Analyzing First Time Investment Oppurtunity

4 Replies

Hi everyone,

Quick intro/background on me and then I'll get to the meat of the post:  I'm a healthcare technology entrepreneur married to a real estate agent.  We've been married for 5 years and have collectively been investing in our businesses and the stock market.  Currently, we're ready to diversify further into real estate by jumping investing outside of my wife's RE business.  We think we initially want to look into buy-and-hold rentals and possibly flips if the opportunity presents itself.  I've been lurking on this site for about a week since reading about it in the Entrepreneur Magazine article.  Now I'm posting for some general first-time investor advice.

I have a couple of questions about how the folks with experience on here got into their first property.  My specific questions are:

  • What was your approach to finding your first property?  What were the key attributes for you?  Price? Long-term upside? Location?  Single Family?  Attached?
  • How did you approach the deal from a financial perspective?  100% cash?  100% financing?  Bank financing? Private loan?  If you had multiple options for the financial structuring, what was the ultimate deciding factor on pulling the trigger on that structure?

I guess what I'm really looking for is an understanding of how seasoned and experienced investors approach opportunities.  I know there are a lot of factors, but as with any venture, I want to put together a sound strategy for jumping into the market.

Thanks!

Ryan

When I decided to buy my first 2 properties I purchased in areas where I knew my clients were having success.  I then looked at the cash flow.  I used hard money to purchase, renovate and then refinance into bank financing.  

So I guess you could say I was looking for deals that worked using hard money in decent areas and decent cash flow.

Medium buymemphisnow stacksCurt Davis, Buy Memphis Now | [email protected] | 605‑310‑7929 | http://www.BuyMemphisNow.com

@Ryan Brantley - Welcome to the BP community. Yes, the Entrepreneur articles are excellent and I am not surprised that you would go to the community for more info....lol.

We are here to help!

Anyway, I will share my view on REI as we have the same traits with regards to stocks and real estate.

I will rehash your questions and answer them accordingly.

What was your approach to finding your first property? I live in New York and my investments are in metro Atlanta. In 2013 I spent two weeks in Georgia with my RE agent daily pounding the pavement and looking at scores of houses in various neighborhoods.

Between June 2013 and December 2013, I purchased 5 properties, made six trips to Atlanta. I did the closings remotely, but, I physically wanted to see for myself what exactly I am spending my money on. It was a lot of money, so, I wanted to own the responsibility for the risk of taking this huge step.

Also, one of my stipulations was that I was only interested in properties with tenants in them. This has been positive for me, because of the fact that I hit the ground running with immediate income streams. I didn't have to wait a month or more to get tenants in place.

Frankly, this approach drove my RE agent crazy, but, I didn't care, it was my rule and it works!

What were the key attributes for you, Price? Yes, absolutely

Long-term upside? Yes

Location? Yes

Single Family? Yes

Attached? No

How did you approach the deal from a financial perspective? 100% cash? Yes, I raided my 401k and paid cash for the purchases. At that time I was competing heavily with institutional investors with their tons of cash. So, to be competitive with offers I used cash as well.

100% financing? - No, as explained above.

Bank financing? - No

 Private loan? - No

 If you had multiple options for the financial structuring, what was the ultimate deciding factor on pulling the trigger on that structure? Again, to be competitive even in today's marketplace, cash is King. Plus it depends on your tolerance for risk and your long term goals. 

My objective is long term buy and hold.

Additionally, I tell people all the time that not everyone can be a landlord. So, you have to take that into consideration as well with regards to moving into a new arena of dealing with people, issues and management of the properties. Unless you decide not to self manage the properties.

Good luck with your endeavor and all the best with your REI plans.

Medium stml logoLinval T., STML Housing Solutions, LLC | [email protected] | 678‑922‑2477 | http://www.stmlhousing.com | NY Agent # 40TA0997583

@Curt Davis  - Thanks for the feedback!  @Linval T. - I hear you on the cash thing.  I tried picking up a few short-sale/forclosure opps back in 2008/9.  I didn't have the capital back then so I just ended up getting trounced by guys with cash in pocket!  How have your Atlanta properties been working out for you?

@Ryan Brantley - You are welcome. They are doing fine and thanks for asking. Actually, I am in the midst of adding another one in a partnership with four friends.

I have no regrets about my selections and the tenants are fantastic.

The tenants pay online and one of the things that helped is the fact that I have home warranty contracts setup. So, in the event of any internal plumbing, electrical, garage door issues etc. They are taken care of readily. If there is any major work needed outside the scope of my warranty providers' contracts, my broker helps me with local personnel referrals to take care of those issues promptly.

So, being in New York is no road block to the maintenance of the properties.

Frankly, If I had to retrace my steps, the same acquisition and maintenance methods would be utilized.

Medium stml logoLinval T., STML Housing Solutions, LLC | [email protected] | 678‑922‑2477 | http://www.stmlhousing.com | NY Agent # 40TA0997583

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