Ready to start, but where?

Question

BP Members,

Let me start by saying this is an amazing wealth of knowledge.  I found the Podcast recently and made my way here today.  My business partner and I own 5 retail stores.  We currently have around 200k cash at our disposal.  We are and have been in the process of educating ourselves to be real estate investors/flippers/landlords.  We did most of the build outs for our stores ourselves, so we are very handy.  My question is this:

We planned to buy a 2-4 unit to start out.  But I quickly realized with 200k we can easily pick up a 50-70 unit, maybe more property.  Is it too crazy to go big right out of the gate or should we just go for more doors if the numbers make sense?

Kevin Christensen · Answer

Thanks guys.  I really appreciate all of the feedback.  @Matthew G. I grew my business slowly and then expanded.  But I also built it out to not require much of my time, so time is an asset I have a lot of currently.  I definitely understand bigger risk, bigger mistakes with a larger unit.  I was planning to buy a quadplex, but I've recently felt after listening to PodCasts and YouTube that running a much larger 30-75 unit property wouldn't be too much harder than running a quadplex.  Especially since either way I plan to get a PM and do it mostly hands off.  These are long term plays, not  quick cash.  I'm super excited to have found this group and can't wait to know more and meet many more of you!

Matthew G. · Answer

@Kevin Christensen You should look at real estate investing like owning a business. Did you decide to just build out 5 retail stores at once, or did you build out one, see how it did then expand? You may not want to just jump into as many units as you can buy without first testing the waters. What if you buy a 50 unit rehab that ends up taking away time from your successful business. If you start smaller, it's easier to get out of it if you decide it's not for you.

Christopher Brainard · Answer

Hi @Kevin Christensen and welcome to BP!

Before you try to figure out what you want to buy, you need to figure out how you want to invest. Real estate investment covers a wide variety of vehicles that range from very time intensive (ex: doing your own flips) to very passive investments (ex: buying notes). Figure out what sounds good to you and research it as best you can. Try to find someone who is doing what you want to do and build a relationship. When you're starting out, the worst thing you can do is over-leverage yourself and not prepare for the unexpected.

-Christopher

Matthew G. · Answer

@Kevin Christensen I have my own business as well that is in software development. The business has provided mostly passive income for me and so I also had a lot of time and capital to get into real estate. After going to a couple meetups, I realized active real estate investors are just like business owners. It can easily be a full-time job. It made more sense for me to invest passively and focus on what I enjoyed doing more.

Being on BP tempts me to become more of an active investor , but then I hear some horror stories from friends or other investors and realize that I'm fine investing passively. Now I'm just trying to merge my two passions of real estate investing and software development. Maybe it will work out, maybe it won't, but I get to learn a lot more about real estate investing in the process.

I'd recommend you go out and meet other local investors. Talk to them and really get a grasp of what it is like. Podcasts and YouTube videos can be very one-sided. They try to inspire people and not scare them out of doing something. When you can talk candidly to someone in person, you can really ask questions and figure out if it really is for you.

Ready to start, but where?

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