how to get started on investing

Question

My goal is to purchase my first property by the end of next year. I am just starting out (34yrs old) I do not have a lot of money, however, I am saving. Problem is, I have no idea where to start. Should I buy and fix up, then sell, out rent out? I have read, research, etc...any advice/information is appreciated! My dream to is to become a property developer. That will be awhile from now, but I want to educate myself as much as possible.

Scott P. · Answer

In my experience, the easiest way to start is with a duplex.  You qualify for a loan for it just like a loan for your own house but it has a completely separate apartment just like you'd have for renting if you were a landlord.  As the tenant helps you pay down the mortgage you prove yourself as an investor and build equity you could borrow against for future business.

April Bellard · Answer

Some Great food for thought! Thank you Brian, I’m definitely soaking this all in! it’s a lot, but I’ll get it 😉

Brian Ellis · Answer

Welcome to BP Ape,

Id suggest researching loans. FHA is 3.5% down, 203k is 3.5% down, conventional 10% down, and so on. With this knowledge you'll have an idea of your price point. Utilizing the right financing is the key to obtaining future deals.

For example: you go in with an FHA loan and buy a single family house that is worth the same as the mortgage, how are you going to utilize that investment for another? You cant.  BUT, if you use an FHA on a 3 family, you can collect rent and save faster for the next deal.

If a house wont qualify for an FHA, that means it needs some work and most likely you can get a good deal. You can go the conventional route and fix it up to add equity. But, that requires 10% down.

Some food for thought. Goodluck!

April Bellard · Answer

Thank you for that. I really appreciate it. Your advice is spot on and very clear! I am keeping all of this information. I believe I am going to try do a flip first and build from there.

JD Gunter · Answer

You've already made the correct first steps. Saving money and reading everything you can is a great start. Some of the other advice mentioned is also great.

As far as which route to take, there isn't necessarily a right or wrong way, it's just a combination of what you are capable of, what you can finance, and what is available in your market. I've done all of the strategies you mentioned, including development, and buy and hold is where the money is. However, many people starting out don't have a lot of capital, and so they flip or wholesale so they can build capital with the goal of holding.

I would say look at your resources, capital, funding sources, and abilities and decide which route you need to take in the short term in order to meet your long term goals. If you aren't very handy, like me, you'll need a solid team of contractors. If you are handy, which it sounds like you are, that's a big advantage that you can capitalize on. If you have a lot of capital, maybe you can jump right into buy and hold and build your portfolio.

Either way, you're off to a good start!

April Bellard · Answer

Hey there! Yes it can be a little intimidating, I know For me that is. It’s a lot of information to cover. I believe if we can take small steps, it’ll lead us to bigger things and so on. Ill check out his books on here. Yes I agree, can’t wait! 😉 good luck to you as well! We will get there!

Maxwell Xavier · Answer

Hey Ape, just wanted to let you know you're not alone! I'm also trying to get started except I'm not very experienced. I recomend reading some of the books on bigger pockets! Its given me plenty of information and it's made me much more confident on the whole process. I'm currently reading one by Brandon Turner about real estate investing for rental properties. It's a greet book! Good luck on this journey hopefully we'll see eachother in the real estate world!

April Bellard · Answer

Hi Sean! Thank you for replying. You have given some some great tips to start with. I am enrolled in a Gen Contractor’s seminar. It lasts two month. I am trying to retain as much information as possible. I did email two developers in city, but no one got back with me. I will for sure keep trying though! Thank you ☺️

Sean Lunny · Answer

Hey Ape, congrats on taking some first steps!

I think the strategy you should use should be in line with your goals. If you want to be a developer, maybe doing a rehab or a BRRRR would be the best first strategy to use. You can do this with low or no money down in a variety of ways

Another good piece of advice would be to reach out to other developers in your area and see if you can shadow them on a project to learn the basics - maybe offer of something of value in return ( how can you help them?)

Lastly - adding on to the second point I made, go to your local REIA meet ups and network and start building some relationships with other real estate investors!

Hope this helps!