Where to start

11 Replies

Hi All,

I'm new to this forum and new to real estate investing. I haven't purchased anything yet... I live in CA where prices are exorbitant. I had some realtors send me some potential investment homes (multiplexes) for rent in LA in my price range (600k) but they all looked trashy. I also have family in Texas where I was considering buying for rent. I don't have a lot of cash, maybe 20k to start. 

My question is, should I go for cash flow, long term equity, renting multiplexes? I'm struggling with what should be my target.

maybe start with the ubg? (ultimate beginners guide) Ubg

 

that's where found what I wanted to do. I haven't made an actual purchase yet, but it certainly help narrow down what I was looking for and setting a criteria so that I could stop chasing every shiny thing I heard about. Find a nitch that fits your goals, lifestyle and personality. 

Because of your situation you should seriously and as a matter of urgency consider the FHA 3.5 % downpayment for owner occupied triplex or quadruplex purchase.you could also benefit from rehab loan if you need to fix the property and hold to generate rental cashflow from this multiplex investment property. at the end of the day you wont even need to spend half or your 20k. Do your due diligence meticulously on this Nieche.

I would definitely consider investing in Texas. You're at an advantage by having family members that reside there. California is just too high. Marginally it doesn't make sense in any aspect. Happy investing!

@Leland Smith welcome to real estate. Knowing what your after is more than half the challenge. 

The challenge is to figure out what you're after before you get burned out and throw in the towel. 

IMO the best bang for your buck will be marketing. 2k in letters could gross you 20$k in fees. 

I hear Texas has areas that are a great market for investing right now. I used to live in LA but invested in Fresno, Ca. where I'm originally from. The ROI was a bit better. If you're dead set on living in LA and are currently renting in LA... AND if the numbers make sense (in my opinion, even coming close to breaking even) I might just do it. I hate renting and FHA is the way to go. It's your first purchase, you can rehab a bit to bring it up to the local market with the money you save. It's definitely not a get rich quick strategy but it can help you get your feet wet if buy and hold is your goal.

First you need to know what your goals are.

Are you looking to be a buy and hold investor?

What is your goal with the real estate properties you acquire?

I wouldn't bank on long term equity as prices do go up and down.  There probably will be another big housing crash soon.  At least that's what I see it's headed for.

You definitely need to have cash flow.

I think a multiplex such as a duplex or quadplex would be a great way to start and get your feet wet.  

I highly suggest you start listening to the podcasts.  They pretty much answer every question imaginable.   All the resources here are free.  Lots of how to guides as well.

Best of luck to you and welcome to BP.

Hey! I'm from CA too and I'm also new to BP too.

I was looking at the prices here around where I live and yes the prices here doesn't make any sense! The single families are so overpriced! And you look at the pics and wow. So trashy! You wonder how people even buy those kind of properties. Not only that, how do you even make a profit when the asking price is already so high? There's not much room for flipping neither wholesaling!

And in my case, I wasn't even approved for the FHA. You should check it out tho. Owner occupy is a way to go.

And since you have family in Texas, you should really take in consideration checking out the market there!

Good luck!

Hi Leland! Most of us have been where you are... with so many options and strategies that people talk about in the forums and podcasts, it can be a bit overwhelming. As others have said, take your time and don't rush.

These days I am trying to do what rings true for me. It seems like once a week I am discussing using leverage as a strategy purchase buy and holds (we are currently wholesaling to build capital), but then I shy away because I'm not a big risk taker. So, I have to ignore all my temptations to chase all the "shiny objects" and focus on doing one thing... wholesaling. When we hit our financial goal there, then I will start worrying about buy and holds.

As mentioned already, start trying to consider what your long term goals are. Do you like your day job and want to use real estate as your get rich slow scheme, or are you really hoping to change jobs? If you aren't holding property long term but are doing flips or wholesales instead, many would say that's working (not investing).

The great news is, you don't have to get this all figured out today. :) Don't let that 20k burn a hole through your pocket and spend time going to REIAs, reading, listening to podcasts, etc. In time, something will click and you will know which path seems like the best fit for you.

Just don't quit and don't give up, ok? There are lots of amazing people here who are willing to help!

Hang in there and welcome to BP!

I would invest in private equity RE investment firms who put their funds up in a first loss position.  Returns start at 9% and the average is around 26%.  I know of several firms who are always looking for investors so hit me up if you want me to make intros.

Originally posted by @Mike Osterman :

@Leland Smith welcome to real estate. Knowing what your after is more than half the challenge. 

The challenge is to figure out what you're after before you get burned out and throw in the towel. 

IMO the best bang for your buck will be marketing. 2k in letters could gross you 20$k in fees. 

 Hi Mike,

Can you explain that method? I haven't heard of this. You mean paying to advertise for someone and earn profits on leads?

Originally posted by @Jeff McDermott :

I would invest in private equity RE investment firms who put their funds up in a first loss position.  Returns start at 9% and the average is around 26%.  I know of several firms who are always looking for investors so hit me up if you want me to make intros.

 Absolutely, I'll PM you!

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

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.

Lock We hate spam just as much as you