My advice to those that are NEW to RE Investing

91 Replies

I am not the absolute best real estate investor, nor am I a tire kicker thinking about getting into this...I own a little over 50 rental doors, I have owned a dozen small businesses and completed over 10 flips profiting up to $72k on my best flip... so in the end, take my advice for what you feel it is worth

Lessons learned:

1. Bigger Pockets is AWESOME and frankly all you need to be successful... listen to the podcasts daily, believe in what they are telling you, use their networks as you see fit... they really know what they are doing and you will find help and information around every corner

2. Look at the downside FIRST:  when looking at a potential deal, look at the downside (what if the entire place is vacant or no one pays rent) and then decide if you can LIVE with that downside.  Any property I buy I say to myself "if no one pays any rent can i cover things for that one month"  I may not WANT to cover things but in a worst case can I do that... or more realitic: "If only half the tenants pay is my mortgage covered"...if the answer to this is yes then you likely have a safe deal

3. Set VERY clear goals:  I will own one rental property by May 31, 2021 is far more powerful than I want to own a property this year!  You can listen to 100 podcasts about how to set goals and in the end the advice is always very similar: Create a clear goal, then work back and decide on the DAILY actions and WEEKLY performance to reach that goal.  Example: I want to lose 30 pounds in 90 days...that means I need to lose 1 pound every three days.. to do that I need to work out 45 minutes per day, track my calories daily and consume no more than 2000 calories per day, ever 3 days I should be 1 pound down

4. This one is MOST important:  TAKE ACTION!  Too many people sit around and debate, consider, analyze, talk, network, and so forth... all can be helpful but in the end YOU HAVE TO TAKE ACTION!  Doing the wrong thing is better than doing NOTHING.  There are lessons learned in making mistakes and there are things you gain by simply taking action and proving to yourself that you can do anything

5. BUY POTENTIAL but DONT PAY FOR IT:  You will see a lot of properties where they say "below market rents"  the property has a value right now for what it is generating NOT what it can maybe down the road generate... Pay based on what rents are TODAY, so you want to BUY POTENTIAL not pay for it, if the potential was EASY to get the current owner would have already achieved that potential (who doesnt want to make more money)

6. Treat your TEAM well... by that I mean when you find a great contractor treat them well, when you find a great property manager treat them well, when you have a great tenant treat them well.. you can still make money, but making a couple of dollars less because you treated someone well (bought them a gift, paid them a little more than charged, got them a new fridge or whatever) is well worth the long term investment in that relationship

7. The Bigger Pockets (or David Green) concept of every deal has three legs just bring two and you can find the third is 1,000% TRUE:  In every deal you need the following:  The Deal, The Money and The Hustle... if you can find a solid deal and are willing to do the work (bring the hustle) you can easily find the MONEY!  If you have The MONEY and you find the DEAL it is easy to find the person willing to put the sweat in to make you more money.

In my opinion these companies are EXTREMELY helpful to success in Real Estate: (I own none of the below and make NOTHING if you use them)

1. Bigger Pockets and literally ANYTHING they do

2. LawDepot.com: I use it almost daily and it saves me a fortune compared to a lawyer for every little thing

3. DealMachine: this app can tell you exactly who owns each and every property. I have closed deals and learned more from this app than any other one I have worked with, its not cheap but it is very helpful

4. Rentometer: this site is freaking great and well worth the money, it literally tells you the rental prices in every area, it shows what things have ACTUALLY rented for


And my parting words for those that took to them time read all of this:

A long time back I realized that I will NEVER be the richest, smartest, fittest, or best looking person in any room (far from it in all circumstances)...literally I would not be at the top of ONE of these categories, let alone two of them.  BUT what I could be, the one thing that was in my control, no matter the room or the group of people is I could be THE HARDEST WORKING PERSON IN THAT ROOM!  So each of us, in any given place and time CAN BE THE HARDEST WORKING PERSON IN ANY GROUP...it is the ONE thing we control

This post is simply my way of saying THANK YOU to The Bigger Pockets Family for helping any hard working American create wealth and happiness through Real Estate

Thanks for sharing, @Matt Lyons

I agree with everything you've said. I'm not the smartest guy. I'm good at numbers, but I don't enjoy looking at them and prefer to "wing it" or usually operate with "knapkin analysis".

It takes some hustle and sacrifice but I'm not doing anything that others couldn't do. The opportunities exist for those willing to put in the effort. BP provides all the tools necessary.

Hello Matt! Thanks for sharing this! I saved your post for future reference. One question that I have for you that others may want to know: when do you know that it's time to move onto a different strategy and what was your learning process for that? (ex: going from rentals to flips, did you have someone help you out at first, how long did you learn before going into taking action.)

@Stephen Brown good question. First, I am unapologetically weird so my process may not be everyone process

For me it went like this: I was 45 years old and hated the stock market or 529 plans to pay for kids college so I decided “buy cash flowing real estate to pay monthly for college instead of other vehicles”. So I began to look for cash flowing and needed to decide what was enough let deal.

I decided that I wanted my down payment back in free cash flow in 36 months or less, that just seemed right. It is tough to find these places but when you do they are well worth looking at.

After I got my cash flow to where I needed a deal presented itself that I realized did not fit my 36 month cash on cash return plan BUT it was an awesome flip... so I just did that without knowing a thing about it.. jumped in with hope, swear and expectations. Deal took 6 months during COVID and netted almost $70k!

Then I decided that what I needed was some diversity... my cash flowing deals were great and I had reached my goals but these places I bought would never appreciate much, so I bought a couple of Airbnb places (one in the Ozarks and one in Bonita Springs FL)

The one in Bonita closed I December of 2020 and I opted to keep it as Airbnb but put on the market as well, it is currently under contract for almost $100k more than I bought it for

So for me the trip just took steps based on my feeling that I needed to diversify my holdings from all cash flow, to a flip when that math makes more sense and finally some Airbnb for appreciation in hot markets.

My initial goal was simple: cash flow enough for college for kids, when achieved it spread to diversify a little with flips and a little with appreciation plays.

Hope that helps... in short, I pivoted when it made sense after achieved goal... if I would have failed in my goal I would have pivoted constantly and often to find the right lane to become wealthy

Awesome post I like it! I like posts where people are more transparent and the reality of what it takes to be successful in real estate.

@Matt Lyons Incredible post! Anyone new to REI or even seasoned investors should read your post and follow your guidance.

I'm in a similar position as you. I own 55 doors, but by no means consider myself an expert. I'm actually far from it. 

The one thing I would add to your second list is some type of accounting software, which I'm currently looking for. I'm still "spreadsheeting" all of my rentals, and I'm finding I spend more time here than necessary. The quicker you transition to a legitimate accounting tracker/system the more time you'll have to focus on revenue generating activities.  

@Jon Kelly too funny... I am also a spreadsheet guy and have made a promise to myself and my accountant to move to some sort of RE software THIS YEAR!

If you find one you like please let me know which one... I need to find one and actually created a second post today asking for opinions

@Matt Lyons Ha, I made the same promise! I started looking at Stessa a couple months ago, but haven't put enough time into learning it to make the switch. Seems to cover about anything you'd want. I don't want to hijack this thread to make it about accounting software, so I'll look for your other post and see what others have said. 

“Nothing in this world can take the place of persistence. Talent will not; nothing is more common than unsuccessful men with talent. Genius will not; unrewarded genius is almost a proverb. Education will not; the world is full of educated derelicts. Persistence and determination alone are omnipotent. The slogan 'Press On!' has solved and always will solve the problems of the human race.”

-- Calvin Coolidge

@Matt Lyons

Awesome post and thanks for taking the time to write this!!

I’m new to the scene and have lots to learn as I’m looking to convert a some recent cash I came into to an Opportunity zone RE play. I Just signed up for BiggerPockets and it seems people like you really make this a great community to be a part of, especially for someone just learning the ropes . Cheers!

Thank you Matt, your post was very insightful. As a 19 year old, I am a beginner and I'm unsure of where to start. I want to start investing in real estate by the end of 2022. My school is distributing emergency COVID-19 funds and I'm expecting a deposit of $1,000 soon. Some of the money will be used to earn my RE license, but how can I take action today? I have a goal but no idea how to achieve it.

@Matt Lyons This is a great post.

I am currently making up for lost time regarding financial planning and see REI as my way to FI and security in retirement. I'm still a beginner but will soon have 8 doors and if everything goes well with an estimate I'm waiting on for another property I'll have it under contract soon too.

I’ve got some renovations coming up but I’m excited to get going and fix the issues and turn my newest property into a top notch rental.

My parents and my partner aren’t on the same page as I am regarding the extra hours I’m putting in right now but I want to have the nicest properties in my area and a waiting list of tenants. This is why I work extra hours at my W-2 job and my side hustles and only have the best people working for me.

Thank you for the uplifting post and for reinforcing my reasoning for doing what I’m doing.

Originally posted by @Jim K. :

“Nothing in this world can take the place of persistence. Talent will not; nothing is more common than unsuccessful men with talent. Genius will not; unrewarded genius is almost a proverb. Education will not; the world is full of educated derelicts. Persistence and determination alone are omnipotent. The slogan 'Press On!' has solved and always will solve the problems of the human race.”

-- Calvin Coolidge

I never knew Coolidge was that smart. Thanks for that quote Jim.  Never heard that one before and it is spot on. 

Originally posted by @Bradley Post :

Thank you Matt, your post was very insightful. As a 19 year old, I am a beginner and I'm unsure of where to start. I want to start investing in real estate by the end of 2022. My school is distributing emergency COVID-19 funds and I'm expecting a deposit of $1,000 soon. Some of the money will be used to earn my RE license, but how can I take action today? I have a goal but no idea how to achieve it.

Bradley, work on your credit score and saving money right now. If you do this you will be uniquely qualified to take advantage of the next downturn if it does happen.  If it doesn't happen you will still be farther ahead. 

I was one of those that paid cash for everything. I had one bank that I went to and they knew I would pay it off. But when I wanted to go into REI they balked. They didn't think I had it in me. I had a score of around 650 (I didn't understand why since I had never been late). Then I researched how to make my score better and did. It took 2 years to gain 100 points. When I achieved that, I refi'd my primary and immediately dropped my note (including escrow) by 230 dollars a month. This is with taking 5k "out" of my house. The minimum they wanted. So 5k cash AND 230 a month was a big boon for me. It opened my eyes a lot. 

I have never looked back since. Now if the tshtf, I have enough to pay my bills if I get laid off plus pay my notes. It is getting rich slow so dont rush it but you need to get started. Baby steps first and then you will be running in no time. 

Mahalo from Hawaii Matt I`m a newbie just closed on a multi unit April 1st, doing renovations should be done in a couple of weeks 5 rental units on single property looking to find my wealth building team got a great handyman searching for Tax and legal professionals to complete team really appreciate everything in your post and will look into your list Thanks again

Hi Matt,

This post has been really inspiring to me. I am an aspiring newbie investor that wants it so bad I can taste it. I know I am not going to stop until I reach that goal. thank you for your honesty and for sharing advice through your own personal experience. It really puts things in perspective. Cheers!