Having just recently bought my first property, I know for myself what was holding me back was the fear that I would overpay, especially in this type of a market. I would get analysis paralysis and basically talk myself out of every property I looked at.
@Frank Patalano For me, not having an income to back a purchase and the equity in my home is locked there because I can't refinance without the income as well (my old job barely covered daycare for one of my two boys.. I'm a stay at home dad now). My wife and I want to move to an income producing property on the Oregon coast, live and work on the property, improve it, add new units and once rents have increased, refi and leverage that into the next property, but don't feel we have the finances to back the purchase or the ability to effectively get a loan. And we feel the home we're in will be appreciating even more in the near future with the golf course it overlooks getting a $20 mil makeover here soon, so we don't want to sell it now and lose out on that future appreciation - though I know it may make sense to just cut our profits and use the funds towards the purchase of our income property - so that's also holding me back.
@Jacob Gelinas I have the same exact fear. I’m waiting for the crash.
Anil, personally, I think waiting for a crash is the same as banking on appreciation. You have no control over either. If you're expecting a repeat of 2008, that is highly unlikely. The market factors that created that crash don't exist today. The crash of 2008 was caused by a combination of lax lending standards, the supply of money flooding the market and over construction. None of those exist today. Although many markets have seen significant run ups in prices, many of these markets are now only at, or sightly higher than their 2006 levels.
When I help new investors with buying their first property I often want to know what is holding them back from pulling the trigger.
So I'll ask here. What is holding you back?
Challenge:
Getting the local rent 700 miles away which varies every few blocks or so. The broker that showed us the deal said that he doesn't know what the rents should be and we should check "Rent Range". We checked both Rent Range and Rentometer and they differ much from each other. It is a 30 unit deal. I am also concerned to tell a local PM about it until I am in contract since I notice that they buy a lot of properties too and may create a competitor.
Im at an awkward point where i still have 70k debt in student loans, but have been paying them off for nearly seven years with little change. I work two jobs, about 50 hours a week, and am going to gross about 50k income this year. I turn 30 next month, and want to retire in my 50s at the latest, but it just doesnt seem possible doing what I'm doing now. Ive reconfigured my budget so about 50% of my paychecks are going toward debt repayment (overpaying on the highest interest debts first), but I'm still wondering if i shouldnt just switch back to min payments on my debt so i could put together about 15k in one year for a down payment on a rental. Im stuck in that debt interest vs potential cash flow/appreciation argument.
As far as education in RE investing, I'm also at the point where I know just enough to be dangerous. I'm in a small town in the middle of Kansas, with a city of 13k 10 miles south that is booming with industrial jobs, and a 60k pop town 10 miles north that has tons of $30k, 2 bed 1 bath, 500-1000 sq ft houses that just need some rehab work that could rent for an avg of $700/mo. I see the opportunities, I'm just...stuck.
@Frank Patalano I have been a contractor for years and I have worked with investors, asset managers, and so on. At this point what’s holding me back is knowledge of the industry and where to start
You're kidding right? If you have been a contractor for years then you have more knowledge in the industry then I had in my first 5 years of investing. Start looking at properties and make offers based on the numbers that you think will definitely make you a profit no matter what they are selling it for.
@Frank Patalano I was in the same boat as Jacob. I bought my first rental property almost a year to this date. Now that I want to start thinking about getting a second one. I find myself still second guessing every purchase.
Second guessing every purchase? If the number don't work, they don't work. Move on. You have at least a little experience and know a little what the actual numbers look like.
@Frank Patalano what a great question. 2 things, analysis paralysis as well as the continued disappointment of running the numbers for deals in CT as compared to out of state markets. I’m convinced that I’ll find that diamond in the rough if I look hard enough but the numbers, especially property taxes, as well as the fact that CT doesn’t seem to be landlord friendly, continue to disappoint. The fact that I’m an engineer doesn’t help the matter either ;-)
Yes. I love investing with Engineers because their analysis is very detailed. Ya, CT is hot. Where is your source for leads?
The duplex —four plex is way too expensive now in Houston. It’s our first time want to go for multi units instead of sfr but there is no way to get a positive cash flow there.
I haven't looked into Houston lately. That's sad. Houston has always been a good market. When you are analyzing the properties what source are you using?
I am having a license being a part-time investor myself. so I am using my own excel calculator, har, zillow, etc.
That's not what I meant. Sorry. Where are finding possible deals? All MLS?
@Frank Patalano I've recently just made the switch from employee to self employed. Which is a risk within itself lol. I'm hoping to generate a nice nest egg with in next 30-45days and then potentially get started with a multi-family. I live and work in N.Dakota, the market here seems to flux with oil field and seems to be on the rise as well.
Be careful. If that is the main industry in the market it will be a problem if oil prices drop or the wells dry up.
Multifamilies are great as long as they cashflow. If not they can be a millstone around your neck. You can start visiting properties now. See what is for sale. Then you will have a better idea if something is a deal if the price drops 30 days from now.
Just don’t feel comfortable with calculating the deals even with the tools under BP. I don’t like just plugging numbers into something I need to understand how it is calculated and why it is calculated that way.
Download calculators from other sites. There are other calculators out there that explain the numbers differently.
Yes you must know some of the numbers. NOI, Cap Rate, etc.
Ask an agent is there are any properties for sale in your area that include profit and loss statements. Those numbers are not always accurate but it will be a start in your neighborhood with numbers that you can play around with and improve upon.
@Frank Patalano totally new to the process and just learn of bigger pockets real estate is definitely something I want to get into. Being 51 and looking at retirement in 6 years and being the only provider at this time of a family of 5 it is a little scary.
Absolutely. Well most successful investors have money for deals, time to find deals, or knowledge/experience in deals. Do you have any of these? If not, target the one that you have the best chance with and improve what you have going for you.
You didn't give me a lot of info your help you with your journey. I don't know the market in the Harrisburg/Carlisle area. I will say that you get better with finding deals through education and networking. Hopefully you are a member of your local REIA. Keep meeting people that is the best way to find an opportunity. If you don't own a house now, house hacking is one of the best paths to take.
I’ve been learning quite a bit about wholesaling and I’m very interested in learning more. I haven’t done any deals yet but I really want to get started.I seem to be stuck in over analyzing and fear of pulling the trigger. I see many beginner investors being successful in their first deals because they had mentors. I live in the northern New Jersey area and would like to know if you know someone I can be mentored by and acquire more knowledge.
@Frank Patalano My age, unfortunately I am a teenager. Once I turn 18, works watch out!
You can be investing right now through your parents. You just can't sign any documents. You could be negotiating deals, visiting open houses, sending out mailers. You just can't sign any paperwork.
Thank you so much, I will explore de 25% option with the commercial loan. I would prefer to have it done right from the get go than do acrobatics afterwards.
Many thanks
I've done it many times. Contact your local banks and credit unions. Ask to talk to someone in the commercial loan department.
@Jacob Gelinas I have the same exact fear. I’m waiting for the crash.
Anil, I understand your fear. Unfortunately no one know if that will happen 6 months from now or 6 years from now. I'm not saying that the market won't go down. If you are buying Cashflowing properties with conservative analysis then you can't go wrong. I say no to 99% of the "deals". Also looking for that diamond in the rough. I have no problem putting in low ball offers. I only buy cashflowing properties that can survive a crash.
@Frank Patalano I have been a contractor for years and I have worked with investors, asset managers, and so on. At this point what’s holding me back is knowledge of the industry and where to start
You're kidding right? If you have been a contractor for years then you have more knowledge in the industry then I had in my first 5 years of investing. Start looking at properties and make offers based on the numbers that you think will definitely make you a profit no matter what they are selling it for.
I wish! I mostly worked with companies and they have strict guidelines but now that I have capital I’m looking to create my own way and become companies I’m working for or have worked for in the past