New investor Soliciting for expert advice from investors

[Kenneth Kussman]

Question to the experienced real-estate investors that have made it to the $1,000,000.00 mark in cash or equity or a combination of both.

I am just starting out. After many years of wanting to become a full-time investor, I made my first move.

At this time, I have a decent 6 figure job, very little debt, good credit score, but only about $10,000.00 in savings (cash). I just bought a new home to live in. I have a 4-bedroom, 3 baths, 2,300 sq. ft. home with a pool, that has approximately $100,000.00 in equity, that I have just rented out with a positive cash flow of about $280.00 a month.

I have about 15 hours a week to focus on my real-estate business. My goal is to get to the $1,000,000.00 mark in cash & equity in 2019.

To all the successful real-estate investors, based on your experience and the above scenario what is THE ONE THING I should learn or focus on to reach my goal?

All advice is welcome and appreciated

[Richard Sherman]

@Kenneth Kussman Your biggest asset is your income and the brain that you have which allowed you to make it.  I have more than one...but they are in order of importance.

1. Cut your lifestyle.  You should be aiming for 60% or higher savings rate to free up cash to plow into investments to get the train running.

2. Decide the path you want to take.  Is it SFHs or is it Multifamily etc.  I am a buy and hold guy, so this is biased, but your income will make you VERY bankable if you are able to save capital for down payments and that will allow you to scale using the cheapest source of leverage which are bank loans.

3. The method is less important than time in the market and you working to improve the property (like what you did to get the equity in the home you have. SFH, multi, storage it does not matter, what matters is getting a coherent system and understanding how value is created.

NOI= NOI = Total Income – (Vacancy Losses + Total Operating Expenses)

NOI/Value(price)= Cap Rate

Which also means that CHANGE in NOI / Cap Rate gets us INCREASE in value. That is your power.

You make money (capital appreciation which can be taken as INCREASED cash flow OR by taking capital out (refinance, 1031 etc) through increases NOI by either increasing revenue or decreasing expenses (ideally both.) That is the active business side of Buy and Hold. TIME will also increase your revenue as well as rents increase (assuming competent management and a normal area where rents are increasing.)

Be patient, figure out your path, do your own management until you understand what a good PM looks like and bank the savings, you might decide to do it yourself as well.