Newbie, Trying to figure out to not just give up

13 Replies

Hi everyone,

I am obviously a newbie, but I am working on my knowledge base to make sure that I not only get a start with a good home/deal, but also not feeling overwhelmed by the whole process.

From what I have read/watched so far it is about analyzing and then making offers. I have the bigger pockets books and haven't gotten through one yet (still working on them), so I am worried that I may find a property that I think is a good deal but may end up costing more than I thought. How can you know that you are at least in the right ballpark on the rehab costs?

Also, I have been working on my credit so I can get a better loan. It has gone up but still hasn't gone up over 700. Is this something that I should really be worried about? Or should I just deal with the loan that I can get? This has honestly been what has stopped me so far. I have a lot of anxiety (that is probably misplaced) when it comes to financing this huge change. 

What would your advice be? 

What is your plan? To buy and flip? If you buy a place that does not need to be rehabbed you can stop worrying about rehab costs.

Sometimes the best idea for a newbie is to make your first investment the least complicated one.

Try to find a buy and hold property that is cash flow positive and rented. Then you can slowly build up a network of vendors on small jobs,
And gain confidence in managing larger jobs.

You will also get an idea of how much plumbing clogs, painting, changing locks, taxes, and all the other expenses that come along with RE cost.

And.... get through the book!!! That’s step 1

Originally posted by @Lindsay Bearden :

Hi everyone,

I am obviously a newbie, but I am working on my knowledge base to make sure that I not only get a start with a good home/deal, but also not feeling overwhelmed by the whole process.

From what I have read/watched so far it is about analyzing and then making offers. I have the bigger pockets books and haven't gotten through one yet (still working on them), so I am worried that I may find a property that I think is a good deal but may end up costing more than I thought. How can you know that you are at least in the right ballpark on the rehab costs?

Also, I have been working on my credit so I can get a better loan. It has gone up but still hasn't gone up over 700. Is this something that I should really be worried about? Or should I just deal with the loan that I can get? This has honestly been what has stopped me so far. I have a lot of anxiety (that is probably misplaced) when it comes to financing this huge change. 

What would your advice be? 

So long as you've got a good DTI you don't need your score to be above 700 to obtain residential financing so no I would not be too worried about that if I were you. Keep working to improve it though.

Go talk to a bank about getting pre qualified for a loan.  That will help ease your anxiety about the financing part.  They will run your numbers and let you know how much they will give you.  You should always keep your credit score in mind and improve it when possible, even if getting this first loan is easy.  

@Ali Boone

Thank you,

We are looking to buy and hold, didn't want to do too much until we learned how to handle everything. But we wanted to stay in our market, which either is higher than we wanted to buy for or more work than what we know what to do. But honestly I think it's just nerves and the unknown that is really stopping me. I know I will get past that soon. Just need to do it! Lol.

Hey!! Don't give up! You can do this. I'm new myself (bought 3 rentals). My thoughts on interest and loans.......look at the payment you will make at say 4% and the payment you will make at say 5%....there's really not much difference. Just make sure that you have enough income from rent to cover all your expenses.....I make sure that my rent is enough to cover management fee, insurance, tax, any loan payment AND pocket $300/month. If the rent is not high enough to do that, then I look for a different property. The biggest thing that I did to help speed up the process is ---increase my income. I'm a teacher and my home state does not pay that well, so.......I moved to Alaska where my income is double. The higher your investable income NOW, the better the terms of your loan will be, the better deals you will be able to make, and the more down payment you will be able to play with.

Originally posted by @Lindsay Bearden :

@Ali Boone

We are looking to buy and hold, didn't want to do too much until we learned how to handle everything. But we wanted to stay in our market, which either is higher than we wanted to buy for or more work than what we know what to do. But honestly I think it's just nerves and the unknown that is really stopping me. I know I will get past that soon. Just need to do it! Lol.

Well yes, but if there's quite a bit of unknown, it probably means you don't know enough yet to have your best chances at succeeding. The more education you get beforehand, the less unknowns.