So I am new to this. I desperately want to start investing so I can make a difference in my life and the life of my family. I want to start either wholesaling or flipping. I am in a cash poor position with really nothing on hand to use on my own. I dont have a team yet and have no experience at doing any of this. For those who are doing this: What would you advise on how to even start in my position? I will be watching tis coming weeks webinar on the 90 Day Challenge to getting your 1st property before the end of the year. I am reading as much as I can right now and trying to learn.
Do you own a personal residence? If not, I'd look for a small 2-4 unit multifamily. Put 3.5% down and start investing that way.
If this isn't an option I'd find an out of state market, start networking, and find your first deal that way.
Wholesaling and flipping can be great ways to build cash but if you're tight on funds I'm not sure I'd go that route unless you have construction experience and know the ends and outs that way.
But nothing wrong with starting slow and getting small single family houses out of state and going from there. Hope this helps!
I would agree with Mike. If it doesn’t work for you in state then go out of state but make sure you do your du diligence,get an inspector and have pictures and video taken if you honestly can not go to the property .
So if money is not there, would you recommend a hard money lender on a good deal? I have a friend who is a realtor who is willing to help me look at properties and teach me some things. I have a couple of friends that are investors...had no idea frankly. I know I have to move slow on this or I could do more harm than good. Michael, with the 2-4 multifamily...are you suggesting a House Hack?
If you dont have any funds or limited funds then you have the following options:
2. Lease Options
3. Flipping using joint venture partners
4. Rentals using vendor take backs, joint venture partners.
Basically you need to use creative financing.
@Jim Pellerin The Wholesaling was going to be my 1st choice. I am trying to see about working together with the realtor I know. We want to pitch to my friends who invest, that between the realtor and myself we could find properties of value in the Long Island area they could invest in. Legally, they would have to work with the realtor on this...my function would be to watch learn and assist. The realtor said that perhaps since I would help them, in the end if a deal works out, we could agree on providing me only a small fee for helping. the realtor keeps his commissions etc. I could at least learn and start with some sort of money out of the learning experience. Perhaps its a stepping stone. Thanks for the advice.
@Jeff Ronningen Very Observant. you are correct. Well Paid. Have a family of 4 to support..on a single income. Heavy debt at this time....I do own a home that we bought December...I rent my old home. That is not going that well but its ok at the moment. The home I have is too new to have any equity to tap. I agree...it would be quite difficult with a full time job. But I know i need to make a change. As far debt...yes a little too much right now. 2 car notes....some other long term expenditures...plus a large IRS debt to pay off. Has not been easy. Rather than pity myself on poor moves in the past...trying to be smarter moving forward
@David Medina there's a lot of great advice in this thread addressing how you might get started. The question that comes to mind as I think about your situation is if you should get started right now.
Your very high debt level puts you in a very precarious position, and you have many people depending on you right now. Believe me, I can understand the responsibility you feel (I'm the sole income for my family of 6 daughters). Real estate is very risky, and that risk is more heightened given where we're at in the economic cycle. I'd hate for you to take on a lot more risk right now given your current financial situation.
If you're already making good money, then maybe it would make more sense to double down on your cost structure and focus all your effort and extra income to your debt load. Not only will that put your family's finances in a stronger position, but it will put you in a better situation with traditional real estate financing companies when you're ready to dive into real estate.
I don't want to be a buzz kill, just thought I'd offer another perspective. Hope there's a nugget or two in there that can help. Best of luck whichever path you take. I'm rooting for you!
Thank you for asking the questions, @David Medina . I appreciate learning from all who've responded. As someone who is chomping at the bit to begin investing myself, I'm eager to learn all I can. I am on a debt snowball plan as well. Because of that, my time horizon is about 24-36 months before I can start investing.
Focus on paying down debt first and starting small. Maybe rent a room out of your primary for a little extra cash while you reduce current debt and gain experience renting to someone. Real estate isn't a lottery and takes time, just continue reading and making steps forward.
@David Medina one last tip, that I've heard Robert Kiyosaki and Brandon Turner reiterate:
Never say I can't. It shuts your mind off, ask instead, how can I? Thinking this way has changed my life. You can get there, just ask yourself... How.
Living in one unit of a small 2-4 unit property qualifies as a house hack. It's a great way to get more units starting especially with little funds. Offers better tax benefits than a SFR and you can move out after a year and still be able to put 3.5-5% down on a SFR that next year.
If you know an out of state, build a team, and get qualified with a lender to refinance a deal, I don’t think there’s anything wrong with using hard money.
You’ll want to find a lender that doesn’t require you to season your loan and finances on appraised value not purchase price.
The risk here is you buy a property using hard money and it appraises for less than you were expecting and you have to come up with more than expecting to during the refinance.
How to start:
Step 1: begin intensely studying the area you want to do real estate deals in. Notice that I said “do deals”. To invest takes some amount of money. So first you need to gather some up or meet people who trust you undoubtedly to handle theirs. This takes time and practice.
Become an expert on values and rents and the dIrectIon of the market in your micro “deal area”.
You don’t have to blanket an entire city. Start with just a couple neighborhoods. I started near where I worked and where I lived. That was plenty to build momentum!
Also begin becoming an expert on the local zoning codes as well.
Your job in step 1 Is to as quickly as possible learn what makes a ”good deal”. Whether you are ultimately the one buying it or an assignee or a partner, the buyers out there in the world will buy a good deal If you truly do have one to offer.
Step 2: Learn how to communicate with property owners.
Your job is not to twist anybody’s are into submission. Your job is to create value for people who have real estate challenges they need help solving.
The better you get at asking the right questions and listening to Owner’s real concerns, the more valuable offers you can make to them. Step 3 is how best practice this ability.
Solve their problem, not yours!
Step 3: Get YOUR phone to ring.
You cannot bring any value or help anyone solve their problem if no one knows what you have to offer.
Get your name out there to as many people as possible asking your question of proposition.
Networking with brokers is great too, depending on the broker, but the truly best deals you will strike and have the opportunity to execute will come when you are the one taking the call directly.
Send letters, cold call, warm call, knock on doors, leave door hangers, post ads, do anything to start a conversation with someone who may be considering selling their property. There are millions of property owners out there. Many of them are looking for exactly the solutions you have to offer!
Summary: steps 1 through 3 are more than enough to get you on your way. The more you do each, the more value you will be able to bring.
I'm certain these same strategies are the same great starting points whether you‘re looking for single family homes in Tampa Florida, or multifamily properties in Portland Oregon. Doesn’t matter where, the fundamentals stay the same.
@Bob B. I like these steps i will be keeping in in my mind as i start as well.. so thank for putting them out there.