Hi All,

I've been in the waterpoofing business for over 12 years and have been reading up a lot lately about REI. I live in Bay Area (Northern California) and planning on starting my real estate investment portfolio. Can you guys give me some direction on how to get over my "fear" of just jumping into it. I don't know if I should buy out of state, local, rental, turnkey, rehab, etc

Any insight would be greatly appreciated.

Hi Matt,

First, fear is normal. The main cause of this is the unknown and lack of education in investing. So that is what I suggest you focus on first. As you start learning about REI that fear will go away.

Now for some direction.  If you invest locally you will need a lot more money and understand that this is not a cash flow market.  This is a break-even market at best unless you are putting 50% down or paying cash.  People who invest in the Bay are looking for a safe stable market which has scarcity.  They plan to buy and hold and play the appreciation game for the next 10+yrs.

Investing out of state gives a real estate investor with lower capital an opportunity to start.  OOS investing gives you more chances to buy properties that will cash flow.  Problem is that OOS is not easy you need to learn a whole new market and spend a lot of time traveling and trusting a lot of people 1000s a miles away.

Ideally, if you have the funds I think investing locally gives investors a big advantage.  Nothing like driving to your property close by.  

Don’t be fearful . Get educated . This site is a great start . Join a local investment club that is vetted and meet up and learn as much as you can . 

I agree with @Frank Wong in his analysis of our local market. True cash flow is hard to come by around here and the majority of your gains will be made through appreciation. Also, education is everything! that said, if you want to have a good place to start, I would definitely recommend looking into "house hacking" if you're not already well read on the topic. It can be a great way to get that first property under your belt if you don't already own your primary residence because it allows you to greatly reduce, or in some cases even eliminate, your housing expense every month (although the latter can be hard to come by in this market) all while benefiting from the other wealth-generating benefits of real estate investing. Especially if you have that fear that you talked about, which tends to come from a lack of confidence due to lack of education and experience. House hacking is a great way to get your feet wet!

@Matt Faircloth  

Going off of what @Michael Strachan , house hacking is a no brainer when getting started. Mainly because of the extremely favorable financing options - look into FHA loans. You have to pay rent anyway, might as well pay it to a property that gives you RE experience and equity.

In regards to getting over your fear, learn the market, buy based off numbers and not emotion and go for it.

@Matt Wahidi I'm also new and working towards my first investment property. I'm in the Cleveland, OH area which I'm guessing is much different than your area. BP has two very helpful books, one on investing in rental properties and the other on managing rental properties. These both have provided several actionable steps that can be taken without any money involved and prior to a purchase. For example, I've been organizing forms such as lease agreements, estoppel agreements, property inspection check sheets, etc... All of which, I imagine, will contribute to having a format for that next step after purchase. I know I'll need to make these specific to my system and the laws in my market, but it's a start. This is still a work in progress, and if you haven't read either book I would definitely recommend doing so. On the other hand, if you already have your system in place just trust it, or list any of your doubts on here and see what you get. And if you're farther along in the process than myself, any feedback or advice is always welcome. Thanks and hope this helps.

Great advice Joe! 

All the above suggestions are great. I'll add that you should find the local REIA groups, see which one you like best, join, and go to ALL the meetings. The presentations and info is invaluable but the hidden value is the networking with other members and finding a mentor or two you can learn from. .

@Matt Wahidi

Get pre-approved with a lender first. 

IF you buy in the Bay Area, Buy a Duplex and Househack with an FHA Loan. FHA Loan always needs to be first because they won't loan to you if you alread have another property within 100 miles. After occupying for YEAR...keep the loan in place but move out and rent out the second unit.

Then, use a Navy Federal Credit Union Loan...you may not have to be a veteran....and buy a house for Zero Down with no PMI....but make sure the house has an in-law unit in it so that you can throw a renter in there so you can supplement your income. Stay in that property for a year.....

@Chris Mason is a lender here in the Bay Area and he has access to some really good programs.....

IF you go out of state then look at the midwest.....properties may not go up in value,...but they don't drop very much in value either and the cashflow will be a whole lot better than the Bay Area.  I know of people that have bought duplexes in Ohio for 75K and they get gross rents of $1,500 per month and they are in "C" areas.   IF you need a lender for that, Google Shawn Huss, Chemical Bank...for his phone number....I've utilized him for financing to buy 4 properties out in Cleveland since 2017.  I also have a very investor friendly agent out there and property management company as well, BUT you need to show them proof you are -pre-approved first.

Also there is a meetup that I believe 

@Jason Pabon      is doing this Thursday night in Oakland at 6pm at 2001 Broadway. People there will be networking, hanging out and talking real estate investing.

Hope this helps.

@Matt Wahidi

Welcome to BP.

Originally posted by @Matt Wahidi :

Hi All,

I've been in the waterpoofing business for over 12 years and have been reading up a lot lately about REI. I live in Bay Area (Northern California) and planning on starting my real estate investment portfolio. Can you guys give me some direction on how to get over my "fear" of just jumping into it. I don't know if I should buy out of state, local, rental, turnkey, rehab, etc

Any insight would be greatly appreciated.

 Welcome to the site Matt. If you do go out of state biggest thing is to GET AN INSPECTION. Seems simple but I see so many buyers go into these deals without paying for a home inspection. That my man is a disaster waiting to happen.

Hi Matt,

Brian G. is absolutely correct. Midwest property values have been strong over the past 12 years compared to East/West Coast markets. I live in Tulsa where big corporations frequently host industry and consumer events. It makes perfect sense due to our centralized location and creates pockets or clusters that boom seasonally. Properties there have only increased in value so far.  Same thing with rental units near area universities. Plus, development of new attractions underway offers several promising opportunities that remain largely untapped so far.

Specifically you should consider Air B n B guest income which could be as much as $200 per night with the right amenities and location.  Personally, I would have never even imagined, much less suggested that as an option. But we had to use Air B n B to visit my son when he was sick and were grateful to pay $40 a night just for one room in a 3 bdrm house with no pool, hot tub, or anything special.

It was amazing how thorough and seamless the entire process was while ensuring security and accountability for all parties in the transaction(s). Worth considering closely anyhow no matter where you decide to invest. Let me know if you need someone reliable to help you with scouting, due diligence, equity/strategic partnerships, management, etc.

Would be glad to help you however I can... 

If you are simply looking to get over your fear, in my mind that's simple. Real estate will never go out of style. In ten years, people may no longer need or want an I-Phone, but they will always need a place to live. People will be buying and renting homes until the end of time. If you find yourself a decent deal and have the ability to simply hold on to it for ten years, at the end of that time frame you will have made money through equity growth. If you look at any housing market over a ten year period, appreciation is, more or less, a guarantee. 

What's REALLY scary to me is the idea of working at a desk until I am 75, barely anything to show for it and not being sure if I can retire. 

Originally posted by @Matt Wahidi :

Hi All,

I've been in the waterpoofing business for over 12 years and have been reading up a lot lately about REI. I live in Bay Area (Northern California) and planning on starting my real estate investment portfolio. Can you guys give me some direction on how to get over my "fear" of just jumping into it. I don't know if I should buy out of state, local, rental, turnkey, rehab, etc

Any insight would be greatly appreciated.

 Hello and welcome! Best of luck to you!

Welcome @Matt Wahidi ! 

As the saying goes “Don’t wait to buy real estate, buy real estate and wait!” 

Now there are many different avenues that you can go down and it all depends on you as an investor. Do you want to be active or passive ? How much time would you like to spend on your new RE business every week? Do you enjoy renovations? How risk adverse are you? Do you like to control every step of the process? 

Answering these questions will be a great start to your new journey. If you’d like to meet with local investors let me know and I’d be happy to make some introductions ! 

@Frank Wong is absolutely right - fear is normal...just like starting a new job, family, etc. Embrace it! And educate yourself so you can become an expert. My wife and I became accidental rental owners several years ago when the Denver market wasn't booming like it is now. She was pregnant with our firstborn, I was starting a new job and we were moving to Philly to settle our roots. That property turned out to be a great investment. It's also important to have a terrific property manager if you'll be some distance away from your investment. We had a PM in Alexandria, VA for a property there that was awful. The one in Denver was spot on and very professional and had our best interests in mind. She called us one day with the news that our tenant lost his job, his girlfriend left him and he was no longer digging the CO weather so was moving to FL where it's warmer (sounds like the beginning of a country song - haha!) and most importantly wouldn't be paying us. In those situations, you need someone in your corner whose been there before and can fill the vacancy with minimal adverse financial impact. Anything you can do to mitigate that loss will be useful. Good luck!

@Frank Wong

Hi Frank,

I appreciate you taking the time to educate me a bit about investing locally and OOS. Wha you said makes sense. For my first one, ideally I’d like it to be local so that I have access to the property and is within driving distance.

I joined BP a week ago and I can’t believe how helpful everyone is. It feels like family. I’ve been listening to BP podcasts and reading a lot on here along with other resources.

Maybe you and I can connect and see if we can find a multi-family property locally to look at and you can help me with your expertise

Sincerely,

Matt

@Jo-Ann Lapin - thank you for the words of encouragement. I am trying to educate myself as much as possible and hopefully I can find some local groups that I can join.

Any help/pointers would be greatly appreciated.

Sincerely,

Matt

@Michael Strachan - Hi Michale,I do own my primary residence. Although I’ve been reading and listening to a lot of podcasts and many investors started out “house hacking.” If I was single and looking for my first primary property, house hacking was definitely the way to go.

Any other pointers and help would be greatly appreciated.

Sincerely,

Matt

@Michael Craig - Hi Michael,

I own my primary. Although I’ve been reading and many of RE investors started their journey with house hacking. It’s a great way to get over your fear.

Sincerely ,

Matt

@Joseph R Fornwalt - Ho Joseph,

I’ve been hearing that Cleveland is the place to invest lately. How are you finding your properties? Have you made any offers on anything yet?

I was listening to a podcast today with Bryce Steward and he was talking about agreement of sale etc. he’s a very smart investor and very impressive. He also suggest to have all your paperwork in place and ready to go.

How did you write up your agreement of sale? Did you just make it up, you can pick it up from somewhere or do you pay someone to write it up for you?

Thank you for responding.

Matt

@Michael Norris - Ho Michael, how do I find out about REI groups in my area? Is there a search on BP that I can to find out groups by demographics?

Thank you

Matt

@Brian Garlington - Hi Brian,

I can’t thank you enough for all the information you gave me. Just like you, I live in the Bay Area but I own my primary. So house hacking is pretty much not going to work, right?

Also, you said you have properties in Ohio since 2017. How did those properties turn out for you? I am very inclined to invest out of state, but I keep hearing that for the first one, it’s best to do it locally so I can be within driving distance from the property.

If you could kindly provide me your “investor friendly” agent’s contact information, I would greatly appreciate it.

Also, I hope you don't mind if I could hit you up and pick your brain about how you went about investing in Ohio. How you got over your fear and got started in REI.

Looking forward to talking with you more...

Thank you sir

Matt

@George Blower - thank you, sir!

@James Wise - James,

Thank you for the pointer. Do you own any properties out of state? If so, what’s a good checklist to have to go down the list and make sure things check off?

Thank you

Matt