New BP member looking for advice about the industry
Hey Bigger Pockets Community!
I am a new member of the Bigger Pockets Website. I have been listening to the podcast for the last 4 months or so. I have absorbed a lot of information from listening to the podcast, but I know that learning in the field is the best way to learn. I am currently trying to save up money so that my wife and I can start investing ourselves. I am mostly interested in creating a portfolio of buy and hold properties that will create positive cash flow and that will appraise in value over the next 10-15 years. I also am interested in Flipping, but I know that flipping is a lot more complicated.
I live in the Northern Utah Area, in South Ogden to be exact. I have learned a lot from listening to the podcasts about the concepts, strategies, and the numbers. What I lack is understanding the market, and knowing how to proper analyze deals. I know and have heard in the podcasts that you never really learn the industry until you start going after deals and making offers. However, I still feel like I am not quite ready to do a deal on my own. I don't want to get myself into a pickle. I am looking for some pointers, tips, and ideas on what I should do before I get myself into a situation where I am in over my head.
Anyone that can impart some knowledge or that knows where I may be able to turn to in my area would be much appreciated!
Thank you!
Hi Austin - Welcome to BP! With all the opportunities that exist, it can be very overwhelming. Although I own 3 SFH rentals already, I'm in the process of moving into multi-family and commercial. I too have been consuming blogs, podcasts, books, etc. for the past several months. In addition though, I've been out looking at properties every week. If you have not been studying your target market and looking at properties (in person) I'd recommend you focus on this until you feel you know it well.
Looking for buy and holds versus flip deals can take you in very different directions, so I'd recommend you choose an area to focus on first. Based on your interests, experience, risk tolerance, and budget, you'll need to decide which direction to head. But once you do, it will be so much easier to plan your next steps.
Hope this is helpful. Good luck.
@David Bardwell Thank you for the tips! So did you just look for properties and run your numbers for a while until you felt like you were familiar with the areas market value, rents, NOI, etc? And then once you were comfortable with running and analyzing deals you decided to bring money to the table and make offers? I thought about doing that too, but don’t want to be misunderstood by the real estate community as someone who was just going to look and never make an offer.
I recommend that you find a meet-up, and start talking with those in your local market. You will learn a lot of information that you can't glean from the community at large, as real estate is local.
When I was in "shopping" mode, I ran some properties through the calculators at the top of this site. I made myself a "Avatar House" on a sticky note, and on my phone. I had all the numbers I needed...the cost of the house, the amount of insurance and property taxes, going rents for similar houses in the same neighborhood, and all the rest.
I have a very "cookie cutter" strategy, as I know exactly what type of house I want to buy. I prefer brick or block 3/2 houses B+ quality houses no older than 10 years old for my long term holds. I like C properties that I plan on taking to B+ properties when I am looking for a fix and flip opportunity. Those two properties, the hold and the flip, are likely in different neighborhoods.
When I am shopping for houses, I keep these numbers in front of my eyes...and I know it when I see it. I call my Realtor ASAP, make an offer and punt from there. Or when I am in the season where I am marketing (I haven't for a few years) I do direct mail to neighborhoods in which I'd like to buy. Having those numbers in advance helps me to be efficient, as I don't have to run them a zillion times, and I know what will work for me in terms of cash flow. I can make an offer, and not be emo about the outcome. If it doesn't work, it doesn't work.
Welcome Austin, Its always good to see more Utahn investors. To answer your question I have a few tips.
1. Focus on what you want. (this case rental portfolio)
2. Define your market. Are you looking for Odgen, Centerville, layton, Roy? Be specific how many bed/bath? Is a fixer upper ok?
3. Start looking at the market via realtor.com, zillow.com, etc get learning the numbers for your neighborhood i.e. how much rents go for.
4. If you are looking on the MLS find a good real estate agent (either another investor or someone who friends recommend). If you want off market deals find wholesalers or start marketing via direct mail to neighborhoods you would like to own rentals.
5. Get financing in place. This can be another post in itself but you need money to buy houses.
6. Be patitient. I see so many newbies just want a deal that they buy anything. Take your time if you want reach out to me and I can verify it. (I invest in salt lake and the suburbs to the south).
7. I want you to realize that currently on the MLS there is alot of competition which is why getting a good realtor or a steady stream of properties via marketing is important. If the deals were so easy that no work was required it is probably already taken by someone.
8. Join your local REIAs I have a friend that is looking to start an investment group up in the layton area and can keep you posted if he starts if up seriously.
Thats my basics for getting started. I wish you the best of luck Austin and wish you the best of luck in the Utah market.
You might want to check this out https://www.biggerpockets.com/forums/517/topics/572541-3-bed-1-bath-home-fix-and-flip-or-buy-and-hold-ogden-utah?highlight_post=3457274&page=1#p3457274
Hi Kendall! It’s great that you’ve been researching real estate investing on the BP site. As you mentioned the missing component is often the application part. This part, especially for a newbie can be difficult when going alone.
For this reason we often do a Facebook live each Saturday morning through both fix and flip as well as buy and hold projects. Pls connect with me for details thx
@Austin Kendell Come to the Ogden investor’s meet up tonight!
Austin,
I echo what a lot of people have already said. Great input here.
One thing that I'd add that I think is really good advise is to expect one offer to be accepted for every 10 offers you submit. Obviously this isn't exact but it puts you in a state of mind that makes things more analytical rather than emotional. Just run the numbers, come to an asking price that works for you, and then submit your offer. With the Utah market as hot as it is you might need to adapt a little but you get the point.
Also, find a realtor that understands investors or even has investment properties them self so you don't have to spend time teaching them how to evaluate deals for you. Find someone that can pre vet deals before they send them to you. You can find these guys here on BP, referrals from other investors, or at your local REI meet up groups.
Best of luck with everything! I'm down here in Utah County so if I can ever be of assistance feel free to reach out.
Originally posted by @Austin Kendell:
@David Bardwell Thank you for the tips! So did you just look for properties and run your numbers for a while until you felt like you were familiar with the areas market value, rents, NOI, etc? And then once you were comfortable with running and analyzing deals you decided to bring money to the table and make offers? I thought about doing that too, but don't want to be misunderstood by the real estate community as someone who was just going to look and never make an offer.
I was a property stalker online for about 2 solid months before I even asked my agent to set up a showing. During that time I was analyzing deals using the calculators on this site but eventually set up my own in excel that work better for me. But they were key in helping me understand what to include in the equations.
After starting to look at properties, I started to realize what I liked and didn't, which areas were feasible and which were not, and how realistic my budget was. I was looking at way too large of a geographic area at first. Once I narrowed it down, along with some of my property parameters, it became managable.
In the last 2 months or so I've probably seen 20 properties, made 4 offers (or tied to but they sold too quickly!), and further refined my target properties based on what I'm seeing in the market and the responses I'm getting to my inquiries and offers.
One recommendation I saw here that I'll echo, is that you should find an agent who understands investors, and one who is willing to work on your terms. The reality is that you will want to see a LOT of properties relative to what you'll be putting offers in for--at least until you really know what you want. Most properties have the potential to be a good investment--provided you get it at the right price. But not all agents are amenable to submitting offers that might be considered "low ball" even if that's what it takes to make it work for you.
An alternate approach I heard on a BP podcast is to not have a dedicated agent to work with on the buying side. The obvious downside is that you lose that advocate on your side throughout the transaction. But on the up side, cutting out a middle man can be very helpful when it comes to getting in to see properties quickly. If you're upfront with the agent and let them know you're not working with another agent, they have the incentive of a possible double commission so they may work harder for you. (I love this in theory but have not tried it. I'd be interested to know the perspective of any agents here on BP.).
Lastly, set yourself some goals. Set some dates to make key decisions, then start taking action!
The best advise I can give is to jump into the market. Figure out what you want out of a deal (i.e. cashflow, equity, tax deduction, etc.) Then crunch your numbers and make sure the property achieves your goal. You aren't going to send your kid to college on every deal. But you might do it with 10 deals. So, you have to get started.
I jumped in using hard money to purchase bank owned Ogden property in 2004. I did buy-and-hold this way because I bought the properties at such a discount I was able to refinance them with long term financing. I used my HELOC to fix up the places for the refi. It has all worked out.
We are getting ready for the next burst of opportunity as the Utah housing market prepares to shift in a different direction.