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.
Real Estate Coach · Charlotte, NC · Member since 2016 · 399 posts · 341 votes
6y
@Josh Bugbee first of all as a Minnesotan myself who went to school at Iowa State, I have to extend a huge welcome!
There are a million things to say, many of which have already been covered. But I want to emphasize two in particular:
1. Dig deep and channel your burning passion into a long term purpose and “why”. There are hundreds of combinations of strategies in real estate, and without knowing what you’re striving for you won’t know what steps to take to get there. Read books like The Compound Effect, The ONE Thing, Rich Dad Poor Dad, etc. (happy to provide more, just PM me)
2. Don’t listen to one single person and make decisions based on their input. If someone tells you to pursue a particular path, take it with a grain of salt. There are too many options and no single option that is right for everyone...absolutely consider the input and opinions you hear, but don’t take any of them as gospel
There’s so much more but that’s an important start. Reach out if you have any questions!!
New to Real Estate · Apple Valley, MN · Member since 2020 · 20 posts · 14 votes
6y
Originally posted by @Account Closed:
@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
@Justin Schreibeis This is a great response I really appreciate it. So I’m going to kind of use the questions you asked as a springboard for my thought..
1) Well two things; First, I would not consider myself a property manager, or someone who is able to fix many things in a home/unit. So my ideal goal is to have a property manager for things, and contract things out, so that I can be hands off in that department. As far as what I understand best, I don’t know that I could put any one aspect of real estate ahead of any others to say that I “understand it” more. I’m still very green.
2) This is 100% something I need to work on. Moreover I feel this is something that you can’t just read a book to understand. I feel to get a sense for this I will need to go out, and just look at property after property even if I’m not making offers to get a sense for what has value. Would you agree? When it comes to what I want to tackle.. I would say what I most often have settled on when thinking about it is multi-family, from duplex all the way up to a complex. Most everyone has said to start with a house hack, this is very wise and I know this. Great way to get into the game gain knowledge, and save money. I understand that. For some reason though I’ve been dealing with this devil on my shoulder saying, “F*%# it, go big or go home. Syndicate a 100 unit apartment complex.” I realize this thought is probably folly but I I’m having a hard time containing this fire. Also lastly, I believe I’ve already concluded with myself that I want to be hands off in the Property Management department, so I would most likely outsource that.
3) Yes! This is definitely something I need to get down pat, and while I have been working on learning them it can be quite daunting. I do know a few though just to pinball off the ones you threw out; CapEx/Capital Expenditure, ARV/After Repair Value, LTV I'm not sure on? I'm also not 100% on this, but the Cap Rate is the metric by which you determine the value of a larger apartment complex? Or am I incorrect?
4) This is such a simple yet incredible piece of advice that I honestly had not thought of. To always have a contingency plan on how you’ll get out if things go awry. Fantastic, thank you.
5) This is something I 100% need to do. Hopefully when the Covid-19 stuff clams down I can start going to local meetups and really crank this dial to 10. Also a question, I’m obviously young and I have some friends.. One is an up and coming/somewhat established real estate agent, the other does general contracting stuff on an under the table basis. Would it be a good idea to utilize them going forward, or should I try and connect with more established people in my area rather than take advantage of closer acquaintances that might not have as much experience?
Thank you so much for this thought provoking response Justin! -Josh
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.
@Joanna Eriaku
Yes I have definitely been trying to crawl even before I walk. I have been immersing myself as much as possible in real estate learning material. I can definitely see what you mean because even KNOWING how much of a novice I am, I’ve been getting this feeling like if I truly wanna learn I’ve just gotta dive in. Start looking at deals and running numbers to get a feel for it, maybe even walking properties. My biggest thing I feel I need to learn about that area is how to accurately assess rehab costs or what a place would need to be brought up to local standards.
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.
@Pedro Jean
Yes that’s the closest thing I have to what I could call a “plan” at this moment, to get a 2 to 4 unit multi family property and house hack the heck out of it. Finding one shouldn’t be an issue as the Twin Cities definitely have their fair share of 2-4 unit multi family properties. Also I’m curious, you said live in the attic? So did you have a similar situation where you rented out all three main units of a property and lived in the attic? Edit- About the last part, I’m with you on this 100%. My girlfriend also enjoys real estate so she’s been helping some. When it comes to papers and who’s gonna own what assets though, I’ll be the only one on documentation, at least until we’re married.
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
@Josiah Patrick Zebarth
Thank you for your response! The house hack is the closest thing to concrete within my plan at this moment. For all the reasons you listed I definitely see this as a good starting point. I just also am struggling with this fire within me, and something like that keeps telling me “Go big or go home”. As of now I am just trying to immerse myself in knowledge and insight so I will definitely give Set For Life a read, are there any others you would recommend?
New to Real Estate · Apple Valley, MN · Member since 2020 · 20 posts · 14 votes
6y
@Vinney Chopra Thank you! I’m channeling all that energy right now learning as much as I can. I am fighting with myself to not try and take action too soon.
New to Real Estate · Apple Valley, MN · Member since 2020 · 20 posts · 14 votes
6y
@Jamaal Gibbs Ah, so you’re saying rather than buy a multi family unit and rent out unoccupied units and rooms in my unit, to buy a single family instead and house hack that??
New to Real Estate · Apple Valley, MN · Member since 2020 · 20 posts · 14 votes
6y
@Patrick Menefee Great advice about not taking any one thing as gospel but to compound any advice I get and come up with a plan that works for me. Also I will definitely PM you as I’m open to any book suggestions I can get! Thanks so much for the welcome and insight! I appreciate it! -Josh
Real Estate Agent · USA · Member since 2016 · 909 posts · 1k+ votes
6y
Don't get analysis paralysis. There will always be a better deal or a worse deal, or a better market or a worse market. Don't let the perceived opportunity cost of the "what-if's" keep you from doing your first deal!
New to Real Estate · Apple Valley, MN · Member since 2020 · 20 posts · 14 votes
6y
@Avery Carl Great advice! I haven’t analyzed or walked any properties yet as I feel still to inexperienced.. Is this a false assumption on my part? How quickly in your opinion should I start walking deals even if I’m not making an offer? Should I already have been? Should I start now? Or should I gain more knowledge in any specific areas before taking that on?
Real Estate Agent · USA · Member since 2016 · 909 posts · 1k+ votes
6y
@Josh Bugbee It's not a bad idea to go ahead and start doing drive-by's, but don't enlist the help of an agent until you are ready to make offers. Just read as many books and listen to as many podcasts as possible. Check out properties in your price range and compare them to comparable properties on the rental advertising sites to see what sort of return you will be able to get. Just keep moving forward!
New to Real Estate · Apple Valley, MN · Member since 2020 · 20 posts · 14 votes
6y
@Avery Carl Perfect. So just trying to clarify for my sake.. In order to look at/walk a property rather than just drive by, an agent will need to be involved?
Real Estate Agent · USA · Member since 2016 · 909 posts · 1k+ votes
6y
@Josh Bugbee yes, it’s not legal for you to be in a property unaccompanied by an agent (if it’s an on-market property. Rules are different for wholesale etc). You could walk around the outside, but it would still technically be considered trespassing so you just want to make sure you go through the proper channels!
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
House hacking is a great way to start stringing investments together with an incredibly low amount of out of pocket money. It's how I got started over 10 years ago. Run a $50M portfolio today.
Contractor · WI · Member since 2019 · 34 posts · 15 votes
6y
@Josh Bugbee glad to hear your desire for RE. It’s an exciting thing to get started. I live in Northwestern Wi. About two hours from your market. One thing I would suggest if you want to get your feet wet, but don’t own your own home yet, is to buy a single family that needs renovation. I realize this isn’t for everyone but it’s a lower risk way to learn a number of important lessons.
First, rates are ridiculously low for personal homes right now so great time to buy a personal home. The purchase process is similar for your own home as it is for a rental so this teaches you to talk to lenders and what information they require. You also need far less capital to purchase a property. While you can’t get some specific loans if it is a large renovation, but you can still get into a livable property that needs some solid updating.
If you can do a majority of the work or at least do the project management, you will learn about the construction process. Which will go a long way with investment properties. You don’t need to become an expert but knowing the general process how a building is put together and what contractors do what is invaluable knowledge.
Then refinance it on a home equity loan and pull the equity out that you built up in the property through your improvements. This gives you a bit more knowledge with lending and starts a solid relationship with a lender. Definitely let the lender know your plans from the beginning and inform them that you will be pursuing rental properties.
@James Wise Thank you for the reply! Would recommend doing a single family house hack, or going with a multi unit such as a duplex or more?
If you can swing it and the inventory is available go with a quad. 4 rental income checks beats 1, 2 or 3. Way I see it you get 10 residential mortgages. You should save 1 for your permanent primary residence. This leaves you with 9 residential mortgages to invest with. You do 4 quads you can get yourself a 36 unit portfolio off of only 9 loans.
Investor · Miami, FL · Member since 2016 · 47 posts · 47 votes
6y
@Josh Bugbee
Josh I started out when I was 22 and the only thing I didn’t contemplate was saving or putting money aside for unexpected repairs or events. I think if you have a three month operating expense saving it will bring you a lot of peace of mind and can also help you navigate through issues that are impossible to avoid.
Newport Beach, CA · Member since 2018 · 13 posts · 6 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.
Anyone have insight into what loans are available for a similar investment with a lower down payment?
Rental Property Investor · Long Island, NY · Member since 2020 · 29 posts · 6 votes
6y
@Josh Bugbee
whats up josh! i’m fairly new as well & im just trying to network and make connections in the Pennsylvania & New york areas!
but one advice thats currently working for me is getting a mentor. I have one right now & we are currently working on getting myself my first rental property! I would definitely look into getting a mentor!
Investor · Long Island, NY · Member since 2019 · 34 posts · 22 votes
6y
I just want to say that it is very rare for an investor to start off successfully with large apartment buildings. For someone your age, and just assuming you don't own your own home yet, may I suggest to you HOUSE HACKING as your very first investment when you do decide to take the plunge? But I understand you have FIRE, I do too. Single family or a duplex may be a great start for you. Also definitely keep listening to podcasts. I also recommend following big names on instagram such as @beardybrandon, @biggerpockets, and @investfourmore. Additionally, reading is absolutely key, whether its audiobooks or reading a traditional book. My recommendations are "Rich Dad Poor Dad" by Robert Kiyosaki, "The Book on Rental Property Investing" by Brandon Turner, "Build a Rental Property Empire" by Mark Ferguson and "How to Win Friends and Influence People" by Dale Carnegie. Those are just to start. Have you thought of getting your real estate license and starting that way? Many successful investors end up obtaining their license because there are many benefits. Maybe for someone so young that would actually be a great way to start and get your feet wet in the industry. I am considering getting my license now myself just for the education that I will receive by obtaining it. Another big thing you need to think about before you invest is what your actual goals are because not all forms of real estate investing align with every goal. This is kind of why I suggest "Rich Dad Poor Dad" as a first and very necessary book. In my opinion, it is REQUIRED READING. Make sure you a keep a steadyW-2 job (assuming you have one), and you save as much money as you can (maybe to purchase your first property with the house hacking strategy?) Also, keep your credit score in good shape! Lots of luck to you!
Valhalla, NY · Member since 2013 · 132 posts · 84 votes
6y
@Josh Bugbee
Hey Josh one key piece of advice and you’ll hear Brandon mention it on the podcasts over and over is to just start analyzing deals. After listening to the podcasts on and off for years I think it was sometime around last year I made it a habit to analyze at least one deal a day. Now about a year later I have ran numbers comps potential rent and expenses hundred of times that it takes me about 2-3 minutes to look at a property and know if it’s a good deal. Then (as I’m sure you can read more on) I will determine if a property is worth further pursuing. I definitely recommend investing in some Bigger Pockets books to further educate yourself. Best of luck and if you have any questions on how to analyze a deal feel free to shoot me a message.