Which steps would you take first as a new Real Estate Investor?
Berkeley, CA · Member since 2018 · 8 posts · 4 votes
I am just starting to watch BP videos, listen to Podcasts and read the forum threads. I'm beyond fascinated and feeling very motivated with the possibility of finding success in Real Estate Investing!
I currently own a home that I rent out in Oakland CA across the bay from San Francisco. I bought in 2009 for $220k. Currently owe $182k and the house would most likely be worth 600k or so in today's market.
My end game is to have several properties (4-6ish) in the next couple of years. I like the idea of BRRRR. I'd like to have a couple of 2-4plexes, 1-2 small homes to use as Airbnb's near the Russian River area, an ADU in the backyard of the exiting house, land to create a Tiny Home Village and a new house for myself and my family.
What would your first steps be?
@Jessica Scott you made a great first move with your initial purchase. The next step should be to step back and create a business plan. Many people jump into this field without much thought of a plan. I have yet to meet anybody that entered REI with an actual business plan in place before they were trying to hunt down deals. But with any other type of business it is expected to have a business plan in place before starting and reviewing the plan on a yearly basis. If you put a plan together, you will see that your second paragraph is all over the place with ideas... this is actually very dangerous in a business setting.
Sit back and focus and create a long term plan. Your plan may cover all of the strategies you touched on, but over a longer period of time with definite transition points. The plan does not have to be extremely detailed, but you should give yourself an outline. If you find this difficult to do at this point because you are lacking details on these different strategies, do your research on BP and other places as to what is necessary for each strategy. Also reach out to successful people in each arena, take them out for a nice lunch or dinner and talk to them about why they chose each of those strategies. Spending a few hundred dollars for access to successful people is really nothing in the bigger scheme of things. This is VERY different then paying some "guru" for a course... DO NOT DO THIS. Most importantly, when you are creating a business plan you need to do some serious introspection and get to know what your weaknesses and strengths are, before you make any hardcore decisions.
You have a great start, good luck in moving forward!
-Arlen
@Jessica Scott fellow Californian! I would say first is finding what market you want to be in for your properties. If you are thinking of the Oakland/Bay area it will be tougher than say Sonoma county just because of the density and pricing issues. I would say, get with an agent or consultant to help you and determine a game plan of what you are looking for, what pricing you want, and your strategy (flipping, long term hold, house hack, etc...)
From there you now know what you will need to finance the properties, which means either finding a lending platform that compliments your needs so you don't have to empty your pockets on one deal.
Hope this gives a little insight on what my first step would be.
Well your first step should be to define your goals which you already have done!
Start with that and work backwards.
You want 4-6 houses in 2-3 years so that can be:
- 1 Four-Plex
- 2-3 Duplex's
- 4-6 SFH
Which one's interest you the most and will work with what you have financially?
You could snowball a SFH into another using BRRRR and so on until you get to your goal, or
You could build up your savings and buy that one property that will get you to your goal
Best of luck!
Thank you for your advise!
I definitely do not feel comfortable starting my adventure in the Oakland Bay Area (unless of course an AMAZING deal fell in my lap) because it is just too expensive and competitive here. I'm very interesting in the Sacramento area as well as most towns and cities in Sonoma County, especially the Russian River area. I am also open to the idea of researching out of state markets.
I love the concept of the BRRRR process. It seems like the right path for me at this time. I'm meeting with an agent in a few days to discuss a possible game plan. Fingers Crossed!
@Jessica Scott you made a great first move with your initial purchase. The next step should be to step back and create a business plan. Many people jump into this field without much thought of a plan. I have yet to meet anybody that entered REI with an actual business plan in place before they were trying to hunt down deals. But with any other type of business it is expected to have a business plan in place before starting and reviewing the plan on a yearly basis. If you put a plan together, you will see that your second paragraph is all over the place with ideas... this is actually very dangerous in a business setting.
Sit back and focus and create a long term plan. Your plan may cover all of the strategies you touched on, but over a longer period of time with definite transition points. The plan does not have to be extremely detailed, but you should give yourself an outline. If you find this difficult to do at this point because you are lacking details on these different strategies, do your research on BP and other places as to what is necessary for each strategy. Also reach out to successful people in each arena, take them out for a nice lunch or dinner and talk to them about why they chose each of those strategies. Spending a few hundred dollars for access to successful people is really nothing in the bigger scheme of things. This is VERY different then paying some "guru" for a course... DO NOT DO THIS. Most importantly, when you are creating a business plan you need to do some serious introspection and get to know what your weaknesses and strengths are, before you make any hardcore decisions.
You have a great start, good luck in moving forward!
-Arlen
@Arlen Chou, Thank you! This is exactly why I reached out to BP, for words of wisdom!
No Guru's!
Get a Business Plan!
Start Networking!
Introspection!
Due to my many goals it does become a bit overwhelming trying to figure out which project to pursue first. I have a list of a thousand question for the realtor that I'm meeting with and from there I will put together a business plan for the first project. I'll be back on BP to ask an addition thousand questions I'm sure!
Thank you for your time!
Make sure that you meet with a Realtor that has connections to 1.The Deals, 2.People to do the work, 3.Experience because every realtor wants investors but not all of them understand how to help them.