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.
I live in Canada; looking for investment in US. I have willing partners in US. I overcame the fear factor. I do analyze properties often and have found a few work-able ones. Thanks to bigger pockets, I think I have just enough knowledge to dip my toes in the REI world.
What is holding me back is the uncertainties over cross-border financing. I'm not sure where to start on that. Should I start an LLC in US with my partners? But then, I read that it may not be easy to get financing for LLC (for SFH or small MFH). Or, should I just do partnerships? With partnership, can we get approved for mortgage based on the US credit of one of the partners? These are the questions for which I am still trying to get some clarity on.
Appreciate any advice on this. Thanks, all.
I know nothing about this topic. I will say that if you open an LLC I have no problem getting commercial financing with 25% down.
I like the partnership idea as well. If you have someone with great credit and great w2 income there should be no problem. On my first partnership I was the money and credit partner. It worked out well.
@Frank Patalano When I was looking for my first property, what was holding me back was lack of confidence in my numbers and abilities. This still holds me back today. I hustled to find deals, I would have accepted offers for 70-80% of market value. But I would back out of the deal thinking "how could a new guy be getting accepted offers on these deals, what did I miss?" This happened at least 3 times. I finally pulled the trigger early in 2018 and just bought one. It's been an experience. Had some trouble with the city with the rental license, even though it had had a license for years. My first tenant got a nasty divorce and left just 6 months into the lease (everything looked good on paper). Had to find a replacement tenant right at the beginning of winter. Ended up finding a great tenant but slightly below market rent. Still cashflows but doesn't leave a super healthy margin after expenses, vacancy and capex accounts are filled. At the end of the day, the process of doing your numbers properly, taught on biggerpockets is what saved me. I underwrote for vacancy, repairs, capex etc. So, yes I have below market rent, which stinks for now. But the property still cashflows, not much cashflow but it sure beats being underwater each month.
Think about how much experience you got by taking action.
As rents go up you will make more money, plus the depreciation, debt paydown, etc. Nice job.
Thank you, @Frank Patalano. Great to know these two possible options are available for me and anybody else in similar situations. Encouraging. Thanks, again.
I feel like I’m not ready yet, but I’m starting to wonder if that’s just fear talking. A couple things come to mind:
1) I live in Washington, DC where housing costs are really high. I’ve been dreaming of moving to NYC for a year within the next year (but we’ll see) and then moving to San Diego for a bit. Although, I don’t have definite plans to do that. It’s tough to commit to buying a home here when my plans within the next year are up in the air.
2) I don’t totally know the best ways to find good deals, what construction/repair costs are reasonable, etc. I feel like I’d be easily taken advantage of if I’m not educated on it. So I’m learning and then I’ll start trying to build a network as well.
3) I’ve got about $160k in my 401k. I have about $17k in savings (that includes my emergency fund). I want more in order to be able to put 3.5% on a duplex in the DC area while still having some liquid savings.
I’m continuing to save, trying to learn more about investments, and holding off to see where I end up. There’s also discouragement from some family members - “rental properties aren’t worth it, they’re too much work, you barely break even.” I try to just ignore that.
Every city that you mentioned is a place that I personally would not be investing in right now. It is very hard to make a profit on most properties in those markets. Real estate markets run in cycles. Be careful buying at the top. At the same point keep educating and networking. No matter what I would be househacking a multi and picking a decent neighborhood but a property that must cashflow (make money).
Yeah, that makes it tricky! If I want to get a loan to buy a property in a better market, I need to live there for a year and that’s just not feasible. So one option is to save up enough cash to buy somewhere far away, but that adds some complexity. I’ve considered buying a duplex an hour to an hour and a half away from DC to help with the cost, but that commute would be terrible.
Everything except money (which is of course finite) - I can't be the only on here with liquid capital, but zero resources. I do plan on changing that though, and investing time heavily into educating myself. I also believe that I am some what constricted by my location, living in NYC. I can't purchase anything in NYC outright cash, so my proximity to good deals, automatically disables that option. I actually had a deal on the table, as a hard lender, for an even split between the project manager, myself and the contractor (a close friend), for 33% across the board, but upon inspection, a water problem was detected and we rescinded the offer.
I was bummed out, but more depressed at the fact that I have to depend on others to provide a path into real estate. The gentleman I do work with are big time, and rarely invest in property <$750k (upper Westchester, Conn. areas), so it doesn't necessarily benefit them, to invest their time in a project with me, unless it's a fantastic deal. My budget is $200K, including purchase of property and renovation. I am unwilling to go beyond that budget with my first project.
To add to the problem, my time is limited, as I am Train Operator, so my lifestyle and hours can be totally opposite business hours. I just feel limited by everything except capital. I am going to go on an educational binge for the next 2-3 months, and see if any clarity comes about. Perhaps, flipping is not best suitable, and rental properties with property managers is my thing - long term, stable projects .... Who knows.
Any ideas for someone in my situation would be greatly appreciated. I was not as attentive to the power of networking, when I initially joined this site, but will keep my ears open, and answer any and all messages/responses.
Thank you BP members.
@Frank Patalano
Hi Frank,
I'm trying to figure out where will ne a good location to start my first STR.
Once I'll know on how to find this specific area it will help me to kickstart my first STR business. I currently own only traditional rentals but I knotlw that STR it's a different ball game.
Do you have any suggestions ?
Thanks in advance.
I feel like I’m not ready yet, but I’m starting to wonder if that’s just fear talking. A couple things come to mind:
1) I live in Washington, DC where housing costs are really high. I’ve been dreaming of moving to NYC for a year within the next year (but we’ll see) and then moving to San Diego for a bit. Although, I don’t have definite plans to do that. It’s tough to commit to buying a home here when my plans within the next year are up in the air.
2) I don’t totally know the best ways to find good deals, what construction/repair costs are reasonable, etc. I feel like I’d be easily taken advantage of if I’m not educated on it. So I’m learning and then I’ll start trying to build a network as well.
3) I’ve got about $160k in my 401k. I have about $17k in savings (that includes my emergency fund). I want more in order to be able to put 3.5% on a duplex in the DC area while still having some liquid savings.
I’m continuing to save, trying to learn more about investments, and holding off to see where I end up. There’s also discouragement from some family members - “rental properties aren’t worth it, they’re too much work, you barely break even.” I try to just ignore that.
Every city that you mentioned is a place that I personally would not be investing in right now. It is very hard to make a profit on most properties in those markets. Real estate markets run in cycles. Be careful buying at the top. At the same point keep educating and networking. No matter what I would be househacking a multi and picking a decent neighborhood but a property that must cashflow (make money).
Yeah, that makes it tricky! If I want to get a loan to buy a property in a better market, I need to live there for a year and that’s just not feasible. So one option is to save up enough cash to buy somewhere far away, but that adds some complexity. I’ve considered buying a duplex an hour to an hour and a half away from DC to help with the cost, but that commute would be terrible.
I agree it would be less than ideal. There are many in California who would dream to have such a short commute. Can you partner up with someone to invest?
Everything except money (which is of course finite) - I can't be the only on here with liquid capital, but zero resources. I do plan on changing that though, and investing time heavily into educating myself. I also believe that I am some what constricted by my location, living in NYC. I can't purchase anything in NYC outright cash, so my proximity to good deals, automatically disables that option. I actually had a deal on the table, as a hard lender, for an even split between the project manager, myself and the contractor (a close friend), for 33% across the board, but upon inspection, a water problem was detected and we rescinded the offer.
I was bummed out, but more depressed at the fact that I have to depend on others to provide a path into real estate. The gentleman I do work with are big time, and rarely invest in property <$750k (upper Westchester, Conn. areas), so it doesn't necessarily benefit them, to invest their time in a project with me, unless it's a fantastic deal. My budget is $200K, including purchase of property and renovation. I am unwilling to go beyond that budget with my first project.
To add to the problem, my time is limited, as I am Train Operator, so my lifestyle and hours can be totally opposite business hours. I just feel limited by everything except capital. I am going to go on an educational binge for the next 2-3 months, and see if any clarity comes about. Perhaps, flipping is not best suitable, and rental properties with property managers is my thing - long term, stable projects .... Who knows.
Any ideas for someone in my situation would be greatly appreciated. I was not as attentive to the power of networking, when I initially joined this site, but will keep my ears open, and answer any and all messages/responses.
Thank you BP members.
Being a capital partner will get you plenty of friends on here but be careful. You need to spend a lot more time investing in that education before choosing the right partners. I keep telling people on here to find people with money but no time and you are the perfect candidate.
I'm actually quite impressed that you are going on an educational binge. Perhaps we will chat sometime soon. I always have opportunities popping up.
@Frank Patalano
Hi Frank,
I'm trying to figure out where will ne a good location to start my first STR.
Once I'll know on how to find this specific area it will help me to kickstart my first STR business. I currently own only traditional rentals but I knotlw that STR it's a different ball game.
Do you have any suggestions ?
Thanks in advance.
Good locations. Walking distance to colleges, Walking distance to downtowns with night life, Walking distance to vacation spots.
@Frank Patalano oh okay, that clears that up. Yes, I am part of a couple local real estate groups.
@Frank Patalano
We have our first property and now I’m trying to learn how to buy the next one, where etc. trying to learn a bit and figure it all out.
Hello, my name is Rasmey. I've been trying to learn about real estate investment for a while now. I haven't done much besides listening to podcasts and reading articles/books. There are so much information out there that I feel overwhelmed and just couldn't pin point where to start. I think the one thing that is holding me back the most is not having the right support group or like minded people to go on this journey with. Looking forward to connecting and learning from the people here at BiggerPockets!
Everything except money (which is of course finite) - I can't be the only on here with liquid capital, but zero resources. I do plan on changing that though, and investing time heavily into educating myself. I also believe that I am some what constricted by my location, living in NYC. I can't purchase anything in NYC outright cash, so my proximity to good deals, automatically disables that option. I actually had a deal on the table, as a hard lender, for an even split between the project manager, myself and the contractor (a close friend), for 33% across the board, but upon inspection, a water problem was detected and we rescinded the offer.
I was bummed out, but more depressed at the fact that I have to depend on others to provide a path into real estate. The gentleman I do work with are big time, and rarely invest in property <$750k (upper Westchester, Conn. areas), so it doesn't necessarily benefit them, to invest their time in a project with me, unless it's a fantastic deal. My budget is $200K, including purchase of property and renovation. I am unwilling to go beyond that budget with my first project.
To add to the problem, my time is limited, as I am Train Operator, so my lifestyle and hours can be totally opposite business hours. I just feel limited by everything except capital. I am going to go on an educational binge for the next 2-3 months, and see if any clarity comes about. Perhaps, flipping is not best suitable, and rental properties with property managers is my thing - long term, stable projects .... Who knows.
Any ideas for someone in my situation would be greatly appreciated. I was not as attentive to the power of networking, when I initially joined this site, but will keep my ears open, and answer any and all messages/responses.
Thank you BP members.
Being a capital partner will get you plenty of friends on here but be careful. You need to spend a lot more time investing in that education before choosing the right partners. I keep telling people on here to find people with money but no time and you are the perfect candidate.
I'm actually quite impressed that you are going on an educational binge. Perhaps we will chat sometime soon. I always have opportunities popping up.
Thank you and sounds good. Inbox is always open to ideas.
@Frank Patalano
We have our first property and now I’m trying to learn how to buy the next one, where etc. trying to learn a bit and figure it all out.
1 a year is fine. Keep learning. How about a partner with money?
Hello, my name is Rasmey. I've been trying to learn about real estate investment for a while now. I haven't done much besides listening to podcasts and reading articles/books. There are so much information out there that I feel overwhelmed and just couldn't pin point where to start. I think the one thing that is holding me back the most is not having the right support group or like minded people to go on this journey with. Looking forward to connecting and learning from the people here at BiggerPockets!
Welcome. How about Networking? I am going to at least one networking meeting a week.
@Frank Patalano Think I found one! Wish me luck! Getting the ball moving quick.
@Frank Patalano
I have purchased a few already now I'm trying to either pull equity to buy more or use an investor.
I am having trouble pulling equity because 3 of the property's are condos and the banks wont let me pull the equity out of them.
@Jacob Gelinas and that is exactly where I'm at!!! And making more phone calls. I have to get better at skip tracing. But I am really having a hard time getting the right ARV of properties.
@Frank Patalano
I personally am waiting on my HELOC to process And I also plan to borrow from my 401 to cover my percentage of my first flip. The longer I wait the more money I can borrow which makes it hard for me to rush into any deal knowing that the more skin I can put in the game the less I will have to pay to a hard money lender. My HELOC will be for 40K which I plan to allocate to my rehab costs and just finance the purchases. My goal is to start with flips until I have enough cash to buy my first rental outright then continue the BRRRR strategy for passive income but still maintaining a low volume of flips because that's where I feel I can profit the most, at least in my market. Maybe it's like this everywhere but in NJ we have such a variance in property type and size and most importantly value that it makes it difficult for me to assess ARV confidently. I can have a $350,000 property literally right next to a $150,000 and sometimes being on one side of the street can make or break your resale price. Adding even more confusion is when I look at comps that have some upgrades compared to one that has none but more sqft. Or I look at a comp and think was the property actually worth that or did they find a sucker to pay that price and I may not be that lucky. This is not going to stop me in anyway but I feel like it just requires more analysis and creates more of a risk for me when even a 20-30k swing could eat up all of my profit on a flip. Lucky for me the more I analyze the better I will become and that's my plan and my goals definitely support that. Other than that financing is financing and grinding for deals..well you get what you put in. So as long as I continue to network with the right people and apply the 3ft rule to everyone else I don't see any obstacles that can't be overcome.
@Frank Patalano
Thanks for putting this question out there. I have been evaluating the prospect of buying a multi-family rental property for a while now. The thing that is holding me back most is understanding pricing. I am not confident in knowing the value of a home. I also, feel like I need to learn more.
@Vinay H. It is an important factor to consider. No one can time the market. We had billionaires wrong in the last cycle. Also the cycle could last years longer than we expect. I would say keep educating yourself. Also make sure that if you are going to buy, you're buying for cash flow and not for appreciation. Make sure you buy something that will make you money from day one.
wasn't the billionaire(s)...not sure, the one I'm aware of was Donald Trump and he openly admitted that he let his guard down, if i'm not mistaken. I think there was a way to know the crash was coming. As Marty (podcast 1) told us how, in hindsight he knew.
I have two properties. One single family that only cash flows $50 per month and a duplex that we also live in. I didn't buy the single family with the intention to rent it out so unfortunately at least the mortgage is paid every month with a little to spare. Right now I'm stuck trying to get my debt to income ratio reduced to buy another with another FHA loan.
@Frank Patalano Think I found one! Wish me luck! Getting the ball moving quick.
Nice job.