Best Advice for Getting Into Real Estate

[Mario Russo]

Hello BP,

My wife and I are looking to purchase our first rental property, ideally a 2 unit multi-family somewhere in the midwest. We currently live in Minneapolis and have looked in other areas as well to invest such as Wisconsin where we grew up. 

For a couple just starting out, what would be your biggest piece of advice for us? We've been crunching numbers on various properties over the last 6 months to figure out local rents, cap rates, etc... What types of cap rates would you suggest we look for in the midwest? Would you recommend investing out of state and using a property management company? Or purchasing locally so we can be on site when needed? What's a good amount of money to have saved up before making your first investment? Should we skip the small 2-unit property and just go right to a larger unit, like a 4 or 8 plex? 

Thanks everyone, cheers! 

Mario 

[Nicole A.]

Welcome to BP!! My best advice to someone just starting out is to research enough so that you're truly educated/prepared, but also not have "analysis paralysis" and never buy a property. I would also suggest the following:

• Buy in your own area if possible. Starting out in your "backyard" helps you as you're on the learning curve.
• Don't try to take on several types of investing. Pick one type and go for it whether it be wholesaling, flipping, or buy and hold.
• Look online to see if there are REIA groups in your area. Go to those meetings and meet other area investors.
• If you are open/willing/able, and a bit low on cash, consider house-hacking. Lots to read about that here on BP if you're not familiar. It's also a great way to get properties at a low down-payment requirement.
• Don't feel like you have to grow too fast. And don't feel like the number of units you have determines your success. Success is different for everyone!
• Always hire professional licensed contractors (plumbers, roofers, electricians, etc) even though they're more expensive than that one tenant who is also a handyman or that handyman off Craigslist. I promise you they are more expensive in the long-run.
• Never stop learning! Know there will be difficulties, but you'll get through them.