new to investing 25k to work with advice

Wholesaler · Miami, FL · Member since 2010 · 346 posts · 3 votes

hello fellow investors!

I am a 21 year old who has saved up some money (only problem is I live in CT houses are expensive) lol and I'm looking to get started in the right direction. My goal in 10 years is to have 5 or 6 rental properties for extra income and increase my net worth! I am looking to get started on my first deal soon I just need some advice.. I contacted a lady in Rochester for a house for 24k. The rent is about 750 and after your minus management fees and insurance and such i'm probably thinking ill get 400 a month of pcf. It is section 8 and I am nervous about the type of people who may trash it.. Do you guys have any good books to recommend or any advice for a first timer! Thanks John

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Nick J.

Residential Real Estate Broker · Payson, AZ · Member since 2009 · 3k+ posts · 1k+ votes

16y

John, welcome to BP.

I don't know why no one hasn't told you the most important rule and that is: QUIT telling people you have $25k to invest.

Sure, ask questions, do this or that blah blah blah but when you start telling people how much money you got, you're gonna open yourself up to snake oil salesman and 'Oh my god!!! you have to buy this house, it will make you so much money' crap.

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Josh Keys
Accountant · Sydey, NSW · Member since 2009 · 105 posts · 24 votes
16y
Welcome to BP John.

If you are serious about getting into property investing, spend plenty of time on this site. Read the articles, blogs and posts on here. Understand the 50% (of expenses) rule as a start. Some swear by these and others donâ€™t but itâ€™s a great starting point.

As far as books go â€“ Highly recommend Real Estate Investing for Dummies by Tyson. Its one of the best out there. I recently read Millionaire Real Estate investor. A bit of a Rich Dad Poor dad style (in that self help kinda way) but still quiet good. Search this site for investing books.

Donâ€™t know too much about Rochester sorry. Unsure whether the cause of low prices are that it is in the rust belt, declining population or crime etc. Suggest checking on city-data.com for more info on the region.

Having Section 8 tenants doesnt automatically mean it will get trashed. You just need a good PM.

Good luck.
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Wholesaler · Miami, FL · Member since 2010 · 346 posts · 3 votes
16y
my goal is to get a good PM.. other areas i have interest in is Naples Fl, charlotte NC they seem to have some houses in the 30-50 range.. I think in naples i can hope the market will rebound and I can gain apperciation on the house and positive cash flow! Of course it seems too good to be true also. I did check into the region and it is a very poverty type of neighborhood which maybe not good despite how cheap the houses are.. The one i looked at is on here and is 24,000 and she said she would manage it for 12% so if I bought it I would receive about 300 cash flow.. I read the 50% rule and that is something about all your expenses should be 50 percent of your rent. Of course I read it may be smart to take 20k and use 10k for two properties instead of dumping it into one..
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Des Shei
Investor · Southern CT, CT · Member since 2010 · 211 posts · 41 votes
16y
John, welcome to BP. i'm in CT myself. i would advise you hang on to your 25k and educate yourself to the point of being comfortable with various R.E topics/terminology. There's a wealth of information on this site that is free. Once you are at that stage and understand these different concepts, you can decide on which makes sense for you to pursue based on your personality traits etc. Often times people starting out have a tendency to want to do the "shot gun" approach and do everything at once. That's not what you want to do.
regards,
Desmond
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Wholesaler · Miami, FL · Member since 2010 · 346 posts · 3 votes
16y
Thanks! i appreciate it. I will stay on here and read articles and the forum everyday. As you know CT is tough to invest in because the housing and taxes are so high. Another quick question do alot of people look on here for properties and do you have success with them?
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Peter Giardini
Rental Property Investor · Baltimore, MD · Member since 2009 · 624 posts · 559 votes
16y
John,

Welcome to BP. This is a great site to learn and network.

Regarding your "belief" that it is too expensive to invest in CT... I will bet that if you asked that question of almost every new investor they would say the same thing regarding their location... and while I acknowledge there may be some exceptions (New York City comes to mind) there is an entire world of investing going on right under your nose and you probably don't even realize it. Find your local real estate investors association (CT has a good one), join it and discover what I am speaking of.

Also, just because you can purchase a property cheaply does not mean it is a good investment. Assuming you are speaking of Rochester NY... there are many, many property owners who jumped into the Rochester market in 06 -07 and they got creamed.

Also, again... there are no "good" property managers... especially for someone just starting out and trying to invest from 6 hours away....

And... there is this old saying that you should take to heart... "don't invest in properties that are more then an hours' drive from where you live!"

Best of luck!
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Wholesaler · Miami, FL · Member since 2010 · 346 posts · 3 votes
16y
Thanks Pete, I already started looking into the REIA, but I am a bit nervous to attend the meetings. I will see when the next one I saw their are fee's and some are free which ones do you recommend?
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Jeremy Tucker
New London, NC · Member since 2009 · 14 posts · 1 vote
16y
Why would you be nervous to attend REIA meetings? at one point all of us were new to this game. My 2 cents: 1)Invest your time into educating your self but stay away from the late night infomercials and allot of the gurus online. there are alot of honest people here on BP that can assist you along the way. I'm not saying that all REI courses are bad or scams but there are some that prey on the lack of knowledge of others. You can recognizr these because all through out the seminar they lead up to the "big" secret. which of course is more money for them to "teach" you how to invest. There are allot of great concepts out there but do be careful.
2) be completely transparent on honest with your clients. Integrity is something that you can never regain after you loose it.

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Des Shei
Investor · Southern CT, CT · Member since 2010 · 211 posts · 41 votes
16y
John,
CT is very far from tough to invest in. You can add me as a collegue. i'll be glad to speak with you sometime.
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Rod Marlow
Real Estate Investor · Sherman oaks, CA · Member since 2010 · 52 posts · 12 votes
16y
Don't be nervous about going to an REI meeting..We all have to start somewhere..You'll probably meet very positive experienced people who will be helpful and maybe even instrumental in your decision making..Nothing to be nervous about...and don't spend any money yet!! Read this forum lots before you start spending cash..You will save lots of money and heartache..Best of luck
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Wholesaler · Miami, FL · Member since 2010 · 346 posts · 3 votes
16y
well what she told me was " some PM's charge 15% but I am not greedy and only will charge 12%" I realize that I can probably do a better job than her just reading these articles on how to screen and be a landlord I have already learned alot. I saw a site called CTREIA that has a membership any one have experience with them?
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Des Shei
Investor · Southern CT, CT · Member since 2010 · 211 posts · 41 votes
16y
CTREIA i believe is the largest investor group in CT. they are good and have alot of programs going on year round. I know people who are members and attend their meetings but i am yet to attend myself. Actually i met two private investors from CTREIA referrals.
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Wholesaler · Miami, FL · Member since 2010 · 346 posts · 3 votes
16y
That good! so that would probably be my best bet to get started. I actually listened to the phone call tonight where the two owners said they can get properties for like 10k from tax based auctions? she also said there is one in waterbury for 9k and produces 800 a month in rent. I find this hard to believe
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Wholesaler · Miami, FL · Member since 2010 · 346 posts · 3 votes
16y
that would be like 100% ROI and that seems too good to be true which is why I didnt know about them..
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Raymond B.
FL · Member since 2009 · 2k+ posts · 357 votes
16y
John,
I live in Wallingford, Ct.
I attended my first REIA meeting last June.
I've met a lot of good people at the meetings.
If it would make you comfortable, you can go with me to the next meeting.

You can find cheap houses in Ct., but the neighborhoods might not be to your liking.

Ray in Ct.
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Wholesaler · Miami, FL · Member since 2010 · 346 posts · 3 votes
16y
Yea, I see a bunch of cheap houses in neighborhoods that look rough, but if they can make good cash flow that is fine with me. Ray, you are actually into the same kind of investing that I am interested in which is buying rentals and making extra money. Yea I will probably head up to the next meeting depending on my school and work schedule but that sounds great!
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Des Shei
Investor · Southern CT, CT · Member since 2010 · 211 posts · 41 votes
16y
I just read over my last post(sorry it was very late). What i meant to say it..."i met two private lenders from CTREIA".
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Des Shei
Investor · Southern CT, CT · Member since 2010 · 211 posts · 41 votes
16y
On another note; Ray and John, i am planning a meeting another BP member from Bristol in New Haven. If you both would like to join, you are welcome to. We can start a networking group since there aren't that many in our area.
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Nick J.
Residential Real Estate Broker · Payson, AZ · Member since 2009 · 3k+ posts · 1k+ votes
16y
John, welcome to BP.

I don't know why no one hasn't told you the most important rule and that is: QUIT telling people you have $25k to invest.

Sure, ask questions, do this or that blah blah blah but when you start telling people how much money you got, you're gonna open yourself up to snake oil salesman and 'Oh my god!!! you have to buy this house, it will make you so much money' crap.

3 Reply
Steven Horvath
Real Estate Investor · houston, TX · Member since 2009 · 77 posts · 18 votes
16y
I think one of the hardest things to do is to determine whether you are buying in a declining neighboorhood, but definetly stop telling people you got xx amount. Maybe spend a year educating yourself on all the avenues, you might find yourself in a completely different aspect of real estate then you thought you would be in.
Steven
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David Breitzmann
San Francisco, CA · Member since 2009 · 171 posts · 24 votes
16y
John,

Great to see you're thinking about the future.

Motiv8ted had some common sense advice, be careful. Meetings can be great for locating specific actors but some can also turn into bad infommercials - remain aware of which type yours is.

In addition to reading, figure out your own goals. What is the figure you desire? Saying 10 properties may mean a figure that can just as easily be attained with 8 bought at a greater margin. What do you want?

That all starts with the basic business plan. Link up with an accountant, lawyer and other needed team members.

A tip is to also learn from RE investors who were pursuing your strategy that lost it all. Success stories are wonderful but may blind you to risk.
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Nick J.
Residential Real Estate Broker · Payson, AZ · Member since 2009 · 3k+ posts · 1k+ votes
16y
Originally posted by David Breitzmann:

A tip is to also learn from RE investors who were pursuing your strategy that lost it all. Success stories are wonderful but may blind you to risk.

That's a great tip. You will learn more from others mistakes that will save you whatever money you do have.
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Curt DavisBusiness Member
Flipper/Rehabber · Memphis, TN · Member since 2008 · 5k+ posts · 2k+ votes
16y
Whenever you listen to a call or webinar you are going to hear many things. I would have to slam down the BS card if someone told me they purchased a home for $9,000 and it rented for $800. This just does not happen. Its not impossible but the chances of it happening are slim to zero.

A $9K home would rent for about $350.
Curt Davis - KAIZEN Realty538 Reviews
Website View Page
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Steve Babiak
Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
16y
Originally posted by Curt Davis:
Whenever you listen to a call or webinar you are going to hear many things. I would have to slam down the BS card if someone told me they purchased a home for $9,000 and it rented for $800. This just does not happen. Its not impossible but the chances of it happening are slim to zero.

A $9K home would rent for about $350.

Agree with the part about call and webinar and seminar BS, and that you have to know it is happening.
But Curt, the post you are referring specifically mentioned tax sales / auctions - and that IS one way to get this sort of property, with the numbers that were mentioned. Especially if it is in a tax deed auction, where you get a deed and not just a lien and where all liens junior to the unpaid taxes (like mortgages) are cleared from title.

BP member jawsette manages to get some finds this way.
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Des Shei
Investor · Southern CT, CT · Member since 2010 · 211 posts · 41 votes
16y
Originally posted by Curt Davis:
Whenever you listen to a call or webinar you are going to hear many things. I would have to slam down the BS card if someone told me they purchased a home for $9,000 and it rented for $800. This just does not happen. Its not impossible but the chances of it happening are slim to zero.

A $9K home would rent for about $350.

I don't know about your area but in this part of the country, it's very possible. i lost out on a deal in my area that went for about 15k with rents of 1000. i'm working on a deal now that i hope to purchase for a similar price + 10k in rehab for a 1200 rent. It's not so much the feasibility of such as deal as much as it is a frequency thing. They are out there but they come around only so often. These are not tax auctions either.
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Josh Harms
Real Estate Investor · Centralia, IL · Member since 2010 · 24 posts · 3 votes
16y
Personally I like Sec. 8 I have about 6 ec. 8 tenants right now and I like that I can go to my mailbox and collect a check. Personally never had a problem with them but I have heard the stories. I think that if you spend enough time on here and checking out other websites and going to your local REIA meeting you will learn a lot.
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