Brace yourselves. This one's a doozy. Skip to the line if you're in a hurry.
I joined this site quite a while ago. Then, I forgot about it.
I just focused on other things, almost all of them crazy ideas and flights of fancy that led me right back to here. It got a bit out of hand, and I'll run you through a few of them if any of you are curious.
Anyway, I've had some time to think and grow up a bit in the passing of a year. I still want to improve my cash flow to the point where I can retire, but I'm now under no illusions that it will be a quick or easy process.
As far as I can tell, real estate investment seems to be the best way to go for me. I get a lot of free time because of my work (it's not a horrible job, mind you). My finances aren't that bad. I've certainly seen worse. And, most of all, I think I can do it.
But I'm a total newbie. Since I'm going to be spending some quality time with you guys on this site, I thought I might run the ins and outs of my circumstances and goals by you guys. Maybe you guys can take a look and possibly throw out a few ideas.
I can't offer my own real estate thoughts in exchange, by the way. I'm a good cook, though, so if you want food advice, I can help out there.
Anyway, here's the rundown.
1. I currently own a home, though I'm in the process of selling. Monthly payment on mortgage is around $950 and I have $127,000 on the mortgage. I bought it right before the recession in '06, and have long since regretted the decision.
2. After the house sells, my girlfriend are going to rent until we get married, which will happen within the next two years. I talked to her about buying a multi-family and living in one of the units, and she likes the idea.
3. In fact, this is pretty much the first idea that I've had in a while that she's been fully on board with. That's not a complaint, by the way, as all of the ideas that she expressed concern with were terrible ideas. I'm thankful to have her as she's become a sort of canary for my various schemes.
4. Long term goal: Increase my cash flow so that I can retire and focus on real estate full time. While simultaneously cutting back on my expenses as much as possible, I'm going to increase my cash flow. Currently, I get about $2,500 a month from my job, and that takes care of my expenses and leaves me about $700 or so surplus once you factor in cash flow from my other assets. So, I need about $1,800 more, right?
5. I want to build this cash flow by buying multi-family properties. From what reading I've done on this site, that seems to be the most effective approach. Besides, I'm not sure that I'm a good enough marketer or salesman to try my hand at the others.
6. I am terrified of getting scammed in this process. There. I've said it. In fact, it's that specific fear that helped keep me away from this site. Not that I don't trust you, but, well, I don't really trust anyone at all when money is involved. We didn't have a lot growing up (single parent household), and I think that had a lot to do with making me this way.
7. Here's my skillset:
-I have zero practical experience with sales, marketing, or business negotiations. I'm kind of an introvert, actually.
-I know how to do basic repairs--hammer and nail sort of stuff--and am generally a quick study when it comes to the stuff that I don't know. I plan to devote a sizable chunk of my summer to learning more handyman skills that I can leverage in buying a home (This Old House was one of my favorite shows growing up).
-I love research. It's weird.
-I'm a voracious reader.
-I seem to have a knack for putting together a basic budget on a spreadsheet. At the very least, my girlfriend seems impressed by it.
-I can do web design and a little bit of coding.
-I'm a good cook. That skill might not be useful in buying a house, but I'm sure I can leverage it one way or another. We all gotta eat, right?
So that's about it. Sorry it was so long. I just wanted to make sure that my head's on straight before I dive in to this thing.
I would probably start by buying an inexpensive house to live in and repair that has an opportunity for instant equity. I would say SFHs are easier for people new to investing. Looks like you can get them starting at 15k:
I do not share the view expressed by @Jassem A. . Anything of 4 units or less is essentially a house (residential property) and no more difficult to look after than a SFH. Keys elements to put on your checklist when hunting for a property are:
1) Separate utilities for each unit. In a small building, water and sewer are likely to be common, but if the water feed runs separately to each unit from the basement/mechanical room you have the option to sub-meter water in the future.
2) Ample parking - unless you live in a large enough urban setting that a significant portion of your clientele do not have vehicles or are accustomed to not having parking.
Where you will be living in one unit, do your analysis as if the unit was being rented to be certain the building will perform if and when you decided to move.
Househack all the way :)
I don't think I'm interested in the single fam stuff. I want to give the house-hacking approach a go, first. Y'know, just to see if it works. Besides, multi-family sounds a little more unconventional, and that sort of thing attracts me.
Still, I didn't realize there were so many low cost places in my area. Kind of makes me wonder if any are in safe neighborhoods. It's worth looking at, though. Thanks for the feedback!
Thanks for the tips. I don't think I ever would have thought to look into the parking or utilities thing.
By the way, at some point I need to start looking for an REIA to be a part of. Know of any good ones in the Athens or Atlanta area?
That's the general idea!
Most community colleges offer classes in carpentry/plumbing/hvac/etc that would be invaluable to you as a newbie with less money than knowledge/skills. The classes are very affordable, costing you more in time than money.
For someone in your position with no wife, no children, and no overall responsibilities, I'd recommend those classes to hone your ability to handle minor breakdowns.
Buy a 3 or 4-unit using a FHA loan, and you'll be on a fantastic start to financial independence.
Oh, that's genius. I'm definitely looking into that.
My friend, welcome back :) Your skills will not be nearly as important as your ability to overcome fear. This ability and not skills will determine if you or any of us have what it takes to make this a reality. So fixate on that first and the skills will fall into place.( Don't forget that FHA has extended PMI for the life of the loan. Not that that's a deal breaker, just a fyi. Remember multi fam changes at 5+, appraising and lending are different. But a nice du, tri, or 4 might be something your looking for) Have a wonderful night :)
Oh absolutely. I daresay that that's likely to be my biggest hurdle. I know full well how inexperienced I am, and I know full well that I'd be easy prey.
That's the worst of it. I'd be vulnerable just because I don't know what I don't know.
It doesn't really help that I naturally distrust anyone and everyone who is selling something. Any pointers on getting around that? More specifically, do you have any thoughts on how to handle the sort of cognitive dissonance that I know I'm going to experience when I start pursuing real estate deals? (IE I hate people selling me things, but I'm going to have to be a salesman of sorts myself if I hope to be successful.)
I agree with Ross Ellington. Carpentry skills are not going to make you financially free, your ability to overcome fear and do some marketing and get some leads and make offers and negotiate deals, however, will.
Based on everything you wrote, I think you and I are a lot alike... I am also a cook, or at least I was a cook before I got into real estate. I am also a voracious reader and very analytic (created lots of my own deal calculators on Excel for my own use), and I also got sidetracked many times with all kinds of "get rich quick" programs before finally realizing that it's not going to come easy (or quickly).
As far as your goal, it's definitely a good one... it's just a matter of what to buy and how to buy it. Multi-family is great for cash flow simply because it produces more of it, but you can also buy SFHs for cash flow. Personally, I buy both! I have a 5 plex and 2 houses right now, all of which cash flow quite nicely, and I'm in the market for more of either! My goal is to be, in the words of Ron LeGrand, a "Transaction Engineer", and make money on whatever comes my way.
Anyway, keep studying and make sure you do at least one thing everyday to get closer to your goal!
Also look at http://www.reiclub.com/real-estate-clubs/georgia.h....
(IE I hate people selling me things, but I'm going to have to be a salesman of sorts myself if I hope to be successful.)
My friend, I think you are confusing what it is to sale something. It's only negative if you're offering a bad product or dishonest service. If I'm selling kids drugs that's bad, if I'm selling the cure to cancer that's good. What you have to offer is good because you're not going to take advantage of people, whether it be as a landlord (buy and hold), selling a home to someone (flipping) or anything else related to RE.
You're right, you might someday get taken of advantage of, that is a possibility. You might get a bad deal, or a tenant that doesn't pay rent or destroys your property. Bad things are going to happen to you rather you chase this dream or not, that's life. The important question we must ask ourselves is not what happens to us but how we respond. So I encourage you to get over whatever hurdles have been keeping you down and make it happen in your life :) Have a wonderful night
I'd actually been thinking of checking out gareia. The atlantareia's site just looks a little too flashy and busy for my tastes, though.
You're so right. I guess I just assume that it's all dishonest, and that's no way to be successful.
And yeah, calamities happen. I've seen my dad nailed by bankruptcy, and it pretty much did him in. He made a lot of bad decisions--going to rent-to-own places, getting tattoos because, as he put it, that was the only thing that the government or the banks couldn't take away from him.
Oddly enough, whenever I suggested investing his money instead of buying lottery tickets, he always pooh-poohed my ideas, saying that it was too risky.
I know, right?
Anyway, that's my fear: Ending up like him. But if I don't get over that fear, then that's exactly what's going to happen to me. It's like Oedipus Rex.
At least I don't have to marry my own mother.
You don't have to be anybody you don't want to :)
Travis, you need to buy a house but so not want to be taken advantage of. When I bought out of state I made connections with people in the area I wanted to invest in. I helped out with advice, etc. When I started looking for places to buy I ran the scenarios past my connections. They had absolutely nothing to gain either way. Some had lived in the town all their life so their insight was very helpful. Location, location, location. No matter what you put into a property in a bad area it can fall apart. In a nice area, especially an up and coming one, most of your investments increase value. So network and start learning your area. What are normal prices how were they a year ago, or 2 years ago? How are the schools for that area? What are the rents for that area? You get the idea? Knowledge will help see what is a deal and what is not, then run it past your connections. Good luck and get going!
Originally posted by @Ross Ellington :
You don't have to be anybody you don't want to :)
Speaking of schools, what do you make of that Great Schools website? It seems to rate most of the schools where I look rather poorly. Hell, it seems to rate most of the public schools in Georgia rather poorly.
But I don't think they're that bad. Then again, I work in one, so I'm a little biased.
@Travis H. , for starters I use the ratings on Zillow. Then if you look in the nicer areas of the city you will find the schools with high ratings, then find the boundaries for the schools and often you can find a few pockets where prices are low but schools are good. That is often a good area to do flips in, but again get advice from those who know and have no dog in the fight.
I don't know what it is, but something about that explanation reminds me of the process involved in staking out a good fishing hole.
There are some smaller groups around the Atlanta area. One such group is the Way Down South group. The group is headed up by Stacy Rowles. We meet on the 4th Monday of every month. With using virtual assistants "VA's" being the topic for April the 27th. She uses MeetUp, as do other inventor meetings around Atlanta. This group meets in Newnan, just south of Atlanta. As I'm from Columbus, it's not to inconvenient to attend and network. Their MeetUp site is: http://www.meetup.com/The-Way-Down-South-Real-Esta...
A quick search of other real estate investor MeetUps around Atlanta. http://www.meetup.com/find/?allMeetups=false&keywo...
I am also confident that real estate professionals in your area, can introduce you to other unpublished groups. For instance, we have small groups that meet in restaurants and others in broker conference rooms in Columbus, Ga.
Best of luck.
We have a REA in Athens GA and we meet the last Monday of every month.
Just message me if you'd like an invitation. Thanks.
Free eBook from BiggerPockets!
Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!
- Actionable advice for getting started,
- Discover the 10 Most Lucrative Real Estate Niches,
- Learn how to get started with or without money,
- Explore Real-Life Strategies for Building Wealth,
- And a LOT more.
Sign up below to download the eBook for FREE today!
We hate spam just as much as you
Join the Largest Real Estate Investing Community
Basic membership is free, forever.