Which path for First investment?

Question

This may be a long post so I'll leave a TL;DR at the bottom.

About me: I'm a 6 year Navy vet separating in April. I don't have a job lined up and currently the goal is to go to college and earn my Texas real estate license. I don't plan on selling houses as my primary source of income. I intend to use those resources to build a strong investment team and build a rental property portfolio. I hope that I can ALSO sell properties to my investment team and also to other investors. My endgame goal is to teach others, young and old, to invest and never struggle for money again. 
I am stuck between a few options. I've read several books, listened to some podcasts and read some forum posts. I've come to decide that I am interested in either commercial multi-family, or BRRRR; or both. I think a good idea for me would be to invest around military bases. I understand the way service members pay works, and I understand what happens when they choose to skip rent.

Path 1(cheaper): go back to college on my GI bill and purchase my first single family home with VA loan. Do some day trading and build an online business and presence to pay anything extra. Do not pick up rental income yet. Possibly find a job in a brokerage pre-license as an assistant and begin to build my network. Once I'm licensed and depending on the success of my business I can purchase my first properties.

Path 2(employee mindset): get a job, likely in the upper 5 digit range and look to purchase a 4 unit property with my VA loan. I have to live in 1 unit for a minimum of 1 year and I'll be picking up rental income fairly quickly. I'll have a larger nest egg. But I'll be delaying my licensing and schooling. I'm also worried that I will grow comfortable in the employee mindset and get myself stuck in that life style.

Path 3(furthest out of comfort zone): purchase my own home with VA loan, as in path 1. But add syndicating a larger multiunit property. I have no experience syndicating something like this and very limited knowledge of the way this works. I also don't have many contacts in my network that would be financially able to involve themselves in such a deal. I could attempt to gather enough for a 10-20, or more, unit property. This would allow me to go to college and get ready for real estate licensing. And I'd already have my first team built.

TL;DR: Should I buy a single family home and put off buying my first rental, get a job and buy a quad, or do path one + syndicate a larger deal with no syndication experience?

Ryan Sarka · Answer

Hey @Edward Webb congrats on your time in the Navy, your decision to get into RE and thank you for your service! My opinion is this: You will always need a place to live and if you can purchase a small multi with your VA loan and house hack, pay down the mortgage and gain cash flow that will put you in a great position over the next couple years. (I still wish I started house hacking but for a couple reasons did not, oh well!)

During that time I would also recommend continuing to learn and following many different syndicators, this is how I started. Books, podcasts, get on emailing lists, etc, you want to understand everything you can about syndication. I even put some money into a syndication. I would recommend that if its an option for you, of course don't do this until after following a syndicator for a while, learning how they conduct business and agreeing with their overall investing mentality.

Remember, if you have some capital you can also JV to learn more about larger multis, how they run, how best to work with your manager, etc. It's similar to a syndication but with a much smaller team and you all must be active (there are other differences as well but everyone being active is important) Through this you will learn a lot!  This is another thing I did and I am happy that I went this route.

RE in general is a very powerful tool, getting into it in any capacity should be beneficial to you and your family. Right now I am concentrating on the medium size apt complexes as that's what works for me. @Matt Groth said to narrow your focus and I agree, take the time to decide your path and commit to it!

Chris Stroup · Answer

Real estate school is not long.  Mine was 5 weeks and a test.  You can probably find a school that offers it on nights and weekends.  It also wasn't very expensive, around $1,000. You can have a job and get your real estate license.

It is going to be very hard to get a VA loan right when you get out unless you have a W2 job.  For me to get another VA loan, I have to show 2 years of tax returns for my businesses, means I have to wait one more year no matter how much money I am making.

Real estate is fun and will change the direction of your life.  Pick a strategy and get very good at it.  Meet people that are doing what you pick and offer to help them.  I have a couple of people that come out and help me with projects so they can learn and be apart of what we are doing.

It's probably going to be hard to get people to give you money with no experience.  What we learned was, get some experience and build a reputation and then finding money becomes the easy part.

Matt Groth · Answer

Narrow the focus. You can't be great at all of it at the same time. Selling houses on the side, day trading, rentals, etc. Pick 1, become proficient, then add later if you decide.

Aaron W. · Answer

@Edward Webb Thank you for your service. It is exciting to hear your interest in investing.

Before making the decision on what to do next, what is your why in investing in real estate? What goals do you need to accomplish your why? Do you want to invest for cash flow or appreciation? Do you need cash flow now? What is your appetite for rehab? What realistic returns are you looking for with your investments?

Which one of the options helps answer the questions above the best?

Good luck!

Kevin Hunter · Answer

@Edward Webb, congrats on the success in the Navy and on the decision to transition.  That is a tough one, and one I still haven't made.  You have come to the right place.  There is so much to learn here and so many great people, including a good sized military presence, to learn from.  Get involved in the forums and listen to the podcasts.  They are gold.  Good luck! Beat Army!

Bradley Scruggs · Answer

Firat step is reaching out when you may not know something so good job man! What you haven't thought about is doing them all.

I am currently active duty Coast Guard, I am classified as a full time student, and my wife and I are currently in the process of closing on our second multi family. So it can be done. I myself do not feel that I have the network to sindicate a deal however you can always learn and grow in real estate. I anticipate on sindication my first deal this year, with who, with what money, how. I don't have any answers to those questions but I will! Good luck in your endeavors, have any questions let me know

Edward Webb · Answer

@AJ H. Thank you for your support and response! For investing into real estate, I find that it is one of the best ways to ensure that I and my future family never end up in the same situation I was growing up. I was one of those students in high school that would get free school lunch then hope I was eating again later that night. I also want to eventually teach and train others to never experience that. Speak at high schools and colleges or community centers. Sit down and talk with students and adults alike about what they can do to afford their next meal and afford their rent.

I'm looking for Cash Flow more than appreciation and I would prefer cash flow in the short term IF I were to go with one of the larger two options. Especially if I'm going with purchasing a quadraplex. If I purchase a larger property through syndication I am more interested in paying my investors than paying myself. As long as the numbers indicate it WILL be positive cash flow, and it isn't starting as negative cash flow.

I am interested in rehab but in the beginning I'm not sure I can afford larger more intensive rehabs without taking out loans. I believe a realistic cashflow would be $150-250 per unit.

@Matt Groth I appreciate the insight and I agree. Selling houses is deep on the back burner until I earn my license and really understand the process of marketing, selling and purchasing from an agent's side of the table. The day trading is more of a side income while I'm in college, something I can do in a short amount of time a few days of the week to pay for a night out. I want to build my rental portfolio but I'm not sure how I want to begin. And I understand what you mean, I should focus on a single style of real estate investing as well, single-family, residential multi-unit, or commercial multi-unit.

I appreciate the insight and will work onput my blinders back on and look more into narrowing my field of view on small goals though!

Kevin Hunter · Answer

@Edward Webb , congrats on the success in the Navy and on the decision to transition.  That is a tough one, and one I still haven't made.  You have come to the right place.  There is so much to learn here and so many great people, including a good sized military presence, to learn from.  Get involved in the forums and listen to the podcasts.  They are gold.

What you decide doesn't matter as much as the decision to get started.  Just get moving....

Good luck! Beat Army!

Which path for First investment?

Most Popular Reply