I am a total newbie. I just started learning about real estate and I must say I am intrigued, excited and scared all at the same time! I have been working at my current job for 16 years and I come to realize after multiple efforts in trying to find a way to become financially free and save for me and my family's future, trying various different routes to start a business, that real estate is the answer. It started out with Rich Dad Poor Dad as so many other people started out and I guess I've been doing it wrong all along but it's ok because my eyes are open now. My partner and I have a good chunk of money in our savings and all this time we took the route of just save and save and hopefully it will be enough for our retirement but now that I am 43 I am realizing that we are doing it wrong and our money is doing nothing for us just sitting in the bank. I really want to move into real estate not only because I see it as a great way to become financially free but I am finding myself really LOVING this!
Some people tell me to start slow and buy one or two SFH to start off with and then in a year or two buy a couple more, some people are telling me I am crazy and I should not spend my money but instead save it for retirement. My gut feeling is telling me to go big and start with multi family units. After listening to 3-4 podcasts a day for the past month and reading blogs on BP, I am pretty certain I can do it. I have people management skills and project management skills that I have acquired in the last 16 years. This is the first time I am writing here and I was a little hesitant but I wanted to get a sense of whether I am going in the right direction or I should stay safe. My goal is to have 100 units in 5 years by purchasing 20 units each year (I am open to more but thought it would be more realistic). I live in Los Angeles and the prices here are crazy! I have family in Georgia so am looking to invest in Georgia. I am looking at properties that bring in cash flow of minimum $250/month each unit. I guess I just wanted to get a sense from people that have been in my shoes with no experience and went head on into multi family properties, out of state. Is it realistic? and for those of you that have done it, do you have any tips for me? Is it better to buy out right with cash or finance the homes and just keep adding to our portfolios (As I mentioned we do have a big chunk saved)? Thanks so much for reading this. I love this website!
Well very cool...I'm also in SoCal (Venice) and am from GA so I invested there myself.
I think there's a little more to it. Or rather, some more clarification would be needed in order for someone to answer thoroughly (or maybe it's just me that needs more clarification)-
- when you say MFRs, are you talking about residential MFRs (2-4 units) or commercial/apartment MFRs (5+ units)? Like, what size MFR are we talking about here?
- $250/month per unit is about an average rate for a rent-ready rental property (size and price and such dependent, but just generically speaking)... let's assume $100k per unit to get that... do you have the capital to buy 20 of those a year?
- if financing, 20 per year: would you be planning to finance all of those? I guess this though falls into the- are you talking about residential or commercial loans?
- not a question, but I'm certainly always a fan of leveraging over paying cash-
- while you certainly don't have to disclose exactly how much cash you have saved that you can invest, knowing a ballpark would be necessary for having an idea of what kind of strategy you could/should pursue
- do you want to put work into the properties or want to buy more rent-ready?
I am in a very similar boat as you, just starting out, albeit in very different markets. I realized I had money sitting around and it wasn't working for me. I could continue to do what I have done so far and maintain the status quo, or put it to work using the ambitious bulldog tenacity I have always had but never felt was being fulfilled. I studied fanatically thanks to BP (articles, forums, podcasts, etc.) and have become so enthralled with this new adventure. I attended my first foreclosure auction today as a bidder, just 60 days after committing to learning this craft, and lost a fantastic flip home by $16K. I put so much work into researching and figuring rehab costs, consulting with realtors to determine ARV, pricing contractors and repairs, and doing my best to not get emotionally attached to it. I had my number to bid to, and when two guys ran it on up, I knew I made the right call. If I were going to buy and hold, I would have bid higher, but using the information I learned here, knew when to walk away. It was exhilarating. I noticed as I left the courthouse, I was not bummed at all, but excited to move on to the other properties I have researched and kept in the pipeline in case this one didn't pan out. Back to auction next week!
While I was disappointed, I can sleep well knowing I had faith in my numbers and the deal wasn't good for me. Reading your post reminded me why I got into this in the first place. Your passion for this is infectious. People who tell you that you shouldn't do this, well, just ignore them. If you are passionate about it and determined, you will succeed. Those people will be coming to you in a couple years wanting to know how to get where you are.
Thanks for sharing, and welcome to BP. If you ever need a newbie to bounce ideas off, please let me or any of the other folks here know!
Thank you for your responses! I've been listening to so many podcasts here and reading blogs as well as listening to audio books. It is amazing how much great tips and tricks you can learn from other people in this platform. Am just taking everything in right now and learning how to properly calculate and find good deals as well as listening to various people on their tactics and approach.
So from what I am learning here it seems that it may be easier to acquire a commercial/apartment MFR of let's say 15 units then it is to purchase 15 houses.
Let's say I had 400K available to me and my goal was to reach 100 units in 5 years. What would be the best approach using financing? Looking to buy rentals that are mostly ready to rent. I can work with cosmetic upgrades.
Hi @Aurailia Arnold , have you checked out our Valley Meetup Group? I found it through this site, here's the FB page if you want to check it out and chat with people in your same boat! Next meeting is THIS Thurs.
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