Hi guys. I am a 17 year old student. I would like some assistance
Member since 2020 · 9 posts · 1 vote
Hi everyone, I am based in South Wales. I am extremely eager to get into real estate and property investing. Can someone give me some assistance and more of an insight please? I can possibly have access to a certain amount of money but it will be more of a refurb budget. Therefore I am going to begin with doing assisted sales, then once enough capital is raised, move onto doing quite a few flips and then invest some of that money into owning rental property using the BRRRR strategy. Is there any strategy or something you should follow when doing property flips? Also, with both flips and rentals, is it best to buy with cash or private lender/mortgage? When doing BRRRR, when refinancing, can you take out the equity that would result in profit straight into your pocket, or should you leave it in the property? I will be very grateful if someone could get in contact with me.
I’d recommend reading as much as you can on the subject from multiple view points- there’s a lot of good information out there, you seem to know some of the acronyms but don’t quite understand the principals behind them.
If you can do some work experience with a local sales agent that is valuable insight too.
I’d recommend reading as much as you can on the subject from multiple view points- there’s a lot of good information out there, you seem to know some of the acronyms but don’t quite understand the principals behind them.
If you can do some work experience with a local sales agent that is valuable insight too.
Congrats on jumping into the world of real estate investing! Starting out at your age will lead to you becoming incredibly savvy and probably wealthy by the time you are 30 (IMHO). I agree with @Dave Connelly - read as much as you can about BRRRR, starting with David Green's excellent book, "Buy, Rehab, Rent, Refinance, Repeat." It's the BRRRR book you can find here in BP. The whole idea of BRRRRing is to take out the equity and use those funds to buy your next deal. It's called "the velocity of money"...using the money you make to make more money.
Also, build your network - real estate agents, property managers, lenders, contractors. Oftentimes the agents can help you with the others, especially if you find agents here on BP (I just found two that I will be working with out of state). Speaking of agents, make sure they are either investors themselves or work with investors. That's important.
Good luck to you, and keep coming back to BP! After spending way too much on various trainings and guru promises, I've found that this is the BEST resources with the BEST people.
Suzanne
@Suzanne Ludlum hi there, thanks for the reply. I understand with refinancing you take out your buying and refurb costs, but what about the rest of the equity? For example (something I’ve seen before) you’re all in at £420k, the property gets appraised for £700k. When refinancing, you can get £490k back. In the example I saw, the guy only takes back £420k to cover all of his costs, but leaves the rest of the equity in the property. Why is that? He could have £70k profit straight into his pocket but decides to leave it in the house and not take it out?
He may have wanted to keep his mortgage payment low and cash flow higher. It's not a bad thing to leave money "in the deal" so to speak. I learned this from reading David Greene's BRRRR book (I mentioned it before). If you really want to learn about BRRRR, get the book, read it, memorize it (as I was told to do), and listen to Brandon Turner's podcasts as often as you can. You will get to know the process very well.
@Suzanne Ludlum which is better, quick profit from equity or slightly higher positive cash flow? What type of property Is better to rent out? As if I rented out a family home I’d only have roughly £500 positive cash flow a month which is £6k a year. But if I had an apartment/flat with about 5 or more rooms, I could have more per month? What’s your thoughts?
There's no straight answer; it depends on your long-term goals. Since you are young, cash flow may not be as important as building equity by holding the property a long time. Less monthly cash flow (unless you need it to pay for college/live on/etc). As for me, my husband/business partner and I are looking towards retirement age and want cash flow as passive income. We don't care as much about equity (of course, we don't want the property value to drop).
You will have to do some research in the geographic area where you want to buy to see if there is a market/need for single family home rentals or if you can do well by purchasing a home and renting out individual rooms. The latter works well if you buy a house near a college or university and rent each room out to students. We are in the process of doing that here, and we are designing the lease so the rent is X per month no matter how many people are living there. In other words, if three people live in the house and one moves out, the remaining two people are still responsible for covering the rent. College rentals, at least here in the States, do very well.
I recommend you reach out to other investors who are doing what you want to do, and shadow them. Offer them something of value (i.e., make phone calls for them, find properties, etc.) and they will be more likely to give you something in return (i.e., advice, share connections, etc). This is ALL in the BRRRR book. I've found that the best way to learn how to do something is to work with/for someone who is already doing it, learn everything I can, and then go out and do it on my own.
Remember: real estate investing is NOT a get rich quick business. There is a learning curve. It takes time, practice, making mistakes (I can share a nightmare wholesale story with you), asking questions, asking more questions, and then asking more questions. Find a local REI group in your area and go to those meet-ups. Build your network of partners such as real estate agents, property managers, contractors, lenders, other investors, etc. Read the books you can find here on Bigger Pockets. If you are not a Pro member, it's DEFINITELY worth the $390/year to become one. This site is nothing short of amazing with what they offer (I'm sincere about this, no one paid me to say it). In fact, if you upgrade to Pro before tomorrow, June 28th, you get a 20% discount PLUS access to their new Insight feature, which will help you greatly if you are doing buy & holds/renting.
@Suzanne Ludlum so really there is 2 types of rentals? One where you take out all of the equity to put quick profit into your pocket, but having less of a positive cash flow. And the second is only taking your buying and refurb costs out and leave the rest of the equity in there, so that you have a higher cash flow? How is higher cash flow better than taking all of your equity equity out and have a big profit? With cash flow you must wait however many months for the cash flow to build up to be anywhere near as much as the amount you would’ve earned from realising all of your equity? For the long term, lower mortgage payment and higher cash flow sounds quite good, but would be something I’d be interested in at the age of 25+ years old. What’s your thoughts on flipping? Is there a certain strategy/something to follow? Which brings in more money, flipping or renting and taking all of the equity out?
@Iwan Rhys Williams So sorry for the delay in responding to your questions; got busy with medical situation. One way of renting isn't necessarily better than the other (low cash flow/take equity out or high cash flow/leave equity in). It depends on what your investment strategy is. For my husband and me, we are looking at retirement in a few years so we are willing to take equity out in order to use that money to purchase more properties (and thus, have more rental income). Having said that, if we can find a multifamily that is one property with 2-4 units, bringing in more cash each month total, we would go for that.
Flipping can be very lucrative, although we have not flipped yet. But unlike buy & holds, you always need to be finding the next property and flipping it. Once you stop, the money stops. Rentals are endless (hopefully) passive income streams. Are you familiar with the BRRRR method? If not, get David Green's book on BP and learn all about it there. It's a fantastic book and extremely helpful.
I will try to log in again soon if you have any other questions.