Providence, RI · Member since 2018 · 29 posts · 409 votes
7y
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. What is holding me back is mostly the capital to fund the deal. Additionally, I am new to this, so I am trying to learn as much as I can prior to starting. I am listening to the podcast daily, reading books and searching through the blogs and forums for information. I am hungry, but I need to find investors and work on how to approach them with a deal.
I hope that you have time to be out there working the market. Because if you don't have money or experience what are you bringing to the table?
Finding the cash to fund my first deal is my biggest struggle.
So the easiest thing you have to do, is off of your time to help others. Find some of the bigger players in the real estate market and offer to help them. Eventually they might be willing to partner on a deal with you. Or you could also try wholesaling. The main thing that sounds like you have his time. With little money, little experience you can still do a deal if you want to put the time into it.
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.
Thanks for your response Frank!
Yes I have thought about upstate, particularly near colleges. Also potentially condos in / around the city. Still saving a ton so I can buy cash and BRRRR because I'm a pretty impatient person and can't imagine leaving my cash in a property for so long. I will look into PA as well, NY is just easier at the moment since I have MLS access here. All solvable problems I just have to be persistent and get creative.
What's holding me back is the unknown. Everything takes risk but it is a gut check to jump in.
You have to separate things that you can control and things that you can't. You can plan for things that are bound to happen vs things that not likely to happen.
It's like planes vs cars. You are so much more likely to get hit by a car vs airplane accidents (the safest form of travel). Think about which one we worry about more.
San Diego, CA · Member since 2019 · 6 posts · 1 vote
7y
@Frank Patalano well I do have money but it isn't necessarily cash. I should have explained my situation a little better. I am married located in San Diego, CA. We have a condo that we own free and clear worth 330k. Since we have 2 little ones we needed to move into a bigger place so we bought a home last May worth 490k. My wife just bought a new building last September that she can pull 80k out immediately. We both are fully employed. So technically we do have money just not immediately available. Lol. Our biggest downfall is that we have both been so busy with work life and the kids that our condo has been sitting collecting dust since last May. We could have been collecting $2100 a month for rental income. So we both decided to stop making excuses and we are finally clearing everything out and doing minor fixes to prepare for renting. We are both a little nervous because we have never rented before. I have been doing a little reading to know where to start, but I am still a little nervous. I am wondering should we hire a property manager or do it on my own? Additionally, we would like to start adding more to our portfolio, but not sure which direction we should go. For example there are a couple of multi family units for sale that do accept a 1031 exchange. This would be a great opportunity for us, but we are unsure about how to do a 1031 exchange. We know that the property has to be equal or greater value, but not sure what to do after that. Lol. Also, we were wondering should we rent out the condo and then take a HELOC to purchase another property or should we sell the condo and use the money from that as a down payment for a bigger multi family unit. We want to stay in San Diego because we know the area, but we are not opposed to going out of state. We are just a bit afraid since we would have to travel to out of state property to manage.Furthermore San Diego is an expensive market and we have to consider what is a good deal vs over priced.
Realtor · Minneapolis, MN · Member since 2019 · 64 posts · 16 votes
7y
@Frank Patalano. Lack of savings, not knowing how to find alternative funding sources, not knowing the local market (I’m from the U.K. living in Minneapolis), a worry that I won’t be able to find a good deal... all excuses I know. I’ve been making excuses for the past 15 years! Enough is enough. So I’m trying to learn all I can whilst saving up.
@Frank Patalano well I do have money but it isn't necessarily cash. I should have explained my situation a little better. I am married located in San Diego, CA. We have a condo that we own free and clear worth 330k. Since we have 2 little ones we needed to move into a bigger place so we bought a home last May worth 490k. My wife just bought a new building last September that she can pull 80k out immediately. We both are fully employed. So technically we do have money just not immediately available. Lol. Our biggest downfall is that we have both been so busy with work life and the kids that our condo has been sitting collecting dust since last May. We could have been collecting $2100 a month for rental income. So we both decided to stop making excuses and we are finally clearing everything out and doing minor fixes to prepare for renting. We are both a little nervous because we have never rented before. I have been doing a little reading to know where to start, but I am still a little nervous. I am wondering should we hire a property manager or do it on my own? Additionally, we would like to start adding more to our portfolio, but not sure which direction we should go. For example there are a couple of multi family units for sale that do accept a 1031 exchange. This would be a great opportunity for us, but we are unsure about how to do a 1031 exchange. We know that the property has to be equal or greater value, but not sure what to do after that. Lol. Also, we were wondering should we rent out the condo and then take a HELOC to purchase another property or should we sell the condo and use the money from that as a down payment for a bigger multi family unit. We want to stay in San Diego because we know the area, but we are not opposed to going out of state. We are just a bit afraid since we would have to travel to out of state property to manage.Furthermore San Diego is an expensive market and we have to consider what is a good deal vs over priced.
I would have an agency place your first tenant for you. You can decide to manage it if you want.
1031 exchanges are a great way to diversify as you step up without taking a big tax hit. What do you mean that they will let you take a 1031 exchange? Who wouldn't take 1031 exchange money? On the flip side, I would be very careful about not overpaying for something just because you have to spend your 1031 exchange money.
You guys are doing fine. I agree that going out of state can be tough. I would like to see you have a little more experience first but everyone is different. The two main things you should be doing right now are educating and networking. Meet up with more people in the local market. After that I might start looking at more properties. I find most of my deals through networking.
@Frank Patalano. Lack of savings, not knowing how to find alternative funding sources, not knowing the local market (I’m from the U.K. living in Minneapolis), a worry that I won’t be able to find a good deal... all excuses I know. I’ve been making excuses for the past 15 years! Enough is enough. So I’m trying to learn all I can whilst saving up.
So if you're really ready to break out of this excuse cycle here's what I want you to do. 1. Write down a few goals. Two. One goal should be about real estate networking at least once a week. Get out there and talk to people. Networking will make you more aware of the local market, will help you find like-minded people, and we'll help you find deals. Once a week. No excuses. Three. Besides that try to educate yourself somehow everyday. Read, listen to podcasts, watch real estate on YouTube everyday. Make it like 30 minutes a day.
@Frank Patalano. Lack of savings, not knowing how to find alternative funding sources, not knowing the local market (I’m from the U.K. living in Minneapolis), a worry that I won’t be able to find a good deal... all excuses I know. I’ve been making excuses for the past 15 years! Enough is enough. So I’m trying to learn all I can whilst saving up.
Oh and networking will help you find those hard money lenders and other types of available money. It doesn't matter where you're from. Actually some people will probably be intrigued by your accent. Is it good way to break the ice.
San Diego, CA · Member since 2019 · 6 posts · 1 vote
7y
What I meant by they will let me do a 1031 exchange is that some owners don't want to wait to do a 1031 exchange. A few of the properties that we are considering are willing to do a 1031 exchange and allow us the time to sell our condo. In fact, these properties openly post it on their advertisement. We are also looking into the HELOC option so that we can still keep the property and purchase another one.
What I meant by they will let me do a 1031 exchange is that some owners don't want to wait to do a 1031 exchange. A few of the properties that we are considering are willing to do a 1031 exchange and allow us the time to sell our condo. In fact, these properties openly post it on their advertisement. We are also looking into the HELOC option so that we can still keep the property and purchase another one.
Look into a reverse 1031 exchange. It is slightly pricier than a regular 1031. It would allow you to buy the replacement property first. A HELOC is definitely a better option especially if you want to keep the old property.
Chicago, IL · Member since 2016 · 29 posts · 8 votes
7y
For me, I am trying to get the last of my credit card debt paid off so that I can begin saving for my first rental. It feels like it'll be a couple years before I'm in the game but this seems like the best option right now. I'm trying to educate myself as much as possible so that once it's time to pull the trigger I will feel prepared
Real Estate Broker · Tampa, FL · Member since 2016 · 84 posts · 24 votes
7y
@Frank Patalano
I tend to study a subject or topic to the point of paralysis and I end up never applying the knowledge I possess. However, once I’ve acted on that knowledge once repetition is a breeze thereafter.
For me, I am trying to get the last of my credit card debt paid off so that I can begin saving for my first rental. It feels like it'll be a couple years before I'm in the game but this seems like the best option right now. I'm trying to educate myself as much as possible so that once it's time to pull the trigger I will feel prepared
I had to do a lot of sacrificing when I first started out. It's free to look and you should start looking. When you find that deal you will be more creative and willing to find Partners to get it done.
I tend to study a subject or topic to the point of paralysis and I end up never applying the knowledge I possess. However, once I’ve acted on that knowledge once repetition is a breeze thereafter.
So the best way to break through analysis is by taking action. Set some goals. For example, I will look at 4 properties a week. I will read 30 minutes a day for 5 days a week. Etc. After a few weeks start tweaking the goals. I will make 1 offer every week. Find accountability partners to hold you accountable.