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.
I fear that I will be in over my head. Most aspects of purchasing an investment property involve things that I have never had experience with before. To jump in and be solely responsible for everything that happens after is a little terrifying. It seems that most great things start out that way though.
Education will help lessen the fear/risk.
Also consider getting a partner. Most things are easier with a partner. You can look at things together.
Actually my wife and I have thought about flipping for our first deal. I've done some research about that also. I've got a local investment group that meets on Thursdays for breakfast. I'll start attending those this summer.
@Frank Patalano I am in a similar boat as @Kris L. I am less than 2 years from retirement from the military and over the last month discovered the path of real estate investing. Right now I am preparing by educating myself on different techniques. With my current schedule it makes it hard to go to local investment group meetings. This summer when the kids are out of school it will be easier.
Also I don't have the funds to put a large down payment on an investment property. My wife and family are working on putting a budget in place and paying off some debt to make the transistion easier. Our plan is to ensure our bills are covered by my retirement check and use my next paycheck as the vehicle to fund our investments. - Jacque
Sounds perfect. You are on a great path. Keep learning. Do you own a house now?
Gotcha. Just thinking about options for you. You could sell your single family and use any equity to buy a multi. You could partner on your first deal. You could wholesale your first investment property to build some cash.
Sounds awesome. I wish that I had a breakfast investment group.
@Frank Patalano I’ve talked to quite few hard money lenders that have that requirement for new investors. It’s been about 6 moths ago since Inquiting about lending terms. I still need to get my money together for down payment closing as well. I’m in Colorado so that can be quite a bit. I’ve been starting to learn about other markets as well. That might be the direction I end up going.
@Frank Patalano I’ve talked to quite few hard money lenders that have that requirement for new investors. It’s been about 6 moths ago since Inquiting about lending terms. I still need to get my money together for down payment closing as well. I’m in Colorado so that can be quite a bit. I’ve been starting to learn about other markets as well. That might be the direction I end up going.
@Frank Patalano I just bought my first property (duplex) earlier this month. I want to buy a second but I feel like I don’t know all the mortgages options. Available to me. I am unable to househack since I live in Southern California and I buy properties in a small town in NY where multi family homes sells between 35-90k with 2-4 units. I don’t want to use the wrong loan and it costs me down the road. I want to eventually live off rental income, so I’d like to learn the easiest ways to finance.
Hello... I don't think you are crazy, but caution is over stated.
I talk to investors most of the time, and they assure me its happening again this Fall, so ... do you have to panic, or get going? Will not be even close to 2008 but will be hard....
Mostly same thing many stated, Fear and over analyzing of deals. Right now have a property under contract, price decent, but cash flow not close to my other properties due to how leases configured by current owner with him covering utilities. My Fear is that even though I know i can lower the existing expenses now with current tenants, and on new tenants can change utilities over to them, I fear it will not work as I have planned and will somehow end in negative cash flow. That is what I have to overcome, the fear of failure. If this was a sure thing everyone would do it and it would not be investing.
I like your last sentence. It reminds me if real estate was real-estate was easy then everybody would be doing. How long until the current leases come up? I'm not saying I like this idea but the good news is that if you lose money short-term then at least you will get depreciation and other tax benefits. Your goal must be the cash flow every property.
Agree on cash flow every property. Have a year until leases are up but positive side is if fill 3 remaining leases should cash flow a little, just over $200 a month. Once turn property around to way I want it should cash floor $1000-1200 a month. Downside is if not fill 3 open spots will be under about $1000 a month.
@Frank Patalano Being in beginning stages and trying to figure out the best path.
I understand. you can't sit at that stage forever. Commit to yourself that you will pick the best strategy for you within the next two weeks. That is a fair goal. There are many ways to make money in real estate. Figure out the one you want to use and make it happen.
@Frank Patalano I just bought my first property (duplex) earlier this month. I want to buy a second but I feel like I don’t know all the mortgages options. Available to me. I am unable to househack since I live in Southern California and I buy properties in a small town in NY where multi family homes sells between 35-90k with 2-4 units. I don’t want to use the wrong loan and it costs me down the road. I want to eventually live off rental income, so I’d like to learn the easiest ways to finance.
My suggestion is 2 contact the professionals who helped you on that transaction. I assumed that it was an agent and attorney. Ask both of them 4 recommendations in regards to investment loans. They should be able to put you in touch with a mortgage broker or someone else who can give you options. They should want to help you since you have already used them once they will probably use them again.
@Frank Patalano I would say as a newbie with no previous deals under our belt it is the market in our area and limited capital ($50-60k) to put down. The deals that are presenting themselves at the moment are expensive, not to say they aren't there but we (my wife and I) are being cautious not to overspend. We would like to forego the SFH if possible and start with a duplex. We will reach a point when we can not be as choosy if we want to jump in. We have to expand our searches and get better access to the off market availability. We are continuing to educate and have put together most parts of a loosely organized team and it feels like we are approaching analysis paralysis. I feel as though we need to process more sample deals with the calculators as the availability of properties is there, but the prices are not passing the cap rate or viable rate of return test in our market. I know this only means we have not looked in the right place as I am confident, due diligence will reward us eventually. With both of us working full time and managing a small farm, time has not been on our side, it is time to burn the midnight oil to find a deal worth the risk. We are determined and we will prevail, it is just taking longer than we would like.
@Frank Patalano I would say as a newbie with no previous deals under our belt it is the market in our area and limited capital ($50-60k) to put down. The deals that are presenting themselves at the moment are expensive, not to say they aren't there but we (my wife and I) are being cautious not to overspend. We would like to forego the SFH if possible and start with a duplex. We will reach a point when we can not be as choosy if we want to jump in. We have to expand our searches and get better access to the off market availability. We are continuing to educate and have put together most parts of a loosely organized team and it feels like we are approaching analysis paralysis. I feel as though we need to process more sample deals with the calculators as the availability of properties is there, but the prices are not passing the cap rate or viable rate of return test in our market. I know this only means we have not looked in the right place as I am confident, due diligence will reward us eventually. With both of us working full time and managing a small farm, time has not been on our side, it is time to burn the midnight oil to find a deal worth the risk. We are determined and we will prevail, it is just taking longer than we would like.
I understand that time is at a premium for you.
You still need to make time to network. That is how you will find the best deals. (Not saying that you haven't already). I find most of my deals through networking.
I was working 7 days a week for years while trying to buy properties.
In my area triplexes and duplexes are around the same price. Have you thought of a 3 or 4 unit?
If you are house hacking you can buy as low as 3.5%.
@Frank Patalano my spouse and a lack of time (right at this moment). Last year it was not being able to get financing.
Lack of time? We're all busy. I'm not blaming you but we all make time to get done the things that we really need to get done. I'm still working 60 hours a week outside of real estate. Plus 3 kids, etc. Then there are the weekly networking events, conference calls, webinars, etc.
Analysis paralysis, Fear that the deal will go bad, or the area is not going to work out. Repairs will go over budget. ect.
Sounds like you need to keep educating. Education reduces fear. Education reduces analysis paralysis. Some local reias offer educational seminars to price out repairs, etc.
I'd definitely say information and knowledge of not being aware or informed of the options that are available. If i'm only aware of one way to do something and are fearful that i'm not qualified to do so, that would stop you in your tracks because there are no other options, right? a lot of times professional don't like to deal with unprepared clients, I'd like for someone to say "no that wont work for you but here is what will and if not today here is how you can prepared to be in that position"
@Frank Patalano separating from the military in August, waiting until I get a primary stream of income before I use VA loan to buy a du/tri/quadplex to house hack for my first investment!
As a firefighter I’ll have ample time to do many renovations myself and be able to manage the property. This will allow me to understand the process much better. After day 366 I will refinance and repeat the process.
@Frank Patalano hello, I’m a new member and I wouldn’t give myself the title of an investor yet but I’m trying to bring myself to purchase my first property. Currently I’m in the information phase, I’m grabbing books and looking at video trying to understand the lingo. I’ve set up a meeting on the first weekend in May with a possible mentor who invests in the area... honestly, for me at least, I know I’m getting in a new area of investing and I simply don’t know where to start. I know I could probably borrow money from institutions with little to no problem because I spent the last couple of years getting my credit score to a respectable level.... I just don’t know what constitutes a deal to be honest. After I finish reading Rich Dad Poor Dad I have The book on Rental Property Investing ready to be read.. I guess I’m in the information gathering phase.. it’s rough for me because I have no one as far as family or friends to ask these questions with. I promised myself I’ll be the first individual from my family to obtain wealth, so I just want to make sure my next move is the right move. I’d hate to jump in the deep end only to figure out I left my breathing apparatus at home.