Newbie found really good deal, but having cold feet

29 Replies

Hello everyone!

I've been really interested in REI for sometime now: reading BP forums, listening to podcasts, but haven't closed a deal yet, simply because I'm in my educational phase of REI now. However, I've been working with local real estate agent, who's been sending a few listings to me every other week or so. This morning she sent me a listing that was just posted for sale, and it's seems like a really good deal that won't last long. I'm going to see the place tonight after work, but I have an anxiety about it, simply because I know I'm not fully ready to start buying houses, and because I'm afraid if I will not act now, and will miss this great deal. Any advice on that would be much appreciated! When in your experience, you knew for sure, that you were ready for the game?

Thanks,

Daria

Hi @Daria Sukhenko ,

Congrats on moving forward! I can tell you that, at 4 deals in, there's still anxiety. For me, knowing for sure that I was ready was really just me thinking I knew all (or enough) of the answers. I have definitely learned something new in every deal, and you will too. 

I truly believe that there are enough deals for everyone who's willing to go out and find them, so try not to worry about missing out. Maybe you don't get this deal, but maybe this is the deal where you make your first offer, which gives you enough of a charge to want to make your next offer, and the one after that. So long as you're taking action, you're making progress.

What makes you say you are not ready? 

@Kyle Shankin , thanks for your advice!

I feel that I'm not ready, simply because it's so new to me. I've been thinking about investing for sometime now, but actually researching and learning about real estate investments for maybe a month now. I feel like a have a solid foundation of knowledge, but I know for sure that I'm not 100% know it all yet. That what gives me the most anxiety at this time. I so want to just jump in, but I'm afraid that one wrong decision will completely destroy my desire to invest.

Originally posted by @Daria Sukhenko :

@Kyle Shankin, thanks for your advice!

I feel that I'm not ready, simply because it's so new to me. I've been thinking about investing for sometime now, but actually researching and learning about real estate investments for maybe a month now. I feel like a have a solid foundation of knowledge, but I know for sure that I'm not 100% know it all yet. That what gives me the most anxiety at this time. I so want to just jump in, but I'm afraid that one wrong decision will completely destroy my desire to invest.

What do you think you need to "be ready?"

I can definitely relate to the anxiety, but after all your research, what more do you need to learn?  Maybe you need to find a partner? Or a good PM? 

Originally posted by @Daria Sukhenko :

@Kyle Shankin, thanks for your advice!

I feel that I'm not ready, simply because it's so new to me. I've been thinking about investing for sometime now, but actually researching and learning about real estate investments for maybe a month now. I feel like a have a solid foundation of knowledge, but I know for sure that I'm not 100% know it all yet. That what gives me the most anxiety at this time. I so want to just jump in, but I'm afraid that one wrong decision will completely destroy my desire to invest.

 Totally understandable. One thing that I'm absolutely certain of, is that you're never going to learn everything from books/research/podcasts/etc. There definitely needs to be some action when it comes to real estate investing. 

To help curb the anxiety, I'd recommend that you really consider your first project (or all of your projects really) and just ask if what you're about to do will over-extend your resources. Expect that this project will take up a lot of your time and the money that you've set aside for it. Get out a calendar or a piece of paper and write down how many hours each week you're going to have to spend on the project, so that you can see how that impacts your day-to-day. Make sure that you've padded the numbers in your analysis. If you're rehabbing,  maybe don't buy a property that needs a full rehab. If you're doing a buy and hold, make sure the cash on cash return exceeds your minimum and double check the rent role with the seller. In either scenario, double check the cost of taxes, water, sewer, electricity, gas and insurance. If you've accounted for all of these things and the numbers still look good, you probably have yourself a good deal.  Have you used the BP calculators on this deal?

If you're already comfortable with that information, and it really comes down to the act of actually doing the deal, or getting stuck, talk to your realtor about your options. I once had my realtor write offers on multiple properties sight-unseen, because I knew that I could get out of the deal without spending anything other than my time, and maybe the cost of an inspection. Do your best to make sure that you've always got an out, and that you're always ok with the results of that out.

@Mike Freske I was actually thinking about finding a partner, but since I'm so new at this, I'm afraid experienced investors won't find me valuable to work with. It is very important for me to bring some knowledge or skills to the table, otherwise I don't want to waste people's time. But it all comes with time and everyone started somewhere, right?

@Daria Sukhenko

Confidence! 

In this instance, you are providing the deal, right?  You "prove" your worth by having it be a good deal and by you having already done the legwork. 

Everyone starts somewhere, yes. Everyone is at a different stage in their life, career, investments, whatever..   @Kyle Shankin has great advice for you too..

Perhaps it would help if you could share some more info on this potential deal?  Can you provide some numbers?  Location?  Your goals for this first attempt if successful in buying it?  

@Daria Sukhenko

If more information was the answer - we would all be billionaires with perfect abs. - Derek Sivers

Real estate investing is definitely a mindset game. I barely started in my first fix n flip this past month. But this past few years I've been researching about REI and never felt ready. You just have to take action and learn as you go. Instead of "ready, aim, fire" just think "ready, fire, aim".

Good luck !

@Daria Sukhenko I understand how you feel. I have a date planned in my mind that I’m going to start officially searching an investment. Until them I’m trying to get legal questions answered. I’m nervous I’m going to break the law or something but I’m so excited to get started. Good luck! Hope this one works out!

@Daria Sukhenko - I honestly can't say that I had anxiety once I pulled the trigger. However, as an engineer I tend to run a lot of numbers and I put a lot of stock in those numbers.

The first deal that I bought: I found a duplex that made sense. I got a year's worth of income tracking from the seller, pulled the bills, calculated out my savings expenses (CapEx, maintenance, vacancy, etc). The numbers made sense: I would have to mess up royally for this deal to be negative. After that, I did my due-diligence: a full inspection of the property, a contractor to go through and give a second inspection of the structure, and my own personal walk-through. At that point, I had a strong idea of what my CapEx spending and maintenance would be, I knew what my income would be, and I knew what my bills would be.

If the numbers make sense to me and my due-diligence turns up nothing that I don't think I can handle, I don't have any anxiety about purchasing. There are always surprises in life that can turn you upside down, but it doesn't make sense to have anxiety over those things. If your math and your due-diligence look good, the next logical thing to do is take a step forward

Well psychology aside,Let’s actually hear the numbers . Maybe your fears are legitimate on this but we haven’t seen the numbers so all we can do is pay you on the back and say “go for it !”

@Dennis M. So I had some miscommunication with my realtor, she attached wrong listing to the email she sent to me, and scheduled showing with wrong place as well (bad realtor alert?). So that wasn't fun, showing up in somebody's place while people were packing and had no idea someone was coming to see the place. The price for the place is $159K, which would make my mortgage around $1200 a month. Previously realtor told me that current tenants are paying $1500 for rent, and I thought that sounds like a good deal, but she was talking about other listing. For this particular place, rent would be $1300 tops, which is way less than I anticipated for that townhome in a first place. But this townhome in a really nice and fast growing area, with great school district. Last time it was sold in 2007 for $119K, and Zillow predicts it to be around $170K next year (how accurate Zillow's predictions are?). She also told me that it's a new construction and will not require any fixes (turnkey?), but that was information for the wrong place. This place was build it 2005 and will require some investment upfront, because it's really outdated looking in the inside. So, it wasn't really a great deal after all, I let my excitement to call it "great deal" and realtors mistake played a big role in that as well.

160k for 1300 in rent is a bad deal . I would not do this . Your brain was trying to warn you 

@Daria Sukhenko

Hey Daria,

As one perfectionist to another let me give you some advice. It’s okay to make a mistake. It’s okay to lose money on deals, and to learn the hard way. It’s okay if every deal you get into loses money over the next two years. Why do we pay to go to school? It’s to learn what we need to know to make money later. Investing is no different. The sooner you learn lessons to make money later the more time you have to make money later. You will fail in this business. You might fail a lot. But after a certain amount of failing you win a lot too. Would you give me a dollar now if I promised you’ll make five tomorrow? Absolutely.

@Daria Sukhenko

Please

Post your numbers for why you think it’s a good deal.

I almost fainted on my first closing. It barely happened.

If it’s truly a good deal.... pull the trigger and get the first one out of the way.

@Daria Sukhenko

I’ve heard that there are three or 4 things which can be brought to the table which are of worth.

A deal

Money

Work ethic

Experience

Any one of those will work for finding someone to work with you. No one will say no to a good deal. Likewise, no one will say no to you paying for everything. If you have the time and energy to work, then you’ll get the previously listed attributes.

Experience is what the other guy brings to the table.

Grab your future by the throat!

Clint

Originally posted by @Daria Sukhenko :

@James Canoy thank you for great advice!

 No prob. Definitely check out the BiggerPockets calculators. They tell you which numbers are important so you can figure out if a deal is good or not. 

It'll be difficult to find a good investment property on the MLS. I recommend finding local real estate clubs and networking a lot. Also drive for dollars and look for places in need or some deferred maintenance.

@Daria Sukhenko I’m a noob investor as well, but the best advice I’ve heard is that there will never be a time when you feel 100% ready. It’s about taking the plunge when you feel that your knowledge is “good enough”.

I’ve heard it’s a lot like parenting - you’re never truly ready to have a kid until you do it. Things may go wrong here and there, but as problems come, you’ll be in position to fix them whether you’re ready for them or not.

Good luck!

Originally posted by @Daria Sukhenko :

@Dennis M. So I had some miscommunication with my realtor, she attached wrong listing to the email she sent to me, and scheduled showing with wrong place as well (bad realtor alert?). So that wasn't fun, showing up in somebody's place while people were packing and had no idea someone was coming to see the place. The price for the place is $159K, which would make my mortgage around $1200 a month. Previously realtor told me that current tenants are paying $1500 for rent, and I thought that sounds like a good deal, but she was talking about other listing. For this particular place, rent would be $1300 tops, which is way less than I anticipated for that townhome in a first place. But this townhome in a really nice and fast growing area, with great school district. Last time it was sold in 2007 for $119K, and Zillow predicts it to be around $170K next year (how accurate Zillow's predictions are?). She also told me that it's a new construction and will not require any fixes (turnkey?), but that was information for the wrong place. This place was build it 2005 and will require some investment upfront, because it's really outdated looking in the inside. So, it wasn't really a great deal after all, I let my excitement to call it "great deal" and realtors mistake played a big role in that as well.

 I'd pass

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