So what's holding you back?
Rental Property Investor · East Providence, RI · Member since 2018 · 1k+ posts · 1k+ votes
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?
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 not finding a good time to go see an out of state property, while dealing for 4 kids and 1 college class ;)
@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.
Thanks for listening! What's on your mind?
Tough one. Perhaps you can find a rehab that you can get seller financing on. I don't know enough about the market. To be successful you have to be strong at something. Usually the big 3 are time, money, or knowledge/experience. Which one of those is the best bet for you?
@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.
Mike, I agree. I do see standards relaxing a little too much in my neck of the woods. Our personal residence has not even come close to recovering from what we paid for it in 2005.
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.
It is a Catch 22
Jeff, your question is not for the newbie forum but I can handle it. I buy based on actual rents, screw the proforma. You make an offer based on what the property is actually generating. I don't care what it might generate. We recently bought a 9 unit with under market rents. It was a great opportunity and we raised rents $170 monthly per door the month after we closed. DM me sometime and let me know how you make out.
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.
I see both ways.
If you choose the heavy repayment route you might be doing it wrong. Don't pay off the highest interest rates, pay off the smallest loan amounts first. Dave Ramsey style. After one is paid off you can snowball the payment into the next one.
I would more likely choose the investing route. Sounds like you are in a good market to buy a few. My partner Jimmy owed about $70K when he bought his first Multi. Now he owns a few things and is doing very well.
I can't make the choice for you but let me know what you decide to do.
Hi!
nothing held us back. My husband and I jumped right in and never looked back. Fear will kill your ability to grow, so why let it?
Great answer. How are you doing with that first property?
The space between my ears and getting my wife and sons on board
Fill that space with knowledge.
You may not be able to get your wife on board. Some family members are too cynical or worry about the what ifs.
i suggest that you set some investing goals with her. You can put so much towards real estate as and investment fund and she can save using stocks.
If that takes a long time you may have to partner to get that first one.
Thanks for the advice!!!!
BTW, do you invest in Providence, Ri?
Absolutely investing in Rhode Island. We are investing in other areas as well but I am a decent networker so it is easier to get deals in your local market.
@Frank Patalano
Hi Frank
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.
Thank you
I have a friend or two in N NJ but they are not in real estate. The best way to find a mentor is to start going to REIA meetings monthly. Go for 3 months but don't ask for a mentor. Start to build relationships especially with wholesalers. Eventually ask them if there is any way that you can help their business. You might have to work for little or no money but you will build experience working for them which is a long term investment in you if nothing else.
Cash, I'm at any uncertain place in my career so I need to get on my feet more before I can invest more.
If you have time then you can work for others to build experience and possibly cash. You said cash is a weakness for you in Real Estate. What do you consider your strength?
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
If you can put in your own sweat equity, buy a rehab and fix it up yourself. If you have some capital that might be the best way to use it.
Personally fair which derives from lack of education and encouragement are the biggest factor when it comes to making a decision where you don't have the guidance, encouragement and education. It was tough and still is but I am at the stage where I can move a little more freely after I've made my first purchase understanding the process also seeking ways to educate myself where I can grow and expand in this area. Hope this helps.
@Frank Patalano not finding a good time to go see an out of state property, while dealing for 4 kids and 1 college class ;)
I completely understand. If you have a dream of becoming a real estate investor, you need to plan and sacrifice for it to become a reality. I sacrificed for many years before I started to see results. Its even harder if you are focusing out of state. My network is my networth so investing out of state requires you to build a team of people remotely that you have never met.
Personally fair which derives from lack of education and encouragement are the biggest factor when it comes to making a decision where you don't have the guidance, encouragement and education. It was tough and still is but I am at the stage where I can move a little more freely after I've made my first purchase understanding the process also seeking ways to educate myself where I can grow and expand in this area. Hope this helps.
You bought one. Think how much that experience will help you on the next one.
Definitely excited and looking forward for the experience to dominate all challenges, basically staying one step ahead.
@Frank Patalano
I think my biggest hold back is the lack of knowledge I have in this field at moment, and that carries over to “pulling the trigger” on deals because I’m scare I might be getting my self into a huge debt I probably can’t afford.
@Frank Patalano
I think my biggest hold back is the lack of knowledge I have in this field at moment, and that carries over to “pulling the trigger” on deals because I’m scare I might be getting my self into a huge debt I probably can’t afford.
You shouldn't "pull the trigger" if you have a lack of knowledge. But if can;t be an expert before you find your first deal. Actually get out there and look at properties. That will build knowledge as well.
@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?
Thanks Frank, those are certainly motivating words. I have a few local friends that have experience flipping and doing buy and hold that have been holding my hands in terms of strategy and concept but they tend to stay local for returns that just don't make sense to me at least as compared to some of the out of state possibilities. I'm still looking to do my first deal and my market research has been limited to HomePath, HUD Homestrore, etc... Eventually I will need to source off market deals in the areas I feel might work best for me. Im Open for anything at this point...
@Frank Patalano
Well, 1st let me say this is my 1st post and I’m new to the site. I was at a Fortune Builders seminar in the MA area over the weekend to learn more about this. My good friend and I brought our young adult children with us to see what they could learn as well. I have my real estate license and my friend did a flip on his own maybe 10 years ago. We’ve talked about doing this together.
While we did learn a few things at the seminar, we were not signing up for the Mastery program. Just too much money. But that is what led me to this site as it was mentioned in a few reviews on FB and I’m impressed with the knowledge and what seem like helpful people on the forums. This comes in to play at the end of my answer.
Now, your question as to what is holding me back? Well, fear of the unknown. Will we succeed? Will we fail? How will be get the money to do it right? You name it, the fear of “it” has come to my mind. While I did feel more confident at times during the weekend seminar, I also felt less confident too. Would I succeed without their coaching? Who would guide us to make sure we got a good deal? What about all of the tax strategies they would teach us?
So I guess it all boils down to fear vs confidence. I’m glad I have a friend to learn more about this with and jump into it together. But I want to do it right and not just “think” I know what I’m doing. This past weekend in the seminar helped me but also put some fear in my head to do it without their coaching.
-Mike
@Frank Patalano fear and not knowing everything in case something goes wrong. Also, lack of funds.
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?
@Frank Patalano
That is a very important question. There are several things that will delay action in making that first purchase. The first, is the fear, whether it is fear of failure or fear of success. It could also be fear of change and leaving that comfort zone.
Second, is an important one, it is the lack of knowledge about the business. Some will spend a lot of time educating themselves before even attempting to take that important step of taking action. Many people try to make sure everything is perfect before they take action and we know that nothing is ever perfect. The task of looking for that perfect scenario can sometimes lead to analysis paralysis. Some people may even get caught in that scenario for years before they decide to take action, or they may decide not to move forward because it has been so long and nothing happened.
Third, is the access to capital. The newbie’s who were not exposed to any form of, or category of the real estate industry prior to deciding to become an investor, may wonder about how and where to find the cash flow to make the purchases. After some research is done, then the information arises that there are many ways to access funds through private money but that person still needs to get access to the funds by building relationships. That may still take some time but the process has been streamlined by the creation of BiggerPockets to guide us newbies through the process.
The newbie still has to go through the tasks of visiting the local meetings, Bigger Pockets meet ups and other networking events to form the relationships with investors, private lenders, brokers, realtors, property managers, accountants, lawyers etc. After all those things are done then the newbie has to do the most important part of the action plan, which is find the property to be purchased.
In my opinion, these are a few of the reasons that answers @Frank Patalano's question. Some people will work through these one by one, while some may do them all at the same time. The one thing that I believe will help newbies take action is the guidance provided by those that already have the experience. It goes a long way in the development of the newbies and I am sure is very, very, very much appreciated.
@Frank Patalano, I have enough money to invest, and I'm not sure where I want to invest it. We were under contract for about a week on a SFR we were paying $16k cash for and would likely put another $15k into. It would likely rent out on a government program for $800/month, and it was in one of the worst areas of our city. The occupant has to participate financially, and it's our responsibility to collect it. Neither of us was comfortable, and we didn't know how long it would really take to rent. Ultimately, we let the deal fall through on inspection contingency.
Now, we're looking at maybe a duplex in the $400,000 range. We'd finance some, but it would provide us a steady income. We could also buy two $200,000 duplexes or 1-4 $100,000 SFRs. Do you see? I could probably make it work no matter which route I went; I just am held back by the understanding that once I spend money, I won't be able to spend money again for a good while (buy and hold), or even worse take a haircut because I don't want to be in a situation that I got myself into. There are too many options atm, I think.
@Frank Patalano
I’m in a small county called Lackawanna County.
There don’t seem no cash buyers in this area. And almost every one owns his/her property and it takes times to sell a property in this area.
It’s more a buy and hold area.
I wanna do wholesaling deals.
Any recommendations?
Or is it analysis paralysis?
@Frank Patalano getting replies on here lol jk
But I’m in the military and new to real estate so I’m saving up for a down payment while learning as much as possible .
It’s rather limitiations in mind not outside ✅
Hi Frank,
This issue is not so the offer which I agree should be made based on current rents but whether we will be able to add value with rent increases if the market rent for the area is higher. Without knowing the market rent, we won’t know. The broker doesn’t know, rentometer and rent rage have a huge discrepency on this location and we have the trust issue with brokers and property management which are competing for the same type of properties.
Jeffrey