How to start investing with no previous experience?

[Jorge Quintero]

Hello, BP! I am currently saving up for my first property and my goal is to have my first rental property in Houston, TX by the end of 2018! I am starting to become a lot more familiar with REI but one thing I’m confused about is, what might be the best way to start investing for someone with no experience and my age (22 yrs old)? Some background on my finances: - I make about 48k a year after taxes - I don’t have any credit card debt. - Only about $5k in student debt - I am saving $1.5-2k a month with about $2.5k saved up currently - I have about $1.2k in expenses each month I have big goals and want to achieve financial freedom (making about 1.5-2x my current monthly income) by Jan 1, 2023. I’m planning on starting with small multi family properties or SFRs next year and maybe moving into commercial real estate later on. So back to my question, for my situation, would it be better to get a small multi family property and house hack it? Or are private/HML investors willing to take gambles on new investors with no experience? I have been able to successfully build relationships with other people in real estate thus far, but am wary whether people are generally trustful of new investors.

[Mihir Bhimaraju]

@Jorge Quintero I just noticed you're a fellow electrical engineer. Cheers! :D

I usually "binary sort" deals- deals that meet 1% and deals that don't. All you need is the rent and sale price for this. You can quickly eliminate deals that won't make money for you this way. Then you move onto deals that have potential. This is where you spend more time analyzing the ROI. You're right- a lot of numbers need to be accurate. That's how you know what to expect and whether it's a good deal or not.

For insurance estimate- call up multiple insurance agents and see what they'd quote. That's the only way you'll know. Make sure there's a tradeoff between good coverage and good price.

CapEx & Repairs- It depends. If it's a turnkey home- they're minimal, as in you won't need to repair a whole lot. You're basically saving up a % when poop hits the roof ( sometimes literally). That's why they suggest 10% for Cap & 10% for repairs. Now, if you buy a home that needs frequent repairs, you'll end up spending more. Make sure you get an inspection and preferably a walk through from a handyman. This helps. For ex, I bought a place that needs significant work done. I spend more than 10% - but I knew that before going in. So it depends on your deal.

You'd also want to get to know any utilities you're responsible for. It's a deal killer sometimes if you end up paying gas, water and electricity. Hope this helps.

You're an engineer man! I'm pretty confident you'll get a hang of it once you take the plunge.