Advice for a total novice?

Advice for a total novice?

New to Real Estate · Apple Valley, MN · Member since 2020 · 20 posts · 14 votes

My name is Josh Bugbee, and I am 25 years old. I was born in Iowa but raised in Minnesota. I work in fabrication currently, but I have recently discovered that I have a huge passion for Real Estate. I have very little capital and no experience or knowledge behind me, but I have this incredible fire and energy to act on this newfound passion and get into it as quickly as I can.

I have recently been trying to do as much as I can to dive into learning as much as I can, and have been binge listening to the BiggerPockets podcast. I’ve also reached out to people I know personally to gain their knowledge or experience. Since I’ve been listening to the show I figured I would join the BiggerPockets community to try and get in touch with some like minded individuals, connect with, and learn as much as I possibly can from this community and those in it.

So with all that said, what are some pointers, tips, advice, on any and everything having to do with getting into real estate as someone in my position? I feel all I can do right now is save money and continue to learn. I hear about some aggressive funding strategies, but wonder if I have the ability to take these routes due to my lack of knowledge, experience, and reputation.

My girlfriend and I were thinking at first of starting with a duplex, triplex, or fourplex, and continuing to buy those in succession. I start thinking of starting with a multi unit, house-hack, and scaling up in units immediately on the second deal to grow. Yet, I’ve been wondering how feasible starting with a larger multi family complex would be, am I dreaming too big?

I hate to make such a long post that’s so all over the place, but I am just looking for any and all advice or knowledge that anyone can give me on any aspect of real estate investing.

Thank you for reading, have a nice day!

-Josh

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Austin, TX · Member since 2019 · 5k+ posts · 5k+ votes
6y

Hi Josh,

Step one might be learning from the education link at the top of this site.

Concurrently, read Rich Dad Poor Dad, and save as much as you can as fast as you can.

A tip: Keep your credit score high, and your debt to income ratio inline with the type of loan you intend to get.

Good Luck!

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  • Austin, TX · Member since 2019 · 5k+ posts · 5k+ votes
    6y

    Hi Josh,

    Step one might be learning from the education link at the top of this site.

    Concurrently, read Rich Dad Poor Dad, and save as much as you can as fast as you can.

    A tip: Keep your credit score high, and your debt to income ratio inline with the type of loan you intend to get.

    Good Luck!

  • Rental Property Investor · Brooke Park Drive · Member since 2018 · 1k+ posts · 2k+ votes
    6y

    Sound like you have the right ideas.  Keep educating yourself.  Stay frugal.  Once you've saved 25% of the cost of a three or four plex in your area buy a house hack.  I'm sure there are options for loans with lower down payments but that's not my area of expertise.  Make sure you have an emergency fund saved up before investing as well.

  • New to Real Estate · Apple Valley, MN · Member since 2020 · 20 posts · 14 votes
    6y
    Originally posted by @Scott Mac:

    Hi Josh,

    Step one might be learning from the education link at the top of this site.

    Concurrently, read Rich Dad Poor Dad, and save as much as you can as fast as you can.

    A tip: Keep your credit score high, and your debt to income ratio inline with the type of loan you intend to get.

    Good Luck!

    Awesome I’ll be sure to take full advantage of the education section and anything it can offer. Also I’ll be sure to buy the book and read it, I’ve been meaning to as it comes up a lot on the podcast as something people say was very impactful to them.

    Thank you Scott, I appreciate you taking the time to reply!

  • New to Real Estate · Apple Valley, MN · Member since 2020 · 20 posts · 14 votes
    6y
    Originally posted by @Account Closed:

    Sound like you have the right ideas.  Keep educating yourself.  Stay frugal.  Once you've saved 25% of the cost of a three or four plex in your area buy a house hack.  I'm sure there are options for loans with lower down payments but that's not my area of expertise.  Make sure you have an emergency fund saved up before investing as well.

    That's the plan as of this moment is to make huge changes to my spending in order to save ideally 20% of my income. I appreciate the encouragement. I have spoken with a mortgage lender in my area, and apparently they do offer FHA loans on up to 4 unit multi family properties. These do have lower down payment requirements, but there is a cap on the allowed loan amount depending on the number of units. As for the emergency fund, is this something for the purposes of rehab, or just an "in general" safety net fund?

    Thank you for your reply!

  • Investor · NJ · Member since 2018 · 869 posts · 921 votes
    6y

    Great Idea to get started in real estate investing. My biggest piece of advice is to get all of your financials in order. Learn to budget for life. Dont just budget now in order to quickly buy a place. 

  • Jonathan GreeneBusiness Member
    Real Estate Consultant · Madison, NJ · Member since 2016 · 6k+ posts · 7k+ votes
    6y

    Don't rush into it. Keep doing what you are doing, learning, saving, and connecting. Go to local REI meetups and meet as many local investors as you can. When you listen to the BP podcasts, focus first on all of the ones with investors who are crushing it in your age range. Not that all of the podcasts aren't worthy, but 18-25 is a spot where a lot of commonalities of getting into the business are found and you can learn a lot from those lessons, more than apartment complex hunting right now.

  • New to Real Estate · Apple Valley, MN · Member since 2020 · 20 posts · 14 votes
    6y
    Originally posted by @George W.:

    Great Idea to get started in real estate investing. My biggest piece of advice is to get all of your financials in order. Learn to budget for life. Dont just budget now in order to quickly buy a place. 

    Yes this is definitely something I need to not only police myself on now, but continue to enforce on myself down the line. I’ve got terrible spending habits. While those can be hard to break, nothing will change if I don’t make it. 

    I appreciate the insight, thank you for taking the time to reply!

  • Rental Property Investor · Bloomington, MN · Member since 2019 · 404 posts · 542 votes
    6y

    @Josh Bugbee Welcome to BP from another Twin Cities investor. I personally love the house hack option for people getting started in real estate investing. My biggest mistake was not starting with that when I had the chance.

    My recommendation would be to find local, investor focused real estate professionals to work with. Also, attend meetups when those start back up. There are several good options in the Twin Cities. Feel free to message me if you want specific recommendations. Or Tim (my phone won’t let me tag people) will also be here soon to offer quality recommendations. :)

  • New to Real Estate · Apple Valley, MN · Member since 2020 · 20 posts · 14 votes
    6y
    Originally posted by @Jonathan Greene:

    Don't rush into it. Keep doing what you are doing, learning, saving, and connecting. Go to local REI meetups and meet as many local investors as you can. When you listen to the BP podcasts, focus first on all of the ones with investors who are crushing it in your age range. Not that all of the podcasts aren't worthy, but 18-25 is a spot where a lot of commonalities of getting into the business are found and you can learn a lot from those lessons, more than apartment complex hunting right now.

     This is great. I really appreciate this grounded take, as I can sometimes get overzealous. Do you know if any meetings are still operating on a regular basis? I’ve looked into it some, but it seems like Covid-19 has put a halt on things like this. Are there virtual meetups happening in their stead? Also what a great idea! It hadn’t even occurred to me to focus on listening to episodes featuring guests from my age demographic to hear how they may have conquered similar problems!

    Thank you so much for taking the time to reply Jonathan, I appreciate it!

  • New to Real Estate · Apple Valley, MN · Member since 2020 · 20 posts · 14 votes
    6y
    Originally posted by @Corey Hawkinson:

    @Josh Bugbee Welcome to BP from another Twin Cities investor. I personally love the house hack option for people getting started in real estate investing. My biggest mistake was not starting with that when I had the chance.

    My recommendation would be to find local, investor focused real estate professionals to work with. Also, attend meetups when those start back up. There are several good options in the Twin Cities. Feel free to message me if you want specific recommendations. Or Tim (my phone won’t let me tag people) will also be here soon to offer quality recommendations. :)

    Thank you so much for the welcome! Hopefully I should at least be able to connect with some good investor focused agents. My cousin and (future) sister in law work at RE/MAX and Keller Williams respectively. Both of them said that they could connect me with an agent experienced in dealing with investors when the time comes. Aside from that though, I haven’t the slightest where to begin! Are these meetups a good place to meet contractors and others involved aside from lenders?

  • Rental Property Investor · Bloomington, MN · Member since 2019 · 404 posts · 542 votes
    6y

    @Josh Bugbee I messaged you as we are not allowed to promote other groups here.

  • Jonathan GreeneBusiness Member
    Real Estate Consultant · Madison, NJ · Member since 2016 · 6k+ posts · 7k+ votes
    6y

    @Josh Bugbee we have moved our meetups to virtual and many others have, depending on the markets. I have one in the NJ area events for every FRI at noon EST if you want to hop in one day. You can also search BP for local and see if they have moved to virtual in the location of the event.

  • Real Estate Agent · Elida, OH · Member since 2020 · 18 posts · 6 votes
    6y

    Hi @Josh Bugbee! Welcome to BP! We are new here also, and though a bit older than you, we are learning from all the great people here! We are focusing right now on education and gathering as much info about our desired niche as possible. With that in mind, we are not closing the door on other niches that we may find are a better suit for us in the future! For now we are focused on searching for small multi-family residences and plan to house hack. Our current primary would then go up for rent as well. Even though I qualify for VA funding, we are opting to save 20% or more first before we jump in. We may or may not use the VA funding, and may actually go ahead with a traditional mortgage on the first investment. Either way, we want to be in a solid financial situation first. Sorry I sprung all that on you, but I find it's best to see what others are doing and compare it to your plans. Good luck! - Andy

  • Rental Property Investor · Gulf Breeze, FL · Member since 2014 · 1k+ posts · 733 votes
    6y

    Step #1 @Josh Bugbee - WHY do you want to invest in real estate? Go through the 7 levels deep concept to discover your WHY. 

  • New to Real Estate · Apple Valley, MN · Member since 2020 · 20 posts · 14 votes
    6y
    Originally posted by @Jonathan Greene:

    @Josh Bugbee we have moved our meetups to virtual and many others have, depending on the markets. I have one in the NJ area events for every FRI at noon EST if you want to hop in one day. You can also search BP for local and see if they have moved to virtual in the location of the event.

    I may just jump into one of those, even though it’s not my area I’m sure I can still learn a lot from talking with people or even just listening in! I appreciate it!

  • New to Real Estate · Apple Valley, MN · Member since 2020 · 20 posts · 14 votes
    6y
    Originally posted by @Lacy Green:

    Hi @Josh Bugbee! Welcome to BP! We are new here also, and though a bit older than you, we are learning from all the great people here! We are focusing right now on education and gathering as much info about our desired niche as possible. With that in mind, we are not closing the door on other niches that we may find are a better suit for us in the future! For now we are focused on searching for small multi-family residences and plan to house hack. Our current primary would then go up for rent as well. Even though I qualify for VA funding, we are opting to save 20% or more first before we jump in. We may or may not use the VA funding, and may actually go ahead with a traditional mortgage on the first investment. Either way, we want to be in a solid financial situation first. Sorry I sprung all that on you, but I find it's best to see what others are doing and compare it to your plans. Good luck! - Andy

     No need to apologize! I do appreciate this look into your plan and story, as I also believe it’s good to compare, contrast, and keep open to new possibilities.

    Thank you Andy! - Josh

  • Rental Property Investor · Wasilla, AK · Member since 2017 · 35 posts · 14 votes
    6y

    @Josh Bugbee

    Check out the free Bigger Pockets Beginners Guide to RE Investing Course online. It’s a very well put video course to help you discover your ideal niche that you want to focus on. Once you figure out your niche, study it, network a bunch with others in your niche and go from there.

  • New to Real Estate · Apple Valley, MN · Member since 2020 · 20 posts · 14 votes
    6y
    Originally posted by @Jay Helms:

    Step #1 @Josh Bugbee - WHY do you want to invest in real estate? Go through the 7 levels deep concept to discover your WHY. 

     Well put simply, firstly to achieve financial freedom, and to work for no man but myself. Secondly because I want to be able to take care of my mother, and my future children, so that they never have to go through things like my family and I did when I was younger. Third, I’d like to hopefully be able to provide people with better service than the experiences I’ve had with “Slumlords”. Also I enjoy the rehab process or at least the transformation aspect. 

    I tried to keep this in a nutshell, as I’m sure you’re not too interested to hear my entire life story, and motivations that are driving me toward these goals.

    Either way this is a great and thought provoking response, thank you Jay! -Josh

  • New to Real Estate · Apple Valley, MN · Member since 2020 · 20 posts · 14 votes
    6y
    Originally posted by @Account Closed:

    @Josh Bugbee

    Check out the free Bigger Pockets Beginners Guide to RE Investing Course online. It’s a very well put video course to help you discover your ideal niche that you want to focus on. Once you figure out your niche, study it, network a bunch with others in your niche and go from there.

     Great advice! I haven’t delved into the education section on the website as of yet, but I have been binge listening to the podcast. From what I can tell so far I think my personal niche I’d like to get into is multi-family buy and hold. But things could definitely shift going forward, I’ll be sure to take full advantage of the course. Thank you for taking the time to reply Kenny, I appreciate it! -Josh

  • Rental Property Investor · Mechanicsburg, PA · Member since 2018 · 281 posts · 176 votes
    6y

    @Josh Bugbee Welcome to the Bigger Pockets community Josh! Lots of good comments here.

    To add to (or second) the responses so far -

    1) Don't try to boil the ocean. Focus [at least initially] on one model of investing. What do you think will meet your goals? What do you understand best? What best aligns with your talents?

    2) Learn how to really analyze a deal. If its single family you want to tackle, learn how to analyze for buy and hold, fix and flip etc. If its a house hack then dive into all the nuances of that strategy. Multi-family - learn about the kinds of loans, buying for value add, self managing vs hiring a property manager, etc. Etc for the 100+ other ways you can get into REI :)

    3) Learn the jargon (necessary evil :)). Every industry has their terms as you likely know. CapEx, Cap Rate, CoC return (Cash on Cash), ARV, LTV.

    4) For every deal you analyze think of the backup plan & think of your eventual exit strategy (sale, 1031T)

    5) Build a network of contacts. Find a realtor, loan officer, contractor, other RE professionals and investors you trust

  • Realtor · NY · Member since 2020 · 167 posts · 169 votes
    6y

    Hi Josh, Welcome to real estate investing, I too am new and quite honestly I kick myself for not starting sooner. Having said that, from one newbie to another my two cents would be to walk before you can run but by all means don't hesitate to start. Learn all you can, absorb all you can, my experience so far has been that real estate is like swimming, you cannot learn how to swim by attending classes, you gotta get into the water and turn insight into action, if possible shadow someone to learn while doing.

    Network your heart out, Real Estate is a relationship business, REIA, whatever forum are out there And above all, give it your all; make meaning, add true value, money is a byproduct of adding value.

  • Rental Property Investor · Pawtucket, RI · Member since 2018 · 38 posts · 12 votes
    6y

    @Josh Bugbee

    House hacking is the best thing to do when (in my opinion) entering real estate investing. That’s what I did 3 years ago and that’s what I am still doing. Find a 3 family home that doesn’t look too pretty and make it look pretty. Live in the attic and rent out the other units. Have your mortgage, property tax, insurance, repairs, and vacancy cover by the rents. Even moving to an area when triplexes and fourplexes are not overly Expensive could be a good thing for you too to get your feet wet.

    Do me a favor, to avoid future problems, don’t buy a rental property with someone you are not married too. That can get very ugly in the end, dude.

  • Rental Property Investor · Denver, CO · Member since 2019 · 76 posts · 70 votes
    6y

    @Josh Bugbee

    Hey, Josh!

    I suggest to invest in the house hack first. For two reasons:

    1) It is a good way to eliminate current rent that you may be paying or save more.

    2) The multi family is much larger scale, and may become too big daunting. The house hack is therefore, a great way to get your feet wet to start and then right after that house you go get your multi family.

    “Set for Life” by Scott Trench is a killer book that encompasses foundational investing advice for real estate and stocks. It gives a detailed blueprint to getting started and is truly a must read book. I highly encourage it.

    Outside of that, just becoming clear on what strategy of real estate investing you’ll apply.

    Best,

    Josiah

  • Real Estate Coach · Danville, CA · Member since 2015 · 42 posts · 38 votes
    6y

    Welcome, Josh! Real estate will change your life! My advice is to make the committed on exactly what your goals are, dive deep into the education and take massive action.


    Good Luck :) 

  • Denver, CO · Member since 2016 · 50 posts · 25 votes
    6y

    @Josh Bugbee buy an owner occupied home with an FHA loan 3.5% down, something with 4+ bedrooms and mostly cosmetic issues that you can get for a deal. Fix it up and rent out your extra bedrooms. This is basically house hacking and should give you a great experience in buying, rehabbing, renting and being a landlord. You can buy another home after a year and repeat and keep improving your system.

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