Zion, IL · Member since 2017 · 60 posts · 35 votes
I've come across a lot of different stories on Bigger Pockets, and there are people who come from all different types of backgrounds. Everyone has had a different starting point. If you were young again, where would you start and what would you do differently? Is there anything you'd avoid right away, or something in particular you wish you started doing earlier?
Avoid all out of state investing. I went to 5 states and they all turned out to be the worst performers in my portfolio. The lost opportunity cost of not using that money to invest locally is incalculable.
Never partner with someone with less experience and money. What a complete waste of time.
Sell off my worst performing properties immediately. Never wait and expect it to get better. It doesn't. Drag them out behind the woodshed and beat them mercilessly into the ground with a big wooden club.
If it doesn't feel right, just don't do it. Your gut is much smarter than your brain. You'll be surprised. Live by, "It isn't the ones I don't buy that hurt me."
Avoid niche properties like condos and senior anything (houses, mobiles, condos). In a good market I will do them, and am doing one now, but in any other market these types of properties just take a ruthless beating and are next to impossible to sell.
Focus on cash flow needs today and get that covered ASAP. I still have a Post-It Note stuck above my desk from my early years that reads, "3 IDEAS to increase income $20 and decrease expenses $20." Do this once a month, especially when looking at the credit card bill. Those $40 gaps in the beginning make a big difference over time. I had another one, long gone now, that said, "$100 net income per month." Every month my goal was to increase my net by at least $100. If I did $150, I did not get $50 credit for next month. If I missed my goal that month, I owed it the next month. Once you meet your monthly nut, every other dollar is an extra point you don't need to win. You've already won and now you're in bragging rights territory.
Focus 1/2 to at least 1 day a week on actively building a private money network. This is what really allowed me to grow my business beyond my yearly goals year after year. With good private money lenders at your back, what you can accomplish will surpass even your craziest dreams. Several years ago I wrote down some wild goals that I thought I'd surely disappoint myself with by December, but by June I was rewriting them because I had knocked 7 of my 10 out already all because of one private lender.
Every December spend some serious time thinking, really thinking about what you want to accomplish over the next 12 months. Put these on paper. I put these on a big white board directly above my desk. I have several paper copies as well. I keep one next to my bed and try to look at it before I go to sleep and once I wake up. I keep another tacked to the wall above the toilet paper in the master bath. As my good friend likes to say, "When I'm stinking, I'm thinking." I have my goals numbered and at the right side of the page a line I can write the date on that I complete the goal.
I could go on and on, but these are some of the habits I picked up along the way which I had in the beginning.
Aaron, I asked a lot of questions so I truly appreciate you taking the time to answer. You have definitely provided me with a clearer thought process on all the questions I had. These lunches and meetings you speak of; did you find them through bigger pockets?
No. They were around long before BP. Here in SoCal there are lots of opportunities to get out and meet people interested in real estate and I'm not talking about the monthly REIA meetings. There are lots of independent lunches, wine events, etc. The best way to find out about these occasional meetings is to network, network, network. Or, host one yourself! I wanted a great club that had a no sales pitch atmosphere so I started one. It was a lot of work, but when you're the talking head in the front of a room, lots of people to scared or confused how to get into the game eventually just throw their money at you and let you invest it.
Sizzler is the best place to run a monthly or weekly luncheon. Everyone pays their own tab before they sit down. Makes it sooo much easier than separate checks or trying to sort out a bill. Some Sizzlers also have private party rooms. A meeting at a Sizzler was where I bought my first deal. And even though that business has long since shut its doors, it was where I met some investors I still do a lot of business with these days.
You are awesome. Where the hell did the Sizzlers go in LA? Mines a Chase Bank. I get your point still:)
I've been told there is a monthly luncheon the 2nd Wed of every month somewhere across the street from the Wholefoods on Beach Blvd in Huntington Beach. I've never been because I go to another lunch that is scheduled the same day. I also know Karren Hall of Udirect does wine & cheese socials. I think Bruce Norris and his company put on a breakfast every quarter.
A good person to reach out to would be @Aaron Norris (tag isn't working, but he's on the site).
Well I bought by first property when I was 20, I'm 25 now and have had and sold 8 since then. My first deal I had a partner who didnt bring anything to the table as far as money or flipping skills. Had to split $100k profit with him and it hurt so bad..... Lol never have a partner, realestate investing doesn't require a partner. You write an offer, get the property, fix it, sell it. Done.
It's the only way I know where you can get a lump some of money at one time. Don't split your money, it's not worth any kind of relationship
Well I bought by first property when I was 20, I'm 25 now and have had and sold 8 since then. My first deal I had a partner who didnt bring anything to the table as far as money or flipping skills. Had to split $100k profit with him and it hurt so bad..... Lol never have a partner, realestate investing doesn't require a partner. You write an offer, get the property, fix it, sell it. Done.
It's the only way I know where you can get a lump some of money at one time. Don't split your money, it's not worth any kind of relationship
I'm curious, how did you get so far deep into that deal that you had to split profits with someone who didn't bring anything to the table? Especially with the financial aspects. Was he a close friend?
I wouldn't buy sfr's. I would buy multifamily with high leverage. 10+ Single family residences are a headache 10 tax bills 10 insurance bills on and on. Much more difficult to leverage than multifamily building's.
Stephen
That's a very good point. I never took into consideration the amount of tax, and insurance bills that would be needed.
In your experience, what makes multi family units easier to leverage?
@Taylor Nunn , If I could start over again, I would jump on investing younger, I would go to the REIAS, I would not be a good Realtor for so long without learning to invest, I would partner with a lot of my clients to split profits on their acquisitions
Thank you for that! I didn't realize those associations existed.
That you don't need a ton of money to get started. If you find the deals the money will find you.
Did you aquire your real estate license before finding those good deals?
No I started and did multiple deals before I ever got my license. I actually just got my license this month but you definitely do not need it to do deals. Actually in some cases it is better not to have your license so then you do not split anything with your broker etc.
That you don't need a ton of money to get started. If you find the deals the money will find you.
Did you aquire your real estate license before finding those good deals?
No I started and did multiple deals before I ever got my license. I actually just got my license this month but you definitely do not need it to do deals. Actually in some cases it is better not to have your license so then you do not split anything with your broker etc.
That's interesting, I didn't know you had to split anything with a broker!
If you don't have your license though, don't you have to pay an agent anyway?
I wish I would have understood cycles better back then. I was very pleased to have found houses for 25% of what they were in the college town I moved from. I would have started buying sooner and faster. Had I bought 10 houses like I bought my current residence I would already be retired. I would have educated myself sooner. I went looking for more information on how to screen tenants and found BP. Even reading a few RE books would have helped. I literally did it by trial and error for the first 20 years. It was very part time and even had a partner back then who did a lot of the day to day stuff while I did acquisitions and lined up financing. While real estate investing exceeded my expectations, in the last 3 years since I got serious I have at least doubled what I used to accomplish any other year and that with a good partner. Get educated and take action.
Taylor, great post and great topic. I’m just starting out as well, this is extremely valuable. I’m a huge fan of the suggestion to figure out a way to increase net income by $100 per month. So obtainable when it’s broken down that much.
Also, LTV is loan to value :) If a bank says 80% loan to value, on a 100k property, they will only loan 80k.
Thanks again!
If I was to start again I would have started sooner and I would have got an FHA and house hacked. Me and my wife found out “forever home” before I really got into the idea of REI. So because we had our primary residence we can no longer get an FHA which made starting out a whole lot tougher. A nice quadplex on an FHA would have been a perfect start.
I would of bought as much as I could sooner in Australia before the banks would not touch me. Australian market has great appreciation., thats retirement savings
I would've bought closer to home. All in my own neighborhood, in 2003 when I bought the one I'm in. They are still 50% higher than they were then and they would be easier to work on and deal with close to home, rather than 30 minutes away.
I would've kept my construction company so I had guys to send to do repair work and work on rehabs.
I would not have used leverage close to home. But I might have used leverage on the coast where prices quadrupled. My dad made that mistake. Only bought two with cash when he could've bought 10 and made several million.
I tried to buy a block of 10 homes once in a great rental spot before the upswing, and still wish I had, but the original developer was only selling to home owners. I could've made a killing in there if they didn't have that restriction.
If I was young again and started over I would invest in real estate to build cash flow first instead on the fix and flip rat race. I would focus more on acquiring more income properties like apartments and self storage maybe AirBnB properties as well.
Taylor, great post and great topic. I’m just starting out as well, this is extremely valuable. I’m a huge fan of the suggestion to figure out a way to increase net income by $100 per month. So obtainable when it’s broken down that much.
Also, LTV is loan to value :) If a bank says 80% loan to value, on a 100k property, they will only loan 80k.
Thanks again!
Thank You! I'm surprised by how many replies I've gotten. I've learned so much! I also agree that the thought of increasing net income by $100 every month was a great way to break it down.
I appreciate you clearing that up, it makes a lot more sense now!