Help... Newbie is drowning...

Olympia, WA · Member since 2019 · 19 posts · 266 votes

I am a very new wannabe investor (have not bought my first investment...yet). I currently in Washington State. Buying property here is a bit expensive and I am definitely looking to find a market outside of mine. The biggest question is WHERE? This is the stage in which having a mentor would be crucial. But I have none, and now venturing out into this scary world on my own.

My goals? Well, ideally I would want to purchase a cash-flowing multi-family apartment (4-6plex). I have search near and far on sites like Loopnet, but I'm afraid without direction I'm just wasting time and energy.

Fam, what advice can you give me? Help!!!

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Todd Powell

Rental Property Investor · Corvallis, OR · Member since 2018 · 840 posts · 1k+ votes

@Donald Thomas My thoughts, save 3.5% and do FHA into a 4 plex or below. FHA will not do anything bigger than a 4 plex, and you can live in one unit and stay close to your tenants. Investing out of state for your first investment is not the path I would take although some here on BP would argue that point. I manage many doors but I own the 4 plexes all within a 30 min drive in each direction or closer. Do not let fear rule you, but make educated choices! I wish you my best

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Jared Boundy
Real Estate Broker · Seattle, WA · Member since 2017 · 139 posts · 82 votes
6y
Welcome @Donald Thomas! Like they say, the first step is the hardest. What part of Washington are you in? If you're in the Seattle area, I'd be happy to meet up and give you my personal insights (I'm in Lynnwood). Just send me a private message. If you're going to look somewhere outside of your home market, best to find a place where you have family connections, or know some people you can trust.
8 Reply
John Barrett
Rental Property Investor · Everett, WA · Member since 2015 · 457 posts · 386 votes
6y
@Donald Thomas I would suggest that you start by attending some local meetups. There are a ton of these happening around the Seattle area each week. This will give you the opportunity to talk with a many investors and narrow down the area that you would like to invest in. Combine this with researching investment areas (here & via podcast) that sound interesting and you will be on your way.
There are many ways to invest in real estate successfully and a lot will depend on how involved you want to be, preferences for investment type, risk tolerance and available capital. I personally prefer investing locally in multifamily. The local market is very competitive but there are still properties available. The key is being ready for when a property that meets your criteria becomes available.
Best of luck,
John

4 Reply
Matthew Irish-JonesBusiness Member
Real Estate Agent · Buffalo, NY · Member since 2017 · 2k+ posts · 2k+ votes
6y
@Donald Thomas Washington is a big state. There are affordable markets in that state.
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Jess Haas
Realtor · Seattle, WA · Member since 2019 · 117 posts · 165 votes
6y
What kind of cap rate are you looking for? How much capital do you have? I think there are some good multifamilies on the MLS. My experience is to invest locally(the market you know and understand). With hot/expensive the trick is to keep an eye out constantly. Rather than waste time on social media sites, start checking Zillow everyday and get in that routine. This will help you understand what is a good deal(the ones that drop off the market quickly) and the duds(the ones that have been sitting there for 100+ days).
16 Reply
Todd Powell
Rental Property Investor · Corvallis, OR · Member since 2018 · 840 posts · 1k+ votes
6y
@Donald Thomas My thoughts, save 3.5% and do FHA into a 4 plex or below. FHA will not do anything bigger than a 4 plex, and you can live in one unit and stay close to your tenants. Investing out of state for your first investment is not the path I would take although some here on BP would argue that point. I manage many doors but I own the 4 plexes all within a 30 min drive in each direction or closer. Do not let fear rule you, but make educated choices! I wish you my best
16 Reply
Donald Thomas
OP
Olympia, WA · Member since 2019 · 19 posts · 266 votes
6y
Thank you all for the advice/thoughts. I really do appreciate it. Local would obviously be the ideal approach, or anywhere in the State. Finding those multi-family deals are tough. Any out of market purchase would obviously be managed by third party. Would want my involvement to be low, but not turnkey low.
When looking at markets outside of your own, what interest you to a certain one?

@Todd Powell I currently own my own home, so house hacking is not realistic. Though would be a great ideal for a younger investor.
2 Reply
Dennis M.
Rental Property Investor · Erie, PA · Member since 2018 · 6k+ posts · 9k+ votes
6y
Originally posted by @Donald Thomas:
I am a very new wannabe investor (have not bought my first investment...yet). I currently in Washington State. Buying property here is a bit expensive and I am definitely looking to find a market outside of mine. The biggest question is WHERE? This is the stage in which having a mentor would be crucial. But I have none, and now venturing out into this scary world on my own.

My goals? Well, ideally I would want to purchase a cash-flowing multi-family apartment (4-6plex). I have search near and far on sites like Loopnet, but I'm afraid without direction I'm just wasting time and energy.

Fam, what advice can you give me? Help!!!

how can you drown if you haven’t even dipped your toe in the water ?

why do you think you can manage a 6 unit building you have zero experience and sound scared to death .

how can you drown if you haven’t even dipped your toe in the water ?

3 Reply
Jim K.
Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes
6y
Originally posted by @Dennis M.:
Originally posted by @Donald Thomas:
I am a very new wannabe investor (have not bought my first investment...yet). I currently in Washington State. Buying property here is a bit expensive and I am definitely looking to find a market outside of mine. The biggest question is WHERE? This is the stage in which having a mentor would be crucial. But I have none, and now venturing out into this scary world on my own.

My goals? Well, ideally I would want to purchase a cash-flowing multi-family apartment (4-6plex). I have search near and far on sites like Loopnet, but I'm afraid without direction I'm just wasting time and energy.

Fam, what advice can you give me? Help!!!

how can you drown if you haven’t even dipped your toe in the water ?

why do you think you can manage a 6 unit building you have zero experience and sound scared to death .

how can you drown if you haven’t even dipped your toe in the water ?

My thoughts exactly. You don't sound like a wannabe, you sound like a dilettante. You have your age-appropriate house plus a whole lot of airy preconceptions that you are going to find are a lot more complicated than you think. The first casualty of your success will obviously have to be your comfort zone.

4 Reply
Alex Schumer
Investor · Snohomish, WA · Member since 2016 · 10 posts · 5 votes
6y
@Donald Thomas Where are you located in Washington State. PM me if you want to chat about the market some time.
2 Reply
Michael HaasBusiness Member
Real Estate Agent · Redmond, 🌧️ Seattle Investor-Agent | 🤑 Helped 400+ Clients Invest in Real Estate | 🏘️ Owns 23 WA Rentals & Airbnbs | 🏗️ Built 5 DADU's | 📈 You Can Do It Too · Member since 2016 · 724 posts · 3k+ votes
6y
Welcome @Donald Thomas! Folks here can definitely help you out with some more specific recommendations if you can answer @Jess Haas 's questions. If you ask for advice with no specifics about your situation you're just going to get crappy advice.
My two cents - you're going to get SCREWED investing out of state at this stage in your development. A buddy of mine just lost well over $15k on an out of state rehab, and he's a savvy investor that owns 8 properties in state.
A 3.5% FHA owner occupied loan on a FourPlex is easy money - @Todd Powell just dropped literally the most powerful early investor strategy on you, don't write it off so quickly. What about renting your home and moving into a 4 plex in Seattle or Tacoma?

[email protected]408-439-7873
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8 Reply
Michael HaasBusiness Member
Real Estate Agent · Redmond, 🌧️ Seattle Investor-Agent | 🤑 Helped 400+ Clients Invest in Real Estate | 🏘️ Owns 23 WA Rentals & Airbnbs | 🏗️ Built 5 DADU's | 📈 You Can Do It Too · Member since 2016 · 724 posts · 3k+ votes
6y
PS: All y'all newbie investors need to stop saying "Seattle is too expensive so I can't invest here".
You can say "CAP rates are too low in Seattle, so I can't invest here" or "Regulations are too stringent in Seattle, so I can't invest here" but you need to stop assuming expensive properties can't cash flow. I'll take a 8% CAP on one $500k Seattle house all day over a 9-10% cap in Atlanta on 5 $100k houses - fewer headaches investing locally, less management, and fewer washer machines to break lol.
[email protected]408-439-7873
HouseHack Seattle | Michael Haas & Team572 Reviews
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9 Reply
Damaso Bautista
Rental Property Investor · Hawthorne, CA · Member since 2018 · 655 posts · 900 votes
6y
@Donald Thomas
I had similar thoughts as Dennis and Jim. Your title says newbie is drowning. I thought I was you were in the deep end and people would have to throw a lifeline or else you would die. Come to find out you haven't even jumped in the water yet LOL.
Welcome to Bigger Pockets! You have time to get educated, plan your attack and then jump in. Your not drowning and with the proper planning you won't be.
Good Luck!
4 Reply
Jerryll Noorden
Flipper/Rehabber · Wilton, CT · Member since 2015 · 4k+ posts · 4k+ votes
6y
Originally posted by @Jim K.:
Originally posted by @Dennis M.:
Originally posted by @Donald Thomas:
I am a very new wannabe investor (have not bought my first investment...yet). I currently in Washington State. Buying property here is a bit expensive and I am definitely looking to find a market outside of mine. The biggest question is WHERE? This is the stage in which having a mentor would be crucial. But I have none, and now venturing out into this scary world on my own.

My goals? Well, ideally I would want to purchase a cash-flowing multi-family apartment (4-6plex). I have search near and far on sites like Loopnet, but I'm afraid without direction I'm just wasting time and energy.

Fam, what advice can you give me? Help!!!

how can you drown if you haven’t even dipped your toe in the water ?

why do you think you can manage a 6 unit building you have zero experience and sound scared to death .

how can you drown if you haven’t even dipped your toe in the water ?

My thoughts exactly. You don't sound like a wannabe, you sound like a dilettante. You have your age-appropriate house plus a whole lot of airy preconceptions that you are going to find are a lot more complicated than you think. The first casualty of your success will obviously have to be your comfort zone.

I don't know what Dilett.. Dilian.. Dellet friggin that word means.
But I agree with you! Besides I like yo fayce!
So I support this dude!
2 Reply
Jess Haas
Realtor · Seattle, WA · Member since 2019 · 117 posts · 165 votes
6y
Originally posted by @Michael Haas:
PS: All y'all newbie investors need to stop saying "Seattle is too expensive so I can't invest here".
You can say "CAP rates are too low in Seattle, so I can't invest here" or "Regulations are too stringent in Seattle, so I can't invest here" but you need to stop assuming expensive properties can't cash flow. I'll take a 8% CAP on one $500k Seattle house all day over a 9-10% cap in Atlanta on 5 $100k houses - fewer headaches investing locally, less management, and fewer washer machines to break lol.

Harsh but well said. 👏🏼
0 Reply
Ola Dantis
Multifamily Syndicator · Houston, TX · Member since 2016 · 1k+ posts · 2k+ votes
6y
@Donald Thomas Welcome to BP, where investors can stop feeling like they are drowning.
You can start drowning in all the knowledge here and then maybe a mentor afterwards.
The reason you are feeling overwhelmed is you have yet to follow a structured way of self-disciplined study.
Learn as much as you think and you will start to build your confidence.
2 Reply
Donald Thomas
OP
Olympia, WA · Member since 2019 · 19 posts · 266 votes
6y
Whoa, whoa, whoa...easy now gentlemen. Obviously, I'm fragile. Headline is only for attention and could have multiple meanings. Sorry that you were disappointed in your interpretation. But I was not disappointed in some of the value that was dropped (including negative).

@Michael Haas Your response have given me a nice perspective of what my mind frame should be focusing on. I definitely appreciated that tidbit of information and advice. And @Jess Haas is correct, harsh...but valuable. :-)

@Ola Dantis Thank you for understanding my dilemma. Information can be overwhelming and at some points feel like I'm drowning in it. Everyone was new and unsure until they gain experience and confidence. Just a phase that I'm openly embracing and rather enjoying actually.
7 Reply
Ryan Butler
MA · Member since 2010 · 14 posts · 6 votes
6y
@Donald Thomas I get where you’re coming from. To help you pick a market or three you’d like to invest in you should check out Neal Bawa. He has a course on Udemy that I highly recommend.
I’m in a similar position as you. I finally settled on a couple of promising markets. Now I’m in the process of finding a good team in those markets.
1 Reply
Donald Thomas
OP
Olympia, WA · Member since 2019 · 19 posts · 266 votes
6y
@Ryan Butler Great advice...thank you! I will look into that. Good luck on your venture!
0 Reply
Lee Mast
Rental Property Investor · Fort Collins Colorado · Member since 2019 · 30 posts · 24 votes
6y
@Donald Thomas
I'm also new...I have one cash flowing Triplex in western NY state where I grew up because investment properties are very expensive where here in Colorado where I live. I have more leads than I can handle right now... I have an off market Turnkey Triplex I am considering and I have at least 20 properties (combination of SF, Duplex and TriPlexs) that an older couple wants to unload in the next 5 years.
Where did I get these leads? Well, I started calling people from "back home". Do you know people in other areas of the country where maybe housing is cheaper? Call them up and tell them what you are interested in. Ask them what they know about the area. Look on craigslist and Facebook for listed rentals "for rent"... contact the number... try and track down the owner... ask them if they would ever consider selling. Where there is a will, there is a way!
3 Reply
Mary M.
Rental Property Investor · Portland OR · Member since 2018 · 2k+ posts · 3k+ votes
6y
Buying in expensive markets is doable and possible. And IMO sending your hard earned $$$ elsewhere, where you cant manage it (ie see your assets and know they are being taken care of) is not something a newbie should do. Too many sharks out to eat little minnows.

There is a lot of information to digest, but one thing I will point out -the BP way is only one of many many ways of using real estate to produce wealth.

I highly suggest connecting with a local commercial agent to learn from. Especially if you want 5 units.

As for stuff to read - “what every Real Estate Investor needs to know about cash flow ( and 36 other key financial measures)” by Frank Gallinelli is the first book to get.

I also am reading a book on risk “An economist walks into a brothel” by Allison Schrager. This is a good laypersons look at financial risk - has been helpful to me :)

Good luck! There are some over the top folks here but mostly folks are pretty awesome!
1 Reply
Sterling Chapman
Rental Property Investor · Baton Rouge, LA · Member since 2018 · 65 posts · 76 votes
6y
@Donald Thomas I think I’ve heard @Brandon Turner say on several podcasts that he invests in Aberdeen Washington and that it is an affordable cash flow market for small multi family. Good Luck!
0 Reply
Ryan LubyPro Member
Rental Property Investor · CT · Member since 2016 · 258 posts · 227 votes
6y
@Donald Thomas A common hurdle when getting started is usually right in the options you are giving yourself. Identify what options you are giving yourself, and make a correction there first.

For example, you are seeking a cash-flowing multi-family, 4-6plex.... If you find one, let me know because I personally haven't found a single property like this on the market yet.

Take it from Brandon Turner, "Great deals aren't found, they're created..." - @Brandon Turner ..or something like that.
If you can't start by house-hacking in some way which I strongly recommend first...
Then practice identifying opportunities. Terrible looking houses. Houses that don't cash flow.. Yet. Small houses with opportunity to add a bedroom, or add value in some other way.
You will eventually find an OPPORTUNITY where you can create a good deal, and you'll go for it and see what happens. You learn, adapt, move on to the next thing...
But seek investment opportunities and get great at doing this first, not looking for cash-flowing properties on the market.
You want to create your own equity, not over-pay for pseudo-equity that a seller might be pushing.
Reach out anytime with questions
Keep working hard!
Best,
Ryan
4 Reply
Anthony Rosa
Rental Property Investor · New York City · Member since 2019 · 703 posts · 538 votes
6y
@Donald Thomas - You're not a wannabe investor or drowning, you're still testing the waters and that's normal. The big topic always is Where to buy & What to buy? Self manage or hire PM? stay local or OOS? Cashflow or appreciation? Its not easy at all, costly mistakes can happen and the learning never stops. The idea is to educate yourself, be reasonable with expectations and find your niche so you know what route to take so you're as prepared as possible.
1 Reply
Anthoney Hanks
Real Estate Broker · Forney, TX · Member since 2019 · 1k+ posts · 399 votes
6y
@Donald Thomas Welcome to BiggerPockets! Truly nice to meet you. Good luck going forward! 😁
I think that you could research using a FHA 203 as a loan. If you can do that, start farming for multi unit homes that need renovation. Go through tax rolls looking for out of state owners. This may be one option.
1 Reply
Anthony Rosa
Rental Property Investor · New York City · Member since 2019 · 703 posts · 538 votes
6y
Originally posted by @Lee Mast:
@Donald Thomas
I'm also new...I have one cash flowing Triplex in western NY state where I grew up because investment properties are very expensive where here in Colorado where I live. I have more leads than I can handle right now... I have an off market Turnkey Triplex I am considering and I have at least 20 properties (combination of SF, Duplex and TriPlexs) that an older couple wants to unload in the next 5 years.
Where did I get these leads? Well, I started calling people from "back home". Do you know people in other areas of the country where maybe housing is cheaper? Call them up and tell them what you are interested in. Ask them what they know about the area. Look on craigslist and Facebook for listed rentals "for rent"... contact the number... try and track down the owner... ask them if they would ever consider selling. Where there is a will, there is a way!

I live NYC metro suburbs, close to NYC and Everything here is expensive and mostly owner occupied SFH. I do have 2 two family houses in NYC that are paid off rentals and are worth a small fortune but I want to stay away from the city because i don't want to refinance my properties to buy property.
That's a nice triplex you have, I remember when you posted it because its probably one of the better looking ones that i've seen. Where in Western NY do you look/own?, What class of Rental?, Average cost of a quad/triplex?, Who does your PM?, What are rents like?, What are the tenants like (working class, sec 8, median income)?, Is it mostly municipal water/sewer or well/septic? Thanks.

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