1. I recall a post you made a month ago talking about real estate just keeping up with inflation. If real estate merely paces inflation, how were able to make millions? (Obviously cash flow and debt pay down are other ways to make money in real estate, but that takes time.)
https://www.biggerpockets.com/...
2. In the same post you seemed to advocate the stock market over real estate, claiming much more opportunity for upside. How much of your wealth came from real estate versus the stock market? (I am personally about 70% real estate and 30% stock market.) Maybe you can explain your thoughts on comparing the two?
3. What market did you start investing in real estate and how did you get funding to start?
4. How has your strategy changed over time and going forward? Are you changing markets or type of property (SFH vs MFH, etc.)?
Hi Jack! I have a FT 9-5 and looking to get started in REI. Looking to purchase my first investment property. Not exactly certain what my long term real estate strategy will end up being, but I am thinking of starting out with purchasing a flip at a Judicial Tax Sale since typically properties are sold free and clear there (pending a title search of course). I could also go the Zillow route and find a property there but hard to find good flips in this competitive market. I am just very motivated to get started and want to make a move. What would your recommendation be for a beginner to get started? Thanks so much in advance!
Hi Jack! I have a FT 9-5 and looking to get started in REI. Looking to purchase my first investment property. Not exactly certain what my long term real estate strategy will end up being, but I am thinking of starting out with purchasing a flip at a Judicial Tax Sale since typically properties are sold free and clear there (pending a title search of course). I could also go the Zillow route and find a property there but hard to find good flips in this competitive market. I am just very motivated to get started and want to make a move. What would your recommendation be for a beginner to get started? Thanks so much in advance!
Unless you have previous construction experience, I would not recommend starting out in flips. Most people lose money on their first flip, they underestimate the costs of rehab. Also doing flips is not investing, it's a business, no different than a job. It's not passive. Once you have experience with rentals, you build a network of contractors from roofing to plumbing and in between. That's when you can do flips. But even then I still don't do them as it's not investing...
Do you own your own home? If not focus on buying your own home first. You're still gaining equity and can turn it into a rental later and use the money to buy more rentals.
Hi Jack,
I am 17 years old out of NJ looking to get into real estate as I get older, pretty much as soon as I can. What tips can you give me on starting out and what I should do at my age to get ahead?
Thanks,
Paul Fedora
Hi Jack! I have a FT 9-5 and looking to get started in REI. Looking to purchase my first investment property. Not exactly certain what my long term real estate strategy will end up being, but I am thinking of starting out with purchasing a flip at a Judicial Tax Sale since typically properties are sold free and clear there (pending a title search of course). I could also go the Zillow route and find a property there but hard to find good flips in this competitive market. I am just very motivated to get started and want to make a move. What would your recommendation be for a beginner to get started? Thanks so much in advance!
Unless you have previous construction experience, I would not recommend starting out in flips. Most people lose money on their first flip, they underestimate the costs of rehab. Also doing flips is not investing, it's a business, no different than a job. It's not passive. Once you have experience with rentals, you build a network of contractors from roofing to plumbing and in between. That's when you can do flips. But even then I still don't do them as it's not investing...
Do you own your own home? If not focus on buying your own home first. You're still gaining equity and can turn it into a rental later and use the money to buy more rentals.
Hi @Jack B, this is an interesting point you make RE purchasing a home first before investing in a rental property. What is your rationale around this? I am currently in a similar position to Debra where I am looking to buy a rental. I currently rent, and my rationale to buying a rental first is to generate net cash flow, rather than buying my own property where my equity is almost locked in to paying off a mortgage that I can only generate net cash flow if I house hack (rent out other rooms if more than a 1 bed). I'd be interested to hear your thoughts and what make sense to you.
Hello Jack. If you had to spend $2M in the next few months, preferably retail assets, what tenants or asset types would you pursue or avoid?
Hi Jack! I have a FT 9-5 and looking to get started in REI. Looking to purchase my first investment property. Not exactly certain what my long term real estate strategy will end up being, but I am thinking of starting out with purchasing a flip at a Judicial Tax Sale since typically properties are sold free and clear there (pending a title search of course). I could also go the Zillow route and find a property there but hard to find good flips in this competitive market. I am just very motivated to get started and want to make a move. What would your recommendation be for a beginner to get started? Thanks so much in advance!
Unless you have previous construction experience, I would not recommend starting out in flips. Most people lose money on their first flip, they underestimate the costs of rehab. Also doing flips is not investing, it's a business, no different than a job. It's not passive. Once you have experience with rentals, you build a network of contractors from roofing to plumbing and in between. That's when you can do flips. But even then I still don't do them as it's not investing...
Do you own your own home? If not focus on buying your own home first. You're still gaining equity and can turn it into a rental later and use the money to buy more rentals.
Hi @Jack B, this is an interesting point you make RE purchasing a home first before investing in a rental property. What is your rationale around this? I am currently in a similar position to Debra where I am looking to buy a rental. I currently rent, and my rationale to buying a rental first is to generate net cash flow, rather than buying my own property where my equity is almost locked in to paying off a mortgage that I can only generate net cash flow if I house hack (rent out other rooms if more than a 1 bed). I'd be interested to hear your thoughts and what make sense to you.
The barrier to entry for rentals is higher. You will usually need 25% down for conventional financing. You can get into a primary residence with FHA for 3.5% down. Let the property appreciate a year or two, cash out refinance (never take a Home Equity Line of Credit) and buy a rental with the money from the primary residence you cashed out. Repeat. That will make you far more money than cash flow. I made 500K in the last 9 months in appreciation alone on 6 properties. The cash flow was barely in the low ten figures. Which is great for tax reasons.
Better yet, since you're only buying 3.5% down, get a bigger property, like a duplex or four-plex. The rents will let you live there for free, thus increasing your ability to save far above what little cash flow you'd get from a rental in this market. Another reason is that you shouldn't be investing if you don't have your basics covered. It's like gambling your paid off house away on a penny stock and losing it all. A paid off house was a huge leg up, blowing it on speculative investments is not the way to go. Get the basics of shelter down first before you invest.
Hello Jack. If you had to spend $2M in the next few months, preferably retail assets, what tenants or asset types would you pursue or avoid?
If I HAD to, I would avoid non residential real estate, bonds. I would also avoid gold, as it's not a great investment, barely above inflation in most cases over long periods. Debt is a better hedge against inflation. Debt is the new money. The asset type I would pursue would be a heavy cash position so I can buy deals at a discount in the event of a crash. I would do more of what made me my money, don't go out of your area of success, unless it's money you can afford to lose.
Hi Jack,
I am 17 years old out of NJ looking to get into real estate as I get older, pretty much as soon as I can. What tips can you give me on starting out and what I should do at my age to get ahead?
Thanks,
Paul Fedora
Start building credit at 18. Get your real estate license. Save up to buy a house. Get a check when you do buy the house because you're a realtor. You also learned on other peoples dime working as one. Don't go crazy, keep it affordable to start. Do that then come back for more. This should take you a couple years.
@Jack B.
Why do you say never get a HELOC and only go for a Cash out Refi? Curious what the downside of a HELOC is
Hello Jack,
I have a few questions, first being how do I obtain financing for multi-family establishments at a young age (currently 18). Also what type of of loan should I be looking to get? Thanks!
Hello Jack,
I have a few questions, first being how do I obtain financing for multi-family establishments at a young age (currently 18). Also what type of of loan should I be looking to get? Thanks!
Talk to small banks and lenders in your area. See what their criteria is. I think you will have a hard time at 18 buying multi family out of the gate with little credit, income or down payment but it CAN be done if you're persistent and ask around a lot. Personally I would only go with reputable conventional financing. Buy a four plex out of the gate after you build your credit and have some income and down payment. If you find the barrier to entry to that too high, try a condo to start to build equity.
@Jack B.
Why do you say never get a HELOC and only go for a Cash out Refi? Curious what the downside of a HELOC is
It's more risky. They can more easily call the loan. The rate can be variable. It's typically higher than a mortgage rate is, by a significant margin. There is no demand feature on conventional financing that is available, unless you're in default. The bank can call a heloc much more easily. Don't be Dave Ramsey. They called his loans back when they had demand notes. Lost it all, though he did come back strong.
Hi Jack,
I am trying to get back into real estate investing. I bought my first property, a duplex, back in 2017 in CT and I still hold it. I recently moved to Los Angeles and currently renting here. I have saved up around $100k and I am interested in investing in multi-family real estate in LA ,but the housing price is very high and out of budget as you can’t find a decent property for less than $1M. I am looking for advise on how I can afford to buy multi-family property in LA. Any recommendations how I can kick real investing again.
Thanks
Mo
@Jack B.
Hello Jack and thank you for your time and help. I saved $160k and we are unsure to wait a little until the market corrects itself or
1. Buy a short term rental in Destin FL to do Airbnb
(Which should cashflow about $1,000 self managed)
Or
2. Buy a 3 unit multifamily in TN or Texas and start building a portfolio of long term tenants.
I live in MA and would rather invest in more landlord friendly states.
Thank you
@Jack B. Indianapolis, a few years of experience, and I own a few properties. Aiming for the next rental property but I'm unmotivated to find a deal because prices are insane. All my properties were off market and really distressed, but similar properties that sold for $75K (distressed/original) are selling for twice that now in the same condition.
How do I get out of this rut and market for properties? What would you do with $100K liquid?
Hi Jack -- thank you for your generosity and wisdom.
I've been working in SFH flips and land wholesaling for a number of years, but have never taken the plunge into rentals. Ideally, I'd like to start building a multi-city portfolio.
If you have the right team set up so that day-to-day is taken care of through property managers and a good communication setup, how much time and headache can I expect from owning rentals in multiple cities?
@Jack B.
Define multimillionaire please. Total portfolio appraisal? Total equity? Total equity prior to appreciation?
@Jack B. I am 18 and want to stsrt grtting good at realestate what can I do to beocme sussessful and see change
@Jack B.
At what level of cashflow did you hire a CPA?
@Jack B. In the same boat as you, so just saying congrats and hello! ;)
@Jack B. Indianapolis, a few years of experience, and I own a few properties. Aiming for the next rental property but I'm unmotivated to find a deal because prices are insane. All my properties were off market and really distressed, but similar properties that sold for $75K (distressed/original) are selling for twice that now in the same condition.
How do I get out of this rut and market for properties? What would you do with $100K liquid?
The fact that you are unwilling to buy properties due to what you call insane prices and them having doubled in value is insane. Had you bought despite what you call insane prices you would have doubled your money. 150K is not an insane price, you would still pay half a mil where I'm at for a distressed property. To see a property go from 75K to 150K in how many years? That's a good play. Sitting on the sidelines doesn't make you money, it just makes the gains you could have had more apparent.
@Jack B.
Hello Jack and thank you for your time and help. I saved $160k and we are unsure to wait a little until the market corrects itself or
1. Buy a short term rental in Destin FL to do Airbnb
(Which should cashflow about $1,000 self managed)
Or
2. Buy a 3 unit multifamily in TN or Texas and start building a portfolio of long term tenants.
I live in MA and would rather invest in more landlord friendly states.
Thank you
You don't have enough data to really make a decision in your post, but I'd go with passive rentals over ABNB personally. Long term tenants and multi family don't go together. Turnover is higher than single family. You need more research.
Hi Jack -- thank you for your generosity and wisdom.
I've been working in SFH flips and land wholesaling for a number of years, but have never taken the plunge into rentals. Ideally, I'd like to start building a multi-city portfolio.
If you have the right team set up so that day-to-day is taken care of through property managers and a good communication setup, how much time and headache can I expect from owning rentals in multiple cities?
A lot of headache. What is the purpose of buying them in all different cities? It makes no sense. You now have to manage 10 different property managers in 10 different cities, instead of 1 PM for 1 city with 10 rentals.
Hi Jack,
I am trying to get back into real estate investing. I bought my first property, a duplex, back in 2017 in CT and I still hold it. I recently moved to Los Angeles and currently renting here. I have saved up around $100k and I am interested in investing in multi-family real estate in LA ,but the housing price is very high and out of budget as you can’t find a decent property for less than $1M. I am looking for advise on how I can afford to buy multi-family property in LA. Any recommendations how I can kick real investing again.
Thanks
Mo
What you want and what you can afford are different things. It's like asking how to buy a Lamborghini with $100 down payment. You can't and shouldn't because you can't afford it. You need to have more reasonable expectations and go smaller. You can try to find a place to take over payments, owner financing, etc. But realistically if you can't put 25% down on a deal you're over leveraged and out of your depth, taking on too much risk. Circa 2008 crash.
@Jack B. i am 5 units in and I am in the process of transitioning to buying bigger multi-family for long term cash-flow. if you know anyone, especially with the skillet to raise capital or who have capital who might interesting in partnering up. let me know!