Starting Out - Early Thoughts and Concerns

10 Replies

Hi BiggerPockets community!

I'm a 23-year-old looking to get started in Real Estate. As I'm sure the case is with the most of us getting started, there are a lot of questions and concerns spinning around in my head. I want to raise a few of them here and I greatly appreciate any answers, whether it would be from other newbies or from experienced investors. I also want to apologize for what will probably be a lengthy post, I tend to write a lot when I'm excited.

- My number one concern is my geographical area. I live in Los Angeles and don't feel comfortable going into this market due to the high prices. I feel like I should start out with smaller investments. That has gotten me looking at other markets (Tampa FL, Kansas City MO, Ogden UT, Peoria AZ, El Paso TX), as you can tell, I'm all over the place. I guess my first question is what to look for when narrowing down the markets and my main question is, how big of an issue is it to invest in a remote market? Is that something that wouldn't be recommended for a first time investor? For the record, I'm currently looking both at fix and flips and BRRRR's. Single-family homes is what I have on my mind (even though that's subject to change).

- I have about $40K that I would be ready to invest. A best case scenario I'm running in my head, is finding a good deal in a cheap market, make some renovations (About $25-35K for both buy and rehab) and then rent it out to create cash flow right away. Is that smart/reasonable as a start-up project

- Finding deals. I have come to understand that there are tons of ways of finding deals. What would be some recommended ones for a first-time remote investor? I have so far been scanning Zillow and Auction.com sporadically. Is MLS a good way to start? Is Google street view enough to get a good grasp of what a neighborhood is like when looking for deals remotely?

- How do I find the courage to actually get started with this? I'm highly motivated as a person but I'm also an analyst and an over thinker, which often stops me from getting started and testing new avenues.

- Lastly, I would also have some immigration/legal questions if anyone has expertise within that. Born and raised in Sweden, I'm not a citizen and would want to know how it works running an LLC on different visas from a legal standpoint. I would elaborate on that if someone feels like they could assist with that.

If you guys made it through this lengthy post, I do appreciate your time. I would greatly appreciate any answer, long or short. 

Thank you and enjoy the rest of your Sunday!

- Daniel

@Daniel Westholm

Hey man 23 is a great age to start. I bought my first house at 19 with a friend and rented out the other beds to pay the mortgage so nice job on wanting to get started early.

The best advice I could give to try and answer all your questions is to go work for a local investor.

Don’t ask them, hey can you be my mentor ? lol

Try to bring them value and help their team or process. Work for free and bring them value to help their business.

Once you bring them value and start to help their business then they will most likely want to reciprocate and help teach you.

Also, imagine being on a team or working with someone learning their systems and seeing it first hand??? You might pick up a few things here or there :)

Oh and I wouldn’t knock LA brother, there is money to be made in almost all areas. The difference is the strategy.

We have done a few deals in Sacramento and Riverside but we LOVE LA.

We have 3 deals going on right now in LA and are scaling to do more here locally.

I know that didn’t answer all your questions but in my opinion it’s the best answer to all of them.

Heck, if you want to come check out one of our properties hit me up. I have no problem showing you what we are doing or answering any questions. I have been helped a ton and love connecting with others.

Good luck brother and nice job on getting started early.

Daniel

Originally posted by @Account Closed :

@Daniel Westholm

Hey man 23 is a great age to start. I bought my first house at 19 with a friend and rented out the other beds to pay the mortgage so nice job on wanting to get started early.

The best advice I could give to try and answer all your questions is to go work for a local investor.

Don’t ask them, hey can you be my mentor ? lol

Try to bring them value and help their team or process. Work for free and bring them value to help their business.

Once you bring them value and start to help their business then they will most likely want to reciprocate and help teach you.

Also, imagine being on a team or working with someone learning their systems and seeing it first hand??? You might pick up a few things here or there :)

Oh and I wouldn’t knock LA brother, there is money to be made in almost all areas. The difference is the strategy.

We have done a few deals in Sacramento and Riverside but we LOVE LA.

We have 3 deals going on right now in LA and are scaling to do more here locally.

I know that didn’t answer all your questions but in my opinion it’s the best answer to all of them.

Heck, if you want to come check out one of our properties hit me up. I have no problem showing you what we are doing or answering any questions. I have been helped a ton and love connecting with others.

Good luck brother and nice job on getting started early.

Daniel

What strategy would you say works well in Riverside and LA? I live in Redlands and am looking to buy my first investment property soon. I was planning on something out of the SoCal market due to the high purchase prices, low rent/purchase price, and, as i understand it but have not actually looked into, difficult laws for landlords regarding things like evictions. Investing in my local market would be easier as I do have some trusted contractors here and of course proximity helps for many things.

Hi Daniel,

Hello and welcome! Yes, there is a high entry barrier to investing in LA. Many Californians are looking here in the Phoenix metro area (including Peoria, but there are many other good areas to consider here). Proximity is an important consideration when investing out-of-state, and Phoenix is a short drive from Southern California. 

Another important consideration is building a local team you trust. You'll want a Realtor who knows the area and has access to off-market deals, a dependable contractor, and a property manager who is both affordable and reliable. Other needs will arise, so it's important to have a team that can put you in touch with anyone you need.  

You're not alone in over-analyzing a deal to death - engineers and attorneys especially are known for this. I think at some point we all just decide to take the plunge and make ourselves do it! There are risks to owning any real estate (a personal residence, undeveloped land, rentals, whatever). Accept that these risks will arise and trust that you can handle them when they do!

As far as immigration: I'd recommend talking to a tax professional. Your LLC will need a taxpayer ID number, and a tax specialist can help you determine the best way of going about that. You might also want to speak with an immigration attorney about the type of visa you are on. Different visas allow different activities, and you'll want to be sure yours allows for investing - or get one that does.

Hope this helps! Happy to answer any questions I can about the Phoenix market.

@Alex Profilet

What up Alex! Hey great question,

I think both markets are ripe with both buy and hold as well as flipping opportunities. I say this because there are a ton of people in both markets killing it doing both. BP has that book on BRRRRing out of state by @David Greene and it has a ton of great insights with actionable steps you can take. 

I did a couple Flips in an area that is 7 hours driving from me. It was a little difficult at times but reading that book helped me know that it can be done. 

However, if you can find deals locally I would recommend that for sure. Also, if you can find deals far away do that as well, why not? LOL

Now, for where we are as a company and from what I have experienced in my markets, I would flip locally here in LA and buy rentals out of state or in lower prices points with higher rental rates. From a rental position, once I have the property management company in place I dont think I would ever actually visit the property ever. I wouldnt need to, that is why I have a property amangement company....

With flips, I feel like you need a body (doesn't have to be you) in the property almost every day making sure the job is getting done. Here in LA, the spreads sometimes can be tight and the killer is hold time. So you have to make sure your team is working everyday to get the renovations done asap. 

I would agree with you that CA favors the tenant a little more than other landlord friendly states but that should not scare you away. You just need to factor in any potential issues into your numbers and make sure you have contingencies upon contingencies. 

As far as flipping in Riverside, I would try to stay away from areas with brand new houses. Our team actualy left that market as we were trying to sell houses with ARVs at 430k+ when the competition was around the same for brand new houses! 

Or if you want to be in the brand new houses area then you need to make sure your ARVs are significantly lower for the end buyer that can't afford the higher new home price.  

We decided to leave that area and market and move to the Million plus market here in LA as renovating a 2,000 sf house in Riverside versus renovating 2,000 sf in LA can generally be close to the same actual work. You will have higher end finishes and potentially longer hold time but you should have an extra ZERO on your profits :) 

Hope that helped, sorry for jumping all over but send me a message if you ever want to chat offline. 

Daniel

Originally posted by @Account Closed :

@Daniel Westholm

Hey man 23 is a great age to start. I bought my first house at 19 with a friend and rented out the other beds to pay the mortgage so nice job on wanting to get started early.

The best advice I could give to try and answer all your questions is to go work for a local investor.

Don’t ask them, hey can you be my mentor ? lol

Try to bring them value and help their team or process. Work for free and bring them value to help their business.

Once you bring them value and start to help their business then they will most likely want to reciprocate and help teach you.

Also, imagine being on a team or working with someone learning their systems and seeing it first hand??? You might pick up a few things here or there :)

Oh and I wouldn’t knock LA brother, there is money to be made in almost all areas. The difference is the strategy.

We have done a few deals in Sacramento and Riverside but we LOVE LA.

We have 3 deals going on right now in LA and are scaling to do more here locally.

I know that didn’t answer all your questions but in my opinion it’s the best answer to all of them.

Heck, if you want to come check out one of our properties hit me up. I have no problem showing you what we are doing or answering any questions. I have been helped a ton and love connecting with others.

Good luck brother and nice job on getting started early.

Daniel

Thanks for getting back to me! The thing about LA that scares me are the prices. I don't doubt that there's a lot of money that can be made, but to me there's too great of a risk to invest that kind of money on my first project knowing that I have no experience and no clue on how to really do it. 

That's funny that you would mention Riverside, I graduated from college there about a year ago. I feel like the IE would be another market where I could get started, being close to LA and at the same time have prices at a much lower level. 

I would love to connect and seeing something first hand to get a better understanding of the whole process.

Thanks again!

Daniel

Originally posted by @Pamela Sandberg :

Hi Daniel,

Hello and welcome! Yes, there is a high entry barrier to investing in LA. Many Californians are looking here in the Phoenix metro area (including Peoria, but there are many other good areas to consider here). Proximity is an important consideration when investing out-of-state, and Phoenix is a short drive from Southern California. 

Another important consideration is building a local team you trust. You'll want a Realtor who knows the area and has access to off-market deals, a dependable contractor, and a property manager who is both affordable and reliable. Other needs will arise, so it's important to have a team that can put you in touch with anyone you need.  

You're not alone in over-analyzing a deal to death - engineers and attorneys especially are known for this. I think at some point we all just decide to take the plunge and make ourselves do it! There are risks to owning any real estate (a personal residence, undeveloped land, rentals, whatever). Accept that these risks will arise and trust that you can handle them when they do!

As far as immigration: I'd recommend talking to a tax professional. Your LLC will need a taxpayer ID number, and a tax specialist can help you determine the best way of going about that. You might also want to speak with an immigration attorney about the type of visa you are on. Different visas allow different activities, and you'll want to be sure yours allows for investing - or get one that does.

Hope this helps! Happy to answer any questions I can about the Phoenix market.

Hi Pamela and thank you for getting back to me. 

Honestly, the Phoenix area is one of the more intriguing ones for me, for the very reasons you mentioned. I'm a very involved person and I'm not sure if I could invest in a very remote location without having the chance of visiting at least fairly often.

Chandler AZ was a place that I came across last night when I was looking around, and it definitely intrigued me as well. What other markets close to Phoenix would you recommend me taking a look at? What are the advantages and disadvantages with the markets? Do the different Phoenix markets differ a lot from each other? Is buy and hold or fix and flip generally more common/profitable? 

Another market that I'm looking into is the Las Vegas area, for the very same reasons as Phoenix. I'm not sure how familiar you are with that market, but what I benefit from investing in Phoenix compared to Las Vegas? Please feel free to either reply here or send me a DM (I'm not sure what standard procedure is at this forum)

Thank you for the reply, I greatly appreciate it!

Congrats on betting on yourself man that takes some serious stones. Realize this, in RE you don't have a boss so only person to hold you accountable will be you, habits are a KEY ingredient to setting yourself up. The work you do today will not rear its head for at least 90 days. I assume you will not be working a 9-5 as you take this plunge so its time to hunker down , run your personal budget, and really just GRIND you're going to have ups and downs its the nature of the game but the rewards will be greater than you can imagine.

I started my path by using my money to lend to others to allow them to shadow their process and learn under their guidance. Now I am running my own deals and got a few listings lined up as an agent. I am a year in, it hasn't all been pretty, and I definitely have less money than I did a year ago, but I have gained a ton of experience and am seeing the fruits of my labor.

Hi Alex, 

Happy Mid Summer to you!  This caught my keywords,  as I'm invested in one place in Ogden UT.  I live in San Diego, but can't make sense of any numbers here - even for a primary home.  I closed in Oct., kept the tenants for 6 mo. then just completed a medium sized renovation that included moving a bedroom from one unit to the other.  They will both be rented by end of this month and I can finally breath.  Hopefully.  

I have a huge competetive advantage in that I have family and friends in UT - boots on the ground.  I'm looking for another one currently and happy to chat if you are ever in SD,  or want a quick call.  I won't be a huge help cause I'm a newb too,  but let me know.  And good job on the early start - Skal! 

Hey Daniel, I'm also completely new to this but I can help with the getting motivated part - listen to BP podcasts or scour the BP threads to find people who have done what you are looking to accomplish already despite having major disadvantages, or less money to start with, etc. You will quickly get comfortable with the uncomfortable by being exposed to success stories. Look on their profiles and see pictures of rehabs - it will become less scary. That's definitely helping me the most. 

Finally, BP podcasts #108 and #250 with Grant Cardone are a must;  BP podcast #331 about getting 10 deals on a $20k waitress salary also truly inspired me.

Good luck man!

-Trev