Why do you want to get into REI?
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OK. To answer your original question, “actually getting started...is better than endlessly researching and analysis paralysis", the answer is "NO", and that is the answer to both parts of your question.
It isn't a matter of one or the other, since neither is the way to go.
You don't, "just get started", without being prepared, and you obviously don't research something to death, and never get started. The answer lies somewhere in between You have to know enough to make the best decisions, know when and how to make adjustments when things don't go as planned, but you will never know everything.
I've been doing this since I was in High School, and I learn something new everyday that helps, or will help me down the road.
@Caleb Anderson Welcome to BP! I've been in your position when I was working within M&A and sell-side equity research. Long hours doesn't begin to describe it!
Unlike some other folks, due to the nature of your job/profession, you might not want to be an active real estate investors (could be wrong here). You need to find a combination of active and passive strategies that could work. For instance, you could start buying a single family and progressing from there.
Alternatively, depending on the nature of your financial sophistication/willingness/balance sheet, you could also look into investing through syndications, JVs and/or partnerships. Those are more passive type returns (assuming you're an LP).
Either way, would highly recommend NOT hurrying into your first deal. Take your time and educate yourself. Podcasts are great but go through other source - books, local REIA meetings, connecting with investors/Sponsors and developing your own set of relationships.
Best of luck!
Don't forget you starting at a time when you really need to know what you are doing.
When the tide goes out many here will wish they never heard of bigger pockets.
@Caleb Anderson Knowledge decreases risk. Experience is the best teacher. You can't hit the target unless you pull the trigger. Find a target, pull the trigger, learn, then you will know if you should repeat it or not.
Hi @Caleb Anderson ,
You definitely do not want to throw your hard earned money away by just getting started without any knowledge. I think the podcast tries to be pretty clear about that; educate yourself, but be prepared to actually take action instead of using needing to educate yourself more as an excuse to never do anything.
Given that you already work 55+ hours a week and it doesn't sound like you are looking to leave your job right away, I would focus your REI activity towards creating a business rather than creating a second job for yourself. I don't think you are looking for something else to keep you away from your family for an addition 40+ hours a week, I think you need to figure out what type of investing you are interested in that can help you create the life you want.
My advise is to do research into what that is, and then learn the basics of that particular niche. From there, take action and be prepared to continually learn while doing.
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@Caleb Anderson I agree with most of the other people who commented and wanted to add to what @Omar Khan said. With your schedule it would be beneficial to find a way to invest passively or semi-passively by either lending to an investor who is doing things in your market, or through an established online platform or fund that you invest in completely passively. The first option would be a great way to learn while making some money.
Thanks for all the advice. I can say I would be willing to work extra at first to get something going. Some things I didn't mention- I have a family member that is able to invest at least 50k in something. I am also able to change my job to make a little less $ and work maybe 40-45 hours a week, which is a finacial hit I can take, while still having the option to go back to more $ at 50-55 hours a week if any of this doesn't work out.
Either way, I will take all this advice and continue researching and learning while finding a local REIA and surrounding myself with them. Thanks!
I was in a similar boat. I'm young (just turned 29). Been reading and studying for 10 years. The stars finally aligned this past year and I bought my first duplex. I'm living in one side with my girlfriend and roommate, while renting out the other side. Tenants pay the mortgage and then some. Duplexes (or quads) are phenomenal starter investments. They're small enough to manage with little experience (so the stakes are relatively low), but you also get to experience the power and fun of real estate. I agree with Anthony Dooley...you've got to find some target and shoot. So this being your first shot, try something small. It's a great way to get your feet wet!
@Caleb Anderson Is your family member savvy about REI? I would make sure they knew as much about the deal as you do, and that they go in with eyes wide open to the risks. Will their ROI be commensurate with the money they put into the deal? You want to make sure it is completely fair to them.
Many a friendship has been lost over deals that did not turn out as expected.
You need to mentally accept that things will go wrong, things will be much more expensive than you planned, sometimes you get lucky, but a lot of times it's the worst case scenario, and you have to roll with it. I'm actually grateful for all the crap that has gone wrong now, because with experience, you learn you can get through it, and move forward.
Think about it like this.. in 5 years, will you be happy you waited, or happy you got the guts and did it? Go for turnkey, and get your feet wet.. it doesn't have to be a home run financially, just enough to get started and see if you like it. Once you have one under your belt, you'll become more confident to move forward with others.
@Caleb Anderson I think that buying a BRRR or flip would be a huge mistake for you with all those hours you are working. You don't have time to manage a rehab and you have no experience, so that is recipe for disaster. I would look for properties that have already been updated and are ready to go day one. Everyone wants a deal which usually means buying distressed properties. After all the time and cost of rehab, half the time you would be better off just buying a property that someone already did the heavy lifting on.
Here is an example. I am going to look at a property today that was a flip. They closed in January and put it on the market yesterday. It was completely redone from roof to basement. I can buy it and have a tenant in there within a couple weeks. I work 45 hours a week, so I don't have time for a 5 month rehab project.
Here is the thing. I may pay more up front, but everything is updated and I am financing it over 30 years, so it is just increasing my monthly payment. I get a tenant in right away, so I cash flow month one. In a BRRRR you are spending cash over several months with nothing coming in. Lots more risk in a BRRRR or flip and LOTS more time required.
As far as getting started, most people talk about it and never take action. There is always an excuse why now isn't a good time. The truth is most people should NOT buy rental property. The vast majority of people can't handle it. I tell people, how will you react after your first fire? How about your second fire? What about when a pipe bursts at 1AM? Can you come up with $5000 to replace a bad HVAC in the middle of summer? What about when your tenant just stops paying rent? What about when your property gets trashed, meaning 20 holes in the walls, destroyed flooring, pet urine smells. All this and more has happened to me over the last 15 years. So if you can honestly say, yes I will deal with that (and your wife will too) then go ahead and pull the trigger.
Waiting to get started is my biggest regret.
Burn the candles at both ends. Work 100 hours . Do whatever it takes if it is your dream and goal. 50 hours day job/50 hours real estate investing. Eventually, with enough smart decisions, the real estate investing income can take over the day job income.
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