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.
Could you share what led you to lose money on your first deal and what the lessons learned were?
I purchased land at an auction in NYC. I thought that I knew enough to make money. I was so excited by the hype.
Once I owned it I realized how I knew almost nothing about land development. After finding out that the land was virtually unbuildable, I ended up desperately selling it back to the auction company. Ended up losing about $20,000.
wow- I didn’t think even a square foot in nyc could be unbuildable. Good to know.
Rental Property Investor · Union, ME · Member since 2018 · 161 posts · 104 votes
7y
Well you need one of three things from what I've heard:
1. Hustle 2. Money 3. Deal
I don't have the last two, and the first one I am doing but it takes a lot longer. Currently in the early stages of starting up a property management company.
I'm trying to Grant Cardone my stuff, which means, as per @Ben Leybovich's recent post:
1. Start cash-flowing businesses. 2. Grow the business 10Xponetially 3. Shove all that money into Real Estate and make it produce passive income.
With my debt taking up all my cash flow from my job, it makes step #1 #2 and #3 close to impossible.
Bad debt. Never go into mountains of debt without being able to garner revenue specifically from it. I got into some bad debt for assets that, yes they are helpful, but in most cases I could bring in revenue without them. So now I have month to month payments that are hamstringing my budget and keeping me in a job I hate.
You can still make money with a lot of bad debt but it will take more Partnerships and creativity.
The current market is somewhat too hot that the cap rate is only reasonable or even below reasonable but it goes pending in 2-3 days with waived inspection and a higher than asking price offer...
Is it still reasonable to buy properties long distances from where you reside? I have heard of people doing this, but also the flip side, like you mentioning you know people who won’t because they’ve been burned. What are the pros and cons?
Chicago, IL · Member since 2019 · 4 posts · 1 vote
7y
@Frank Patalano
My fear is my age, im 51, limited funds, declining credit score due to student loans kicking in, and just plan old fear of getting it wrong while i'm closer to retiring, than I am to recovery.
Could you share what led you to lose money on your first deal and what the lessons learned were?
I purchased land at an auction in NYC. I thought that I knew enough to make money. I was so excited by the hype.
Once I owned it I realized how I knew almost nothing about land development. After finding out that the land was virtually unbuildable, I ended up desperately selling it back to the auction company. Ended up losing about $20,000.
wow- I didn’t think even a square foot in nyc could be unbuildable. Good to know.
What made you try again and what did you do next?
Sorry about the confusion. The auction was in NYC but the properties were Nationwide. The subject property was in Western Massachusetts.
What made me try again? I knew that I wanted to have Investments so I had to continue figuring out other ways to invest. Eventually I tried buy-and-hold multi families.
Well you need one of three things from what I've heard:
1. Hustle 2. Money 3. Deal
I don't have the last two, and the first one I am doing but it takes a lot longer. Currently in the early stages of starting up a property management company.
I'm trying to Grant Cardone my stuff, which means, as per @Ben Leybovich's recent post:
1. Start cash-flowing businesses. 2. Grow the business 10Xponetially 3. Shove all that money into Real Estate and make it produce passive income.
With my debt taking up all my cash flow from my job, it makes step #1 #2 and #3 close to impossible.
Bad debt. Never go into mountains of debt without being able to garner revenue specifically from it. I got into some bad debt for assets that, yes they are helpful, but in most cases I could bring in revenue without them. So now I have month to month payments that are hamstringing my budget and keeping me in a job I hate.
You can still make money with a lot of bad debt but it will take more Partnerships and creativity.
One of my partners Jimmy set up a property management company with a partner. He was able to quit his regular job within a few years because they had grown so much. We definitely need good property managers. If you create a company that is better than the rest you will have no problems at all.
The current market is somewhat too hot that the cap rate is only reasonable or even below reasonable but it goes pending in 2-3 days with waived inspection and a higher than asking price offer...
I know. I invest one hour out of Boston. Have you been looking at anything off Market?
Is it still reasonable to buy properties long distances from where you reside? I have heard of people doing this, but also the flip side, like you mentioning you know people who won’t because they’ve been burned. What are the pros and cons?
I know many people that have made a lot of money in out-of-state investing. If you build a great team you'll be fine. You need to network. You need to educate yourself. You or your team needs to have systems.
Can you lose money out of state? Yes. One street can make a big difference in some cities. But that is something that the experts on your team can help you with.
My fear is my age, im 51, limited funds, declining credit score due to student loans kicking in, and just plan old fear of getting it wrong while i'm closer to retiring, than I am to recovery.
But I really...really...really want to do this.
Ray Kroc was 52 when he started franchising McDonald's. If you want to do it that badly oh, you will spend every waking moment focused on it. I met a woman in Boston yesterday who's bought 72 units in the last year. Wow. She owned nothing and had no real estate experience a year ago. You can do this.
Real Estate Agent · South Dartmouth, MA · Member since 2016 · 13 posts · 10 votes
7y
My full time job. It pays well so it's hard for me to take a step backwards financially for the time being. I know that my time will be better spent towards my end goals, but I also have a family I need to take into consideration. When I can fully cover my monthly expenses with cash flow from our properties I'll feel more comfortable to make the switch.
Rental Property Investor · Dallas, TX · Member since 2019 · 20 posts · 2 votes
7y
@Frank Patalano Because it takes a certain amount of money for them to go into areas they don't understand. In this case, they will be worried. On top of that, they worry about whether you're reliable.
My full time job. It pays well so it's hard for me to take a step backwards financially for the time being. I know that my time will be better spent towards my end goals, but I also have a family I need to take into consideration. When I can fully cover my monthly expenses with cash flow from our properties I'll feel more comfortable to make the switch.
Molly,
If you make $200,000 a year, buying a single family home or a 2-4 unit apartment building is actually NOT worth your time. I have one of my staff members (engineer by training) actually calculate the number of hours an active investor needs to spend to find, analyze, negotiate, finance and manage a small deal (SFH to 2-4 family) and if you make $200K/yr or $100/hour, the paltry $200/month cashflow you make on an SFH does not make it worth while if you pay yourself for the time you spent doing all that work.
I've acquired over 1,000 apartment units and and some of my investors are high earning commercial real estate brokers, lawyers, doctors, business owners and other high income earners. A lot of them are probably smarter than me but they would rather invest passively than do it actively because it's not worth their time.