What's holding you back from buying your 1st investment property?

264 Replies

@Salvatore Lentini analysis paralysis for sure, as well as always telling myself I need more capital. I have been looking into different ways to get some, but so far it has been just research and not actually trying. Also I am “waiting” for a market correction here in Utah that may not come for a while..

Originally posted by @Christian Becker :

@Phil Denton

You’re in one of the golden cities in the Midwest.

Look for properties that are better than the 1% rule there. Mine are all around 1.4%. Avoid any D areas. Don’t want poor rental areas.

Look up and call all rental Management companies in your area. Get their details. Ask them if they will look over your properties that you're interested in. A good one will. Before you buy it. They don't want to manage in a poor area usually. Just by giving them an address and details on the property you're considering, like # beds and baths, garage or parking, SFR of roof, hvac, etc and sending them some pictures they can give you a good deal of info and tell you what they could get in rents there and what the neighborhood is like. And if you should buy there or not. If they want to manage there or not. They're your best consultants. Some will do a site visit for you, sometimes for a fee.

I wish I lived in your town or state. Use the rental management company. They know real estate. Having said that, I had to fire my first rental management company and the one I have now is great. First one wouldn’t do what I just listed. My current one does. But you can’t learn all of this from books. Gotta do a deal or two. Then you know. What other people know and try to warn you about. But don’t get discouraged. Takes a learning curve to get going. And you’ll waste some time, effort and money in the process. But I think you have to go through it. No pain, no gain.

Thanks for the great advice, Christian! I agree with the "no pain, no gain" idea. For that reason I'm considering BRRRRing a SFH or two before I move into multi-family. I might be wrong but it seems like this could be risky - both with less initial capital required AND with this being a seller's market I feel like I should have no problem finding buyers (as long as I don't grossly over-estimate ARV).

In your experience do you think a (good) rental management company would be as eager to team on a SFH as a multi-family? Multi-family is definitely in my mid to long-term plans, but since I already have some cash to start with, it seems like flipping houses could be a good way for me to build more and more liquidity with which to buy long-term multi-family units, rather than waiting around for my day job to fund them.

I'm planning on attending my first REIA meeting in a couple weeks and finding property managers is at the top of my action item list, right next to finding agents!

Originally posted by @Basit Siddiqi :
Originally posted by @Phil Denton:

@Salvatore Lentini I'm an engineer (and a DISC type C). I'm aware of paralysis by analysis but I really do like to try to consider all the angles before jumping into a deal or project or anything else. I know I still have lots to do and learn before jumping into my first deal but right now I want to do these things before I really "get serious":

-Find an agent that primarily works with investors on the buying side.

-Finish LLC Operating Agreement (with my wife) and open corporate bank accounts

-Get HELOC

-Round out team - attorney, CPA, lenders, contractors, wholesalers, etc.

My goal is to buy my first property this quarter. I like the idea of having passive income (small multi-family) but I think I need to learn the rehab/estimating side of things so I'm leaning towards flipping a SFH or two or three first. Maybe BRRRR them. If a great multi-family deal crossed my path I'd have a hard time turning that down though!

If you suffer from Paralysis my Analysis, I would narrow your investment strategy.
Flipping is very different from buy and hold(passive).

There are many different types of investment properties you can buy depending on your experience/ability to fix up.
Paint and carpet touch-up - This investment property doesn't need much in get it rented out
Foundation issues/fire/water damage houses - This type of house will be the best bang for your buck but it will require a lot of experience and expertise.
Somewhere in the middle - this type of investment will need potentially a roof redone, water heater replaced, furnace replaced, mold removed, etc. You likely won't need to fix the house yourself but it would help if you had a good list of contractors. 

You may want to start off your investment in 1Q with a paint and carpet touch up and move up from there.

Thanks Basit. That makes a lot of sense to me. I'm still building my team but so far haven't seen too many "simple" flips on MLS/Zillow near me yet. Since I have cash on-hand I'm hoping to find an agent/wholesaler combo at the next local REI meeting that can identify an opportunity just like the one you described.

@Salvatore Lentini

I am just getting started. I have a realtor sending me single family, condos, and duplex listings in a few towns around my area. I have analyzed about 50 properties in the last 3 weeks. My strategy is to buy, rent and hold. My criteria is $200 for single-family with a rate of return at 10%. The issue I am having is none of the properties are feasible based on the asking price. 99% of the properties are only feasible if the property price goes down by $30-$40,000. I am thinking that I need to pick out the top ones and start make offers that support my numbers. 

My biggest thing that is holding me back is finding a mentor in my area and balancing real estate investing with a full time job. I have number one squared away and I'm really scared to see how problem #2 will work out for me. 

@Salvatore Lentini

I also come from an expensive market in NYC. I’ve also suffered from analysis paralysis at a hi level. I’m 55 and late in the game. I’ve researched markets out of state like PA to start. I’m looking at properties in Allentown and reading. The price points are below 100k. Are there any local meetups in those areas? I forgot to mention I’m also unemployed after 25 years of work. Will I have trouble finding funding for future properties?

@Salvatore Lentini Thanks for this first of all. We have been working on finding our first property for 2 years. We are looking for a tri or quad in an extremely up and coming area. We plan on house hacking and living in a unit and renting the others out. With that though, we are trying to take advantage of a minimal down payment through FHA. We have made several offers, even above full asking price. However, we are primary resident shoppers against investors... and inevitably, a cash investor rolls in with a cash offer and we get bumped. That's been our issue. We are now trying to think outside the box and increase our network to try and find something off market. Any other suggestions? Thanks again! -Jason