So my partner and I have decided to start our real estate investment journey, but we have sooooo many questions!
Where should I start? I have been looking at multi-family and single family units, any idea where would be best for a beginner to start? I have some properties that are in "up and coming areas" that are dirt cheap due to being in horrible condition, and others in well-developed areas, but they cost more and the cash flow would be less due to the higher sale price.
Realtors- I know I need to find a realtor that is familiar with my desired area and works well with investors. But how do I know I got a good realtor? Are there questions I should be asking so I don't look clueless??
Lenders- I have some money saved to a downpayment, so I need to talk to a bank about financing, but what types of questions should I be asking? Commercial Loans (for bigger multi-family properties) vs. Residential loans? Different types of loan for investors?
Once I get the bank to finance a house, how should I fund the rehab? Hard Money Lenders or another private bank loan?
Rehab/contractors- What are the type of questions I should be asking to make sure I'm getting a good reliable contractor that isn't ripping me off? Should I have this contractor before I buy a house to make sure I have some type of a good idea of the cost of rehab?
LLC/S-Corp or not?- I have read mixed review on this but should start a company before buying big properties (or any at all)? Can my company get a mortgage/loan?
Any feedback would help! Thanks!!!
Eliza & Michael
Hi Eliza and Michael,
BiggerPockets is a great place to start! There is a lot of information on here and it could be a little overwhelming. In my opinion, the first place to start would be to define your goals. Once you have a clear goal set, (buy and hold, flip, wholesale) you could then look at multi vs single family. You should talk with lenders early so you know what you are able to afford and you do not waste your time looking at properties that are outside of your price range.
What is your current living situation? There are programs you could take advantage of if you want to house hack for a year or two while doing some rehab work. This will save you some money on the down payment and leave you with more money for rehab. If it is strictly an invest property you are most likely looking at 20%-25% for a down payment.
I find myself getting shiny object syndrome and wanted to go after every new idea I read in a blog post or see on the podcast. I highly recommend that you set a goal and stick to that strategy. Read and learn as much as you can before moving onto other strategies.
I hope this helps get you started!
I'd start with drinking a beer at your local REIA, found either on here or meetup.com.
@Eliza Puente Congratulations on making the decision to get started! This website will be your greatest resource for education and advice, take advantage of it. The only part I can give you any solid advice on is choosing a Realtor. You need to remember you are not searching for a new best friend you are developing a professional relationship. You may have to kiss a few frogs before you find the right one but you want a Realtor with whom you feel comfortable and connect with. This is only my opinion but I think the best way to start is to ask your friends and family if they have a Realtor they've worked with in the past. The other way is to just start interviewing and when you find the right one, stick with them, a good Realtor will be your biggest asset. But please keep this in mind, a Realtor's job is to find good deals for you not to teach you how to be a Real Estate Investor, that's your job. Go into it with realistic expectations of what their role is and you will be successful!! I wish you the best of luck!
@Eliza Puente When it comes to a real estate agent, your first obstacle is to prove to them that you're not wasting their time.
Have a plan that you can describe to them in 2 minutes or less. Think "elevator speech". And have your financing lined up, or at least identified.
If you're planning to wholesale and want your agent to blast out a high volume of offers that are significantly below market, pay them (through their broker) a separate fee for each offer.
For example, in a market where the average property is selling between 98% and 101% of asking price, offering 80% just won't make any sense unless there's something about a specific property that justifies it.
Offers like these are genuine time wasters for agents - and time is the number 1 resource that we have to make a living.
Respect your agent's time and talent and things will work out better for all concerned.
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