Starting out and feeling frozen

Rental Property Investor · Indianapolis, IN · Member since 2018 · 4k+ posts · 4k+ votes

5y

Hey @Ronnie Galindo! At least you're not literally frozen like I am over here in Indiana. The OOS investor is a rare breed. Honestly I don't know how people start out in REI without getting there feet wet in the home market. Going across the county to source deals, locate contractors, remodel property, and flip or find respectable tenants sounds like a nightmare. I'm a firm believer that DEALS can be found in any market, you just have to search harder.

In my market cash-flow is good, fix and flips are good too but if you're serious about investing OOS visit the city! Most cash-flow markets are hit and miss with trashy streets 3 blocks from gems. Take a "work vacation" and drive the market. Seeing what the local investors are doing is vital to your success. Good luck man.

2 Reply

Andrew Powers

Investor · Cincinnati, OH · Member since 2018 · 304 posts · 185 votes

5y

Hi Ronnie, having little or no money to invest forces creativity. Like you said, you've seen ways that other investors have funded deals and you already have some ideas like working more hours. Write down all the options you come across as you think things through, read, listen to podcasts, search the forums. There's dozens of ways. As humans we easily forget things so having them written down is a tool to help us remember instead of relying on our humanly forgetful brains.

When an opportunity arises, look at what you wrote down, and dig into each method for how to make the deal work. Or work the other way to target methods of financing, and find deals that align with it.

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Account Closed

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

5y

You already have your answer:

My wife and I make good money so I could knuckle down and pull a David Greene and work my day job (Deputy Sheriff), pick up overtime, and just be frugal and save for the next 6 months to get to around $20-30k then start investing.

Check out Toledo, OH for a market with a low barrier to entry.

7 Reply

Remington LymanBusiness Member

Real Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes

5y

Originally posted by @Ronnie Galindo:

Good morning BP,

I have been lurking around the forums and BP for quite some time. I decided to pull the plug and become a Pro member because I am tired of no action in REI. I have listened to 80% of the podcasts, read Brandon's book on investing with little to no money down. I am also halfway done with David's book on long distance investing. I have reached out (through BP) and found a great team (it seems) in Columbus, OH and Houston, TX however I have been hit with the truth. It seems I don't have the capital to invest.

Now I know some of you are like "C'mon, there is always a way" and those are the people I am looking for advice from! I know there are ways to start investing but I don't know how, where, when?! I have around $10k in reserves but that is my whole liquid funds. My brother has some money (around $30k) but isn't looking to be a lender (he wants to make money too, and quick). I live in Napa, CA where the market is too steep for me plus the thought of investing in CA makes me nervous because of how tenant friendly they are here.

I know there are options. My wife and I make good money so I could knuckle down and pull a David Greene and work my day job (Deputy Sheriff), pick up overtime, and just be frugal and save for the next 6 months to get to around $20-30k then start investing. Or.... Anyone have any opinions or advice for this newbie?

Thank you!

-Ronnie

You should just start cold calling in Columbus, Ohio

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Zeke ListonBusiness Member

Real Estate Agent · Columbus, OH · Member since 2018 · 1k+ posts · 1k+ votes

5y

Originally posted by @Ronnie Galindo:

Good morning BP,

I have been lurking around the forums and BP for quite some time. I decided to pull the plug and become a Pro member because I am tired of no action in REI. I have listened to 80% of the podcasts, read Brandon's book on investing with little to no money down. I am also halfway done with David's book on long distance investing. I have reached out (through BP) and found a great team (it seems) in Columbus, OH and Houston, TX however I have been hit with the truth. It seems I don't have the capital to invest.

Now I know some of you are like "C'mon, there is always a way" and those are the people I am looking for advice from! I know there are ways to start investing but I don't know how, where, when?! I have around $10k in reserves but that is my whole liquid funds. My brother has some money (around $30k) but isn't looking to be a lender (he wants to make money too, and quick). I live in Napa, CA where the market is too steep for me plus the thought of investing in CA makes me nervous because of how tenant friendly they are here.

I know there are options. My wife and I make good money so I could knuckle down and pull a David Greene and work my day job (Deputy Sheriff), pick up overtime, and just be frugal and save for the next 6 months to get to around $20-30k then start investing. Or.... Anyone have any opinions or advice for this newbie?

Thank you!

-Ronnie

Convince your brother to invest!

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3 Reply

Lionel Mosby Jr

Real Estate Agent · Houston, TX · Member since 2020 · 107 posts · 32 votes

5y

@Ronnie Galindo I know you "feel" frozen, but definitely take a moment and recognize the work you have put in thus far. You have been educating yourself by listening to the podcasts and reading books. That's a HUGE part of preparing yourself to be successful. You know your financial position already and you have started building a team in OOS markets. Bravo! Now, based on where you are at I would suggest you both 1) knuckle down, pick up overtime and save for the next 6 months, 2) start virtual wholesaling & 3) look into rental arbitrage. Leverage those connections you have back into partnerships & joint ventures on distressed properties you find in the two markets you are looking to jump into. Most of the strategies you would be using as a wholesaler to find distressed properties can be implemented while you reside in Cali as much as in the actual market. Partner with someone local to verify the condition of the property, market and collect the assignment fee. Also, short term rentals can be very profitable if set up right. Use a portion of your funds to rent a small condo or apartment in a market with great returns. It will cost some cash to furnish the place, but the returns could more than cover what you put in and it can become a nice cash flow to help you fund other deals.

Also, with your brother, you have a total of 40k. if your brother is looking to do a deal with you then why not go in 75/25 with him? After the flip is done, he gets his 30k = 75% of the profit and you get your 10k + 25% of the profit. I always believe synergy and partnerships is how you really scale. See if you and him can get on the same page, draw up the agreement and then you can fix & flip a few properties with him.

Either way, blessings on your real estate investing endeavors. I'm here if you ever need any assistance.

6 Reply

Wale LawalBusiness Member

Real Estate Broker · Houston | Dallas | Austin, TX · Member since 2018 · 5k+ posts · 2k+ votes

5y

@Ronnie Galindo I will just invest out of state.

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Ben Lake

Investor · Albany, OR · Member since 2020 · 16 posts · 9 votes

5y

Something else to consider, you might be better positioned than most to find distressed properties in your local area given your current occupation as an LEO. I don't know much about law enforcement but my guess would be that you wind up visiting a lot of places that fit that description if you're out in the field. Not that you could or should be posting door hangers or anything like that while you've got the local axe murderer in cuffs, but seeing distressed properties up-close like I imagine you do fairly regularly should give you an idea of some places you or your wife could start prospecting on your personal time. Even if you don't plan to purchase property to rent in your local area, you could potentially do some wholesale deals to help build capital in the beginning as others here have mentioned.

Beyond that, I'm assuming your job has forced you to develop a pretty solid knowledge of your county, where good and bad areas are, crime stats and demographics for various areas, things like that. Of course I'm sure your department has an ethics code that you'd need to be mindful of, but a lot of this knowledge would available to anyone if they chose to look for it, it's just that officers/deputies on patrol tend to have a better lay of the land than most people because the job demands it. This is why a lot of investors will recruit postal carriers, UPS drivers, Uber drivers, and the like to help them prospect for deals. These people drive all over the place all day everyday, so of course they're more likely to come across distressed houses than someone who just drives to work and maybe around town for some errands.

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Jonathan BombaciBusiness Member

Real Estate Agent · Lowell, MA · Member since 2019 · 1k+ posts · 1k+ votes

5y

Hi @Ronnie Galindo it sounds like you're working hard to get started which is great. To echo other comments I would recommend buckling down and saving up a bit of a nest egg. Or if you have a good job have you also been stocking $ away in your retirement accounts? You could always pull from or take a lo a 401k or retirement account to jump start the equity> To you're point it is certainly possible to invest with little to no money down, we just bought a duplex in MA for $315,000 with a HML and put less than 10% down but we have experience in the market and it was a good deal. Even then we had to bring $30k to closing, sure we could have borrowed those funds but there is something to be said about putting your own money into a deal. Even when we have investors lined up get into a deal I always put my some of my own money into the deal. My lenders and investors like that about us as it shows we believe in the deal and are willing to risk our own capital on it.

Best of luck and congrats on taking steps to move forward now you just need to find some capital.

Jon

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Bonnie LowPro Member

Lender · Asheville, NC · Member since 2016 · 1k+ posts · 1k+ votes

5y

Do you currently own a house? If so, do you have equity you can leverage to use for a purchase? Could you house hack it and rent out a room or two to someone else to reduce your expenses? Or, can you buy a home and house hack it? You don't have to be in Napa per se (unless you're required to because of your job.) You could look in an outlying area where home prices are a little more reasonable - maybe Lake County area, Colusa, Solano, Vacaville, Winters, etc? It would be a bit of a commute, but it could help you get started.

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1 Reply

Rahul Bhatt

Fremont, CA · Member since 2015 · 289 posts · 63 votes

5y

@Ronnie Galindo I would start locally first by I have invested here in bay area sacramento and lake county.

I went out of state to places like ohio and indiana I think it's good use of time and effort to start local and if possible keep it local

1 Reply

Account Closed

Investor · Singapore · Member since 2013 · 1k+ posts · 3k+ votes

5y

I have said it before. OOS investing is for those who have very high paying jobs in expensive markets and enough capital to deploy into a portfolio. I would never suggest putting your last 30K into a class C property thousands of miles away from you. You are much better off buying an index fund. I say this having owned OOS midwest properties for 7 years and knowing everything that goes on with them.

5 Reply

Andy Pham

Rental Property Investor · California, US · Member since 2020 · 67 posts · 82 votes

5y

@Ronnie Galindo I agree with Bonnie’s suggestion. If you can’t get a property in your area due the the high price, try looking at local cities and see if you can house hack. I believe house hacking is the best way to get started. And should also try to convince your brother to help out as it seems he’s trying to find a way to make some cash as well.

1 Reply

Brian Garlington

Realtor · Oakland, CA and a Real Estate Investor with Multi-Family Units and a Self Storage Facility · Member since 2016 · 2k+ posts · 2k+ votes

5y

You're a deputy sheriff in the San Francisco Bay Area and you have about $10,000 liquid? Welp, we know you aren't on the take patrolling the mean streets of Lincoln Avenue in Napa :-)

You already know what to do. Work overtime, then work some more overtime. Your money will go further in Ohio for investment property than Texas. I'm originally from Columbus and I have interests there and in Cleveland. Once you get that overtime in and are stacking your cash get pre-approved with a lender my man and you will be off to the races.

3 Reply

Jordan Goulet

Nashville, TN · Member since 2020 · 14 posts · 8 votes

5y

@Ronnie Galindo Reading this thread so far i understood a lot even from (sorry i forgot his name on the phone commenting) TX agent was an amazing idea near the end of his partial take of this discussion.

At the same time the books that i read from bigger pockets that are “Raising Private Capital” is basically using someone else’s money in the sense of doing a deal and discussing the terms with them running the project ideas and overall outlook on the project not just the ideas. I think as Creative Financing can count off so many other ways. Such as pulling equity from one property to put down with a hard money is amazing.

Then that whole Private money is the one part i still don’t understand on finding (only 56 pages in the book) Private Capital from others but i feel as if the beginning is always hard to do then from there you build a portfolio growing so then when you grew this portfolio you are now connected with so much other people and you have info and a portfolio o back up what you’re talking. Then soon after the creative financing just comes to you but the beginning is hard so i say grind the 6 months and i do suggest what TX agent said near end on renting a place and furnishing it is a great idea! You go to the home owner that’s renting and talk to him and be upfront and ask if it’s okay with him if you can do that. Then try agreeing on paying alittle more for rent so you come out on top with a win-win and a great relationship.

Yes grind those 6 months the beginning is always hard but YOU GOT THIS RONNIE!!

1 Reply

Stephen DeThample

Real Estate Agent · Las Vegas, NV · Member since 2020 · 459 posts · 305 votes

5y

Work as much OT as you can. Look for seller financing in an area close to you. Try to find houses that are paid off, can be a primary residence or an investors property that is a "headache" for them. Call for rent signs and ask if they are interested in selling, then ask for seller financing.

Good Luck!

0 Reply

Christian Van Dinther

Investor · Chicago, IL · Member since 2020 · 32 posts · 14 votes

5y

@Ronnie Galindo Hey Ronnie. Glad you posted this as I am having the same issues. But luckily you have plenty of options in RE. I would recommend listening to the Real Estate Rookies podcast. I know you mentioned you listened to Brandon and David's but as you mentioned you are just starting out. Rookie podcast will give you some great ideas on how to kick start REI. Hope this helps, happy holidays!

1 Reply

Reece Iovine

Realtor · Columbus, OH · Member since 2016 · 170 posts · 227 votes

5y

commit and buy a house hack 2-4 unit. Only 5% down required. Have seller cover closing costs - even if you need to up your offer by 3-5K it'll reduce the amount needed at closing. I bought my first duplex for 164K and only brought 7500 to closing. The place broke even once I raised rents and now 2 years later after I've bought a few others I'm going backto renovate both units and my cashflow will be around 1K a month.

2 Reply

Arlen Chou

Investor · Los Altos, CA · Member since 2014 · 942 posts · 1k+ votes

5y

@Ronnie Galindo thank you for your service.

I realize that in this day and age making moves quickly seems like what is suppose to happen. The reality is that the real estate game is about financial momentum. Until you have have some mass behind you the start can feel glacially slow. The reality is that you must either have money or time to invest to start off.

The money can be your own money, an investors money or a loan, but you need some. That is typically where the idea of "there is always a way" falls into place or falls off the table. You already seem to realize this part of the equation. Without cash in the bank it is extremely difficult to get a loan, especially for an investment property.

Start off with a house hack. Getting a loan for your personal residence is substantially easier than a loan for an investment property. Try to get at least a duplex, but reach for a 4-plex if you can. What I say next might be a little controversial but if you don't have kids try to hold off. I have 2 and they really do drain the savings account. Rent the additional units out and build on your experience and rebuild your financial war chest. Rinse and repeat...

This process literally can take years and it will feel painfully slow. However, as you get momentum and mass on your side things do start to get easier and faster. I personally went down this road and appreciation has been a great generator of wealth for me.

There are people who buy properties out of state and successfully get cash flow. So much trust has to be placed in the hands of the OS team. I personally have not done this so I cannot comment on the ease of this strategy. But again, there are many people that are able to do it.

Keep in mind that everybody who comments on a strategy was either successful in it or is faking until the make it. Hardly anybody posts up about failing in a particular strategy, so take any advice, including mine, with a grain of salt.

Good luck to you!

1 Reply

Ronnie Galindo

OP

Realtor · Napa, CA · Member since 2018 · 112 posts · 77 votes

5y

Thank you all for the advice and the kind words! I read everyone's ideas and this has created a few of my own. I will figure this out plus I will knuckle down for the next 6 months and save so I can build up some reserves.

0 Reply

Joshua R.

Investor · Chicago, IL · Member since 2015 · 87 posts · 42 votes

5y

@Ronnie Galindo It may seem antiquated but I am a firm believer in leveraging a well placed written letter to find deals. You had mentioned you are married, is your wife on board with the idea of househacking? If she is, househacking is a great low money down strategy and you will also learn so much about managing your investments. Overtime is a great strategy to boost your cash available to invest! What is your investment strategy (buy and hold, BRRRR, Flipping, etc)? Different strategies lend themselves to different potential financing options. Let me know if I can be of any assistance!

1 Reply

Ronnie Galindo

OP

Realtor · Napa, CA · Member since 2018 · 112 posts · 77 votes

5y

@Joshua R. Currently I am house hacking my primary residence here in CA. Already have around 100k in equity! I am going to apply for a HELOC once I complete a few projects (In the middle of replacing the windows and re-landscaping the front).

My strategy is BRRRR for sure because I want to create a portfolio with several doors to ultimately allow me to retire early and spend time with the family. I think this discussion has definitely helped set my mind at ease knowing I just need to work hard and keep focus. It will all work out and not to be in a rush! I will buy my first investment (aside from my current residence) in 2021 for sure!

1 Reply

Joshua R.

Investor · Chicago, IL · Member since 2015 · 87 posts · 42 votes

5y

@Ronnie Galindo Sounds like you have a great strategy and you are spot on! Slow and steady wins the race!

0 Reply

Linda LabbePro Member

Investor · North Bay, Ontario · Member since 2015 · 709 posts · 262 votes

5y

it helps get unfrozen if you have a good understanding of the numbers working out what your target is is just like having a shopping list when you go to the grocery story.... if you know what you want its far easier to find it have a plan work the plan...... also if you are working next door or out of state you have to have a great team to back you up we Live in Canada invest in the state and are lucky to have the very best people working with us they are our extended famaily... more then willing to chat with anyone about what we have learnt on our journey . Best of the season to all

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Mark Plesha

Realtor · Highland, IN · Member since 2015 · 47 posts · 29 votes

5y

I didn't read through all of the responses so forgive me if this has been stated already, but I would suggest having at least $5k in reserves to start for repairs/vacancies/cap ex. I literally just spent $3k in the past month and a half chasing a plumbing(sewer) problem that I'm still not positive has been fixed completely. You can drastically reduce the amount of stress you will endure when you have enough reserves that you can just write a check and know that it is part of the business. This has shown to be incredibly important this year when all of a sudden tenants can simply decide not to pay and there is no recourse as a landlord.

You seem to be on a similar path I was on before I made my first purchase, just continue earning, saving, and learning until you feel confident you are ready to purchase something.

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Starting out and feeling frozen

Starting out and feeling frozen

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