow from there to pay the lender her share.  Rest of  borrowed cash for miscellaneous .

Again this is just a beginners plan. I will continue to do research. But so far how does that sound to you? 

First thing I would do, before you buy something is get to know your area really well and analyze a few properties.  At least where I live, when you buy a single family for investment the taxes go through the roof.  My first place jumped from $200 a year before I bought it to $1300 a year as soon as I closed.

Make sure that all the numbers work out, over plan your expenses, under estimate the rent, and use at least 10% for vacancy.  I have one place that has had 10 days vacancy in 4 years, and one that just took a 3 month vacancy hit. 

When it comes to buying, yes, you just start. If you are getting something that is listed on the MLS, get a Realtor, free to you. Their commission comes from the seller. If you are using a bank for financing, then you will most likely have to get an inspection done as well as an appraisal.

If I were you, I would find a good local property manager and ask them some questions.  They are usually very experienced dealing with investor/owners and fairly familiar with the purchase process.  I doubt that one would mind if you offered to pick his brain over coffee or lunch.

Best of luck.

@Gabriela Gomez  ,

I would be cautious about jumping in just like that. Try to find a good/honest real estate agent. They can guide you on the due diligence process, including physical inspection of the property, reviewing leases, reviewing the title report, financial analysis/projections, and other important basics that are part of real estate investing..

Then understanding the market, location, etc..

Have you talked to a lender about getting pre-approved? You want to know that they will loan you money BEFORE you make an offer. If you have never bought property before, definitely get a realtor involved. As Jesse Waters said, it costs you nothing as a buyer.

It's not like buying a car where the seller gives you the title. You need an attorney involved to do a title search and make sure there are no outstanding liens and that the legal description is the right property. Otherwise, you may not be able to sell it later because you don't have proper title.

It sounds simple, but if you read posts here, you will see that there is a lot of math going on. You can't succeed as an investor if you over pay for property. You also need to know that you are getting a good return on your investment. What is a good return to you?

Originally posted by @Gabriela Gomez:

I am doing a lot of research and reading along with listening to many of the podcast. I am planning on asking someone I know to borrow 50k or maybe even 60k at 8% interest. Lets say we get that taken care of. I have the cash on my account, Can I start purchasing properties? Is it as easy as that?

Yes

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