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 for me it’s fear of failure. I want to start off doing wholesaling but there’s just so much information and I learn by doing but doing means investing and quite frankly I’m nervous to fail.
My biggest mental barrier is finding the right market to invest. San Diego doesn't seem like an option. And I am fearful that whatever market I choose, I'd be late to the party. I have to find a system to find potential markets to target and go from there. But I'm stuck on how to find upcoming areas.
Just because a market is going up does not make it overheated. I personally could not invest in San Diego either. Look for markets for the growing population but with price increases below the national average. You can still find individual opportunities in any Market. It's just harder in some markets and others. Don't wait for the perfect opportunity. Try to find a decent deal and work with it. There is so much to learn once you own the property. You'll have so much more knowledge for the second deal.
@Frank Patalano for me it’s fear of failure. I want to start off doing wholesaling but there’s just so much information and I learn by doing but doing means investing and quite frankly I’m nervous to fail.
Welcome fellow Rhode Islander. You should come to our monthly meetings in Warwick. People worry too much about failing. If you don't fail once in awhile then you're not pushing yourself hard enough. I fail quite often. Even in real estate once in a while after 10 years of experience. Wholesaling is a great way to get started if you have a lot of time and not a lot of money. If you ever rode a bike as a kid you probably fell off once or twice. You didn't worry about that failure. You got back up and kept riding. Think about that toddler who falls over when they're first starting to walk. They get right back up and keep going.
New member here. What is holding me back? DTI.
I am self employed (unrelated to real estate) and I have been growing steadily over the last 8+ years. Originally, I was employed at one place where I made enough to pay my bills while the profits from the business were reinvested so I could grow it. Several years ago, I hit a wall as i wasn't having enough time to grow anymore because of the time spent at my employed job, so I made the tough choice to go all-in on the business.
Things went well but my income was pretty low as I only made about 16-18k annually. I worked out some private deals and took out private loans to enable me to expand. These deals we're usually 2-3 year loans to buy profit-producing assets. It obviously increased my operating income but the extra profits went almost entirely toward the payments of the loans used to buy these assets. I have done this about 8 times since 2012 and often carried 2-3 private loans at a time.
Purchasing all of these assets benefited me on taxes because my tax burden has been pretty much zero due to having kids. However, child support agencies don't always seem to understand how businesses work and also don't seem to know how to follow their own laws because they can't make sense about what the language even means in the laws because, again, they don't understand businesses. As a result, my child support has been a little high.
Since my tax returns have been low, but child support calculated on a much higher income, that has resulted in making my DTI ratio a little high. To top it all off, I put a business vehicle in my name instead of my business name, which counts toward my DTI.
The end result is that I can't get a loan right now at least until the vehicle loan is gone but I will likely be plagued with child support issues for many more years to come due to, what I find to be, unfair child support calculations simply due to not understanding their own laws.
Edit: I am VERY confident in my financial ability when it comes to researching and working numbers. I am not afraid of debt. I'm not worried too much about depreciation. I'm also not worried about the common problems that I hear about with rental properties. My wife and I have a simple goal of having a long-term mostly passive income stream for retirement.
When I do finally manage to get a loan, I probably won't be worried about the mortgage. I will, however, be worried about potential repairs and updates to properties. When I bought my personal home 10 years ago, I paid it off in 6 years. It was a fixer upper (still is!) but it gave me a lot of experience. I think I have enough knowledge to know what I can and cannot do in a rental as well as enough knowledge to make sure I don't buy more than I can handle.
What I truly lack is knowledge in creative ways to get access to money. To me, business is nothing about emotions and all about numbers.
The second-to-last sentence was the most important one that you wrote. You need to figure out creative ways to get money. Number one if I were you I would be going after hard money to buy a property. Number to I would find a partner with some money. Obviously you have some experience and a lot of business experience. There are many people that have money but no experience in want to do deals. I've done deals before with others who have brought no money to the table. If you find an amazing deal you will find the partner or the money to make it happen.
@Frank Patalano Thanks for the reply! The primary focus to help reach my goal is utilizing risk management. Sure you could buy a stock without knowing what you're doing, but that's not investing its gambling. Always learning is critical but I feel going into it with as much knowledge as possible will increase my chances of success
Leveraging capital is a fantastic tool that I will use through my RE journey. I think it would be more strategic to fund my first rental using my personal capital
Hi Frank, what's holding me back is not being able to find the place to buy the property here in Puerto Rico, since I sometimes feel like maybe long term rentals aren't a good idea because I fear I won't be able to find tenants.
@Frank Patalano Thanks for the reply! The primary focus to help reach my goal is utilizing risk management. Sure you could buy a stock without knowing what you're doing, but that's not investing its gambling. Always learning is critical but I feel going into it with as much knowledge as possible will increase my chances of success
Leveraging capital is a fantastic tool that I will use through my RE journey. I think it would be more strategic to fund my first rental using my personal capital
That's fine but set goals on your Education.
I started out on my own as well but didn't start growing until I started to partner with others.
Hi Frank, what's holding me back is not being able to find the place to buy the property here in Puerto Rico, since I sometimes feel like maybe long term rentals aren't a good idea because I fear I won't be able to find tenants.
I don't know anything about Puerto Rico. I assume it's just like every other part of the country. Why do you worry about finding tenants? Can you Airbnb something?
@Frank Patalano Thanks for the reply! The primary focus to help reach my goal is utilizing risk management. Sure you could buy a stock without knowing what you're doing, but that's not investing its gambling. Always learning is critical but I feel going into it with as much knowledge as possible will increase my chances of success
Leveraging capital is a fantastic tool that I will use through my RE journey. I think it would be more strategic to fund my first rental using my personal capital
That's fine but set goals on your Education.
I started out on my own as well but didn't start growing until I started to partner with others.
Smart! Thank you for the advice!!
Housing cost in Chicago combined with my current DTI due to student really want to dive in but struggling to find that first property that can work for me
What’s holding me back is not knowing where to start. I’m currently a stay at home mom of 3 kids under 4 years old, with only my husband’s income. I’m planning on returning to work as a teacher in September, because we need the money, but it’s not my passion. The idea of real estate investing is my passion. I’m learning as much as I can now through books, podcasts and YouTube, but my goal is to be financially free in two years, so I can stay home permanently with my kids. If I can make btwn 5-10k a month, it can be possible. FYI, I live in Brooklyn, NY. We want to move into a single family home to raise our kids as well. Should I start wholesaling, or try to use OPM to buy multi family homes?
Help!!!
@Frank Patalano Fear of not knowing what is going to happen, you can plan for everything, have every contingency in place, and still fail. Especially as a new investor.
Nice to have the big 2 year goal thats aggressive but it may encourage you to take extreme risk....why not start with extreme smaller goals with shorter windows....ie....as an example
Out of debt 3 months
Emergency fund to $x six months
Downpayment savings by 9 months
Buy muti prop that allows u to live rent free by 1 year
Etc etc....
If your able to beat your goals early you can then move faster
Housing cost in Chicago combined with my current DTI due to student really want to dive in but struggling to find that first property that can work for me
Most major cities have similar problems with pricing. You have to look offmarket and keep networking to find a real deal.
Do you plan on house hacking your first one?
What’s holding me back is not knowing where to start. I’m currently a stay at home mom of 3 kids under 4 years old, with only my husband’s income. I’m planning on returning to work as a teacher in September, because we need the money, but it’s not my passion. The idea of real estate investing is my passion. I’m learning as much as I can now through books, podcasts and YouTube, but my goal is to be financially free in two years, so I can stay home permanently with my kids. If I can make btwn 5-10k a month, it can be possible. FYI, I live in Brooklyn, NY. We want to move into a single family home to raise our kids as well. Should I start wholesaling, or try to use OPM to buy multi family homes?
Help!!!
I would Absolutely house hack a multifamily. That will help pay all of your housing costs.
@Frank Patalano Fear of not knowing what is going to happen, you can plan for everything, have every contingency in place, and still fail. Especially as a new investor.
I got a news flash for you. You are going to fail once in a while. I fail in real estate once in a while too. Shoot I lost money on my first deal. Thank god I didn't give up
@Frank Patalano How do you do all that you are saying? This is my 1st day on here and was suggested to me by a broker after explaining I want to (one day soon) buy an investment prop. So my questions are sincere.
Nice to have the big 2 year goal thats aggressive but it may encourage you to take extreme risk....why not start with extreme smaller goals with shorter windows....ie....as an example
Out of debt 3 months
Emergency fund to $x six months
Downpayment savings by 9 months
Buy muti prop that allows u to live rent free by 1 year
Etc etc....
If your able to beat your goals early you can then move faster
Were you talking to someone specific in this post???
There is nothing wrong with your goals but everyone will have different ones. Most of my friends would have owned no real estate if they waited to pay off all of their debt first. Instead they leveraged their profit to pay down debt faster.
@Frank Patalano How do you do all that you are saying? This is my 1st day on here and was suggested to me by a broker after explaining I want to (one day soon) buy an investment prop. So my questions are sincere.
We all start somewhere. You and I are not in a race. It took me 10 years to get where I am today.
It takes years of hard work to grow your business. I wish that I pushed harder early on but I only started actually setting written goals this year.
If you keep taking action eventually things fall into place and you learn from your mistakes.
If I took your comment wrong please rephrase it and I will try again.
Thanks. I probably should write things better as to not make it seem like I know everything. I definitely don't! In fact, I'm proud to admit that I'm smart enough to look for people with more knowledge and experience than I have at certain things. My strategy is not to milk a cheap house for as much as I can, but rather it is to offer a residence that is reliable, presentable, and fairly priced for both myself and the tenant. I also don't want to do jobs that someone else can do much better, faster, or possibly even "cheaper" than I can do myself. On top of that, I'd prefer a property manager take care of day-to-day duties. My goal is to create long term income as much as possible. As a result, I feel it necessary to start learning from people here, including you!
I know what I know, but the truth is that I don't know what I know! Jokes aside, I am vastly inexperienced with real estate outside of working on my personal residence. I'm still pretty young I think, so I feel like I need to start learning because I honestly feel that real estate COULD be the easiest business to add to my "portfolio" of businesses that currently sits at one.
@Frank Patalano
$$ - financing a property stops me from moving forward. I drive around and look at properties around town all the time though trying to crunch numbers and learn.
I closed on the duplex I live in less than a month ago, tenants moving into the upstairs next week. I’m eager to get more properties, just don’t have the cash to drop or equity to get a loan against at this moment.
Thanks. I probably should write things better as to not make it seem like I know everything. I definitely don't! In fact, I'm proud to admit that I'm smart enough to look for people with more knowledge and experience than I have at certain things. My strategy is not to milk a cheap house for as much as I can, but rather it is to offer a residence that is reliable, presentable, and fairly priced for both myself and the tenant. I also don't want to do jobs that someone else can do much better, faster, or possibly even "cheaper" than I can do myself. On top of that, I'd prefer a property manager take care of day-to-day duties. My goal is to create long term income as much as possible. As a result, I feel it necessary to start learning from people here, including you!
I know what I know, but the truth is that I don't know what I know! Jokes aside, I am vastly inexperienced with real estate outside of working on my personal residence. I'm still pretty young I think, so I feel like I need to start learning because I honestly feel that real estate COULD be the easiest business to add to my "portfolio" of businesses that currently sits at one.
I understand. I'm a big fan of providing quality housing for people that need it. I usually try to be under Market on the rent to provide people value. Keep learning, start networking in the industry more, and keep saving. Then after that start looking at a few deals. If you find an amazing deal, you will find a way to make it happen.
@Frank Patalano
$$ - financing a property stops me from moving forward. I drive around and look at properties around town all the time though trying to crunch numbers and learn.
I closed on the duplex I live in less than a month ago, tenants moving into the upstairs next week. I’m eager to get more properties, just don’t have the cash to drop or equity to get a loan against at this moment.
Keep educating yourself over the next two or three months. Learn the business a little bit by managing that duplex. Then start looking again. If you find that deal of the Year, you'll find the money to make it happen.
I'd say that a big problem for newbies is requiring the property to be "perfect" which could be considered a form of being scared.
I think many have a list of musts before they will pull the trigger and try to have a contingency for everything and thus can never find a deal they are comfortable pulling the trigger on. There will never be a perfect deal and even if they think they have found one there is always something that will pop up after take-over that they hadn't planned or expected.
You have to have confidence that you can and will be able to overcome whatever may pop up, having said that it's really hard if you don't have someone highly experienced to be able to lean on when things DO go a little sideways.
Find a mentor or someone that has experience in what it is you are trying to do and trust the process and their guidance and always buy with a margin of safety. Don't get into something with inadequate cash flow and bank on the appreciation on the sale. This is how people get destroyed.
Just my two cents.
I'd say that a big problem for newbies is requiring the property to be "perfect" which could be considered a form of being scared.
I think many have a list of musts before they will pull the trigger and try to have a contingency for everything and thus can never find a deal they are comfortable pulling the trigger on. There will never be a perfect deal and even if they think they have found one there is always something that will pop up after take-over that they hadn't planned or expected.
You have to have confidence that you can and will be able to overcome whatever may pop up, having said that it's really hard if you don't have someone highly experienced to be able to lean on when things DO go a little sideways.
Find a mentor or someone that has experience in what it is you are trying to do and trust the process and their guidance and always buy with a margin of safety. Don't get into something with inadequate cash flow and bank on the appreciation on the sale. This is how people get destroyed.
Just my two cents.
Agreed. I've told a bunch of people on here that you can't wait for the perfect deal. And that you're not going to know the answer to every single problem. You don't know what you don't know.