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.
Well I cant really consider my self an investor because I'm at the stage of the "hold back". I think it's a combination of lack of confidence as well as fear of failure. I talk to my wife about this all the time and I feel that although she supports me it also her fear that holds me back too.
Look into your local REIA's and go to a meeting and talk to other investors. You will be able to find a lot of information concerning your area, as well as how to actually go through the process.
@Jeremiah Mckenna Thank you for the response. I set out a list of task for myself and at the top of that list is educating myself more and connecting with my local REIA in order to create a network. I think that more education will get rid of my lack of confidence and get me past that hurdle. Again thank you for you time I appreciate all responses!
@Jacob Gelinas agree anyone buying retail is overpaying. The best deals are the distressed properties
I agree with that 100%. The best deals are off market.
@Frank Patalano deciding whether to fix and flip or start with rental. The endless choices make selecting and starting a real challenge.
Part of it depends on the resources that you have available. Fix and Flip are fast small chunks. Rentals are slow and steady.
Set a goal to choose 1 by a certain date and then focus.
@Frank Patalano
I'm looking to invest out of state and unsure which market to start with, whether I want to go turnkey or build my team. How will I build my team (easier after reading David Greene book, but still). And properties on MLS don't look so attractive unless I do BRRRR - which I will, but thought I'd start with something simpler, get my feet wet, then figure out how this rehab thing works and that too OOS.
But I have been looking. I will do something and learn along the way.
You going to overpay for a turnkey. Period. If you are going to build a team I would only do it if you can afford to spend a few days in a market and actually visit people there. I would start with something simple. Getting your feet wet is a great idea.
I have a house that I'm trying to get a good deal on it belongs to my wife's uncle. But I want to keep it for a rental but not sure how to use other peoples money on a rental.
There are plenty of possibilities. Are we talking a single family or multi family?
If it is a single that is just going to be for investment, lenders are going to want to see 25% down. Perhaps you can get your uncle to hold a seller second mortgage but get a lender will still want you to put down something.
If you are going to live on the property the down payment is much lower.
@Frank Patalano I live in CA. I cant seem to find a way to start with $45k. Im starting to consider going out of state and try my luck somewhere else. Is $45k even enough to start investing. Can someone please point me in the right direction.
You can buy a whole house in Ohio for $35K. I would find a property manager in the market first before investing anywhere. Then you can talk to an agent about an expected return. $45K is more than I had to start when I started investing. Every market is different. The rents, expenses, and purchase price will be different.
@Frank Patalano Lack of action plans and daily support system
Read a book on habits and goals.
Many of my friends have recommended Atomic Habits. I haven't read it yet but I have it in my to read pile.
Daily Support System? It would help but not a requirement in today's connected world. You have support online everyday. Many people don't have a lot of support at home when they start investing.
What is holding us back at this point in time is funding. My wife and I started our company a year ago, and have one rehab/flip deal in the works, but now we are hitting a wall with funding for our second deal. Unfortunately, my wife is getting frustrated. We have the education and backing of systems, so the paralysis is not the issue. Money is.
Why can't you guys partner on the second deal? Sharing the profit is better than no profit at all.
Well, we haven't found anyone that will vc a deal, and a majority of the HML's we find want a PG, 20% down and a minimum of three months reserves in the bank, 2 months of business bank statements, along with us having done at least three deals. Or they want us to have been in business for over a year, etc.
We are a new business. Our LLC was finalized in July '18, have one PML funded deal we are rehabbing in Arizona, our FICO was 680, but since we recently refinanced our home, have not made a payment yet, our scores are in the low 6's. Oh, and we only have $50k from my wife's solo401k.
Any and all assistance would be greatly appreciated and accepted.
Jeremiah
You are using alot of acronyms.
#1 You are doing a rehab now. 1 deal at a time is fine when you are starting out. If you find more deals, wholesale them.
#2 Those Hard money lenders are ridiculous. I've never had one ask for a bank statement. Keep looking for lenders.
#3 $50K is more than probably half of the people in the US population have in retirement accounts.
#4 If it is a good enough deal plenty of people will come. Every week I have people begging me to borrow their money. Or begging me to partner with them on a property.
#5 Do you belong to your local REIA?
We found a HML that is willing to work with us. No B.S. like the other guys wanted, and this guy actually talked to us on the phone for about an hour. He said he works with a lot of newer companies, and even a few from FB. So this (#2) rehab deal is going to take off. The seller accepted $180k, so inspections start tomorrow (Wed) and Friday. So we are off to a good start, well, better than it was going.
$50k is only the amount we can borrow from the Solo 401k. and it is not like a self directed 401k where all of the money, including the profit, has to go back to the account.
Yes, we belong to NOREIA. Meetings every week, and the pres. is a RE atty., and owns the title agency we use. He is quite knowledgeable, as are a few of the others. The bad thing is that not all of the, well, not many of the wholesalers in this area actually know how to give an ARV based on comps, they simply see a house or two in the neighborhood sell recently, and think their house can sell for that amount too, even though their house is a 3/2 shotgun without off street parking and the houses that sold are 3/2 two stories with a garage and off street parking.
We are also surrounded by a lot of houses that are gutted for one reason or another, and listed too high for the area. So it goes back to the listing agent not being honest with their seller.
Regardless, we are pulling through.
Send some of those beggers my way. Here in New Orleans area, there are a lot of deals waiting to be had.
BTW, sorry I hijacked the thread and answered a few questions.
What is holding us back at this point in time is funding. My wife and I started our company a year ago, and have one rehab/flip deal in the works, but now we are hitting a wall with funding for our second deal. Unfortunately, my wife is getting frustrated. We have the education and backing of systems, so the paralysis is not the issue. Money is.
Why can't you guys partner on the second deal? Sharing the profit is better than no profit at all.
Well, we haven't found anyone that will vc a deal, and a majority of the HML's we find want a PG, 20% down and a minimum of three months reserves in the bank, 2 months of business bank statements, along with us having done at least three deals. Or they want us to have been in business for over a year, etc.
We are a new business. Our LLC was finalized in July '18, have one PML funded deal we are rehabbing in Arizona, our FICO was 680, but since we recently refinanced our home, have not made a payment yet, our scores are in the low 6's. Oh, and we only have $50k from my wife's solo401k.
Any and all assistance would be greatly appreciated and accepted.
Jeremiah
You are using alot of acronyms.
#1 You are doing a rehab now. 1 deal at a time is fine when you are starting out. If you find more deals, wholesale them.
#2 Those Hard money lenders are ridiculous. I've never had one ask for a bank statement. Keep looking for lenders.
#3 $50K is more than probably half of the people in the US population have in retirement accounts.
#4 If it is a good enough deal plenty of people will come. Every week I have people begging me to borrow their money. Or begging me to partner with them on a property.
#5 Do you belong to your local REIA?
We found a HML that is willing to work with us. No B.S. like the other guys wanted, and this guy actually talked to us on the phone for about an hour. He said he works with a lot of newer companies, and even a few from FB. So this (#2) rehab deal is going to take off. The seller accepted $180k, so inspections start tomorrow (Wed) and Friday. So we are off to a good start, well, better than it was going.
$50k is only the amount we can borrow from the Solo 401k. and it is not like a self directed 401k where all of the money, including the profit, has to go back to the account.
Yes, we belong to NOREIA. Meetings every week, and the pres. is a RE atty., and owns the title agency we use. He is quite knowledgeable, as are a few of the others. The bad thing is that not all of the, well, not many of the wholesalers in this area actually know how to give an ARV based on comps, they simply see a house or two in the neighborhood sell recently, and think their house can sell for that amount too, even though their house is a 3/2 shotgun without off street parking and the houses that sold are 3/2 two stories with a garage and off street parking.
We are also surrounded by a lot of houses that are gutted for one reason or another, and listed too high for the area. So it goes back to the listing agent not being honest with their seller.
Regardless, we are pulling through.
Send some of those beggers my way. Here in New Orleans area, there are a lot of deals waiting to be had.
BTW, sorry I hijacked the thread and answered a few questions.
Glad to see that you finally found someone.
I saw the thread hijacking. :>
@Kris Langloiswhy local? Do you feel like you need control? Why not hire a property manager?
New to this looking for advice!
@Mark Bommarito with that price range and you wanting to invest out of state (specifically mentioning tx and ga) have you considered rental properties near military installations? Both of those states have multiple installations, you can go online and find out what a soldier in that area gets paid a month in housing allowance so you know what to charge for rent (when doing your deal analysis) and you can typically get a tenant for 2-3years until they have to move to another assignment. I was 5.5years military. Spent time in tx as well as tn. Both places had houses well below 150 earlier this decade I’d say probably around 150 now. I bought my first ever house in tn for 130k (2013) and sold it for 144k (2016) 1500sqft rancher on 3/4acre.
@Frank Patalano
Money/finances/funds. However you want to word it.
Good credit between wife and I. But don’t have a cash reserve built up to drop on an investment property. Literally the only thing holding back right now.
@Kris Langloiswhy local? Do you feel like you need control? Why not hire a property manager?
New to this looking for advice!
I prefer local because that is where my network is strongest. Not just in management but also in order to acquire the best deals.
@Frank Patalano
Money/finances/funds. However you want to word it.
Good credit between wife and I. But don’t have a cash reserve built up to drop on an investment property. Literally the only thing holding back right now.
If it is seriously the one thing holding you back then find a partner who has some money and make it happen. I've partnered with people before where I brought the money and credit but they had the time and or experience and or the deal itself.
Another option is if you are finding decent deals then wholesale a couple of them to generate some cash.
@Jacob Gelinas
I feel the same way, Jacob.
I think the market has got to crash soon.
When it does I want to have some form of down payment to scoop up my first property.
Although I have been learning a lot on BP about creative financing, so I’m just learning what I can for now while I save and look for the right deal.
I set a goal though that by the end of 2019 I would educate myself enough to confidently be able to make my first move in real estate.
I've been researching for about a 2 weeks now, listening to over 100 biggerpockets podcasts, I'm starting to read How to Invest In Real Estate from BP Publishing after finishing Rich Dad Poor Dad, even though I'm starting to feel more comfortable and confident. I'm just searching listing websites daily looking for the perfect 4plex or other MFH in Atlanta, GA. I'm currently about 5k in CC debt which is also holding me back. I feel like I should pay that off before investing. It will take about 2-3 months. I look to have my first house hacked property by the end of 2019.
Does anyone disagree with waiting to pay off debt before venturing out into the real estate investing world?
I've been researching for about a 2 weeks now, listening to over 100 biggerpockets podcasts, I'm starting to read How to Invest In Real Estate from BP Publishing after finishing Rich Dad Poor Dad, even though I'm starting to feel more comfortable and confident. I'm just searching listing websites daily looking for the perfect 4plex or other MFH in Atlanta, GA. I'm currently about 5k in CC debt which is also holding me back. I feel like I should pay that off before investing. It will take about 2-3 months. I look to have my first house hacked property by the end of 2019.
Does anyone disagree with waiting to pay off debt before venturing out into the real estate investing world?
I'm in the NY area, and NY/NJ are pretty expensive and have high taxes. Not to mention their bleeding populations. I began to be of the mind that I needed to flip a few first before I got into income properties to build experience and capital. Read The Book on Flipping Houses and talked to several investors, HMLs, and contractors in my area.
Wise words then came to me from someone smarter than me that made me realize it makes more sense to invest OOS, which is a whole nother skillset. Purchased David Green's book on OOS investing and am looking for good potential markets. Hard enough for me to trust GCs to do a good job and charge reasonably in my own backyard let alone someone to do a job I can't physically see. Have to keep educating myself and network a LOT more (my low post count can attest).
I've been researching for about a 2 weeks now, listening to over 100 biggerpockets podcasts, I'm starting to read How to Invest In Real Estate from BP Publishing after finishing Rich Dad Poor Dad, even though I'm starting to feel more comfortable and confident. I'm just searching listing websites daily looking for the perfect 4plex or other MFH in Atlanta, GA. I'm currently about 5k in CC debt which is also holding me back. I feel like I should pay that off before investing. It will take about 2-3 months. I look to have my first house hacked property by the end of 2019.
Does anyone disagree with waiting to pay off debt before venturing out into the real estate investing world?
I agree with paying off the credit card. Sure some people invest despite large CC debts and it works out, but I think the ROI on paying off debt will be pretty good. The credit card interest is usually anywhere between 15%-30%, right? Hard to find such great deals in any investment!
@Mark Bommarito Mark, I'm experiencing some of the same challenges. Even as a professional, it requires a lot of time and research. Perhaps there is a way to form a local group to do research together and talk things out. I've thought about this for a while. Let me know what your thoughts are.
@Jacob Gelinas
I feel the same way, Jacob.
I think the market has got to crash soon.
When it does I want to have some form of down payment to scoop up my first property.
Although I have been learning a lot on BP about creative financing, so I’m just learning what I can for now while I save and look for the right deal.
I set a goal though that by the end of 2019 I would educate myself enough to confidently be able to make my first move in real estate.
A fine goal. We still buying but selling more than buying.
I've been researching for about a 2 weeks now, listening to over 100 biggerpockets podcasts, I'm starting to read How to Invest In Real Estate from BP Publishing after finishing Rich Dad Poor Dad, even though I'm starting to feel more comfortable and confident. I'm just searching listing websites daily looking for the perfect 4plex or other MFH in Atlanta, GA. I'm currently about 5k in CC debt which is also holding me back. I feel like I should pay that off before investing. It will take about 2-3 months. I look to have my first house hacked property by the end of 2019.
Does anyone disagree with waiting to pay off debt before venturing out into the real estate investing world?
I tend to agree with your logic. It sounds like you have not really been studying real estate that long. Spend the next two or three months educating yourself and networking while you're paying off debt. At the same time my partner Jimmy had good amount of college debt when he bought his first four unit.
I'm in the NY area, and NY/NJ are pretty expensive and have high taxes. Not to mention their bleeding populations. I began to be of the mind that I needed to flip a few first before I got into income properties to build experience and capital. Read The Book on Flipping Houses and talked to several investors, HMLs, and contractors in my area.
Wise words then came to me from someone smarter than me that made me realize it makes more sense to invest OOS, which is a whole nother skillset. Purchased David Green's book on OOS investing and am looking for good potential markets. Hard enough for me to trust GCs to do a good job and charge reasonably in my own backyard let alone someone to do a job I can't physically see. Have to keep educating myself and network a LOT more (my low post count can attest).
Perhaps you can start somewhere close such as Western Pennsylvania or even upstate New York (which feels like a world away sometimes).
Realize that technology has made this so much easier with video and pictures. At the same point it doesn't hurt to take a trip out to your target market and meet up with people.
Yes , I haven't which also is holding me back. Fun fact is I am a Finance & Economics graduate and I also looked into being a real estate agent. I took the classes through my University. So real estate as a whole was already interesting to me and I understand the terms and ratios and math behind it. I was thinking about getting my license anyway to reduce my bottom line. So that's holding me back as well as since it has been so little diving specifically into real estate investing. The real estate courses had very little if any to do with investing.