Rental Property Begineer

11 Replies

Just starting out with multi-family homes and want to build a rental property portfolio. Military background and looking for any advice on where to start. Any advice?

Your post doesn't indicate what you've done so far, so I'll just throw out my basic beginner advice. Let me know if you have specific questions:

1. Start with BiggerPockets Ultimate Beginners Guide (free). It will familiarize you with the basic terminology and benefits. Then you can read a more in-depth book like The Book On Rental Property Investing by @Brandon Turneror The Unofficial Guide to Real Estate Investing by Spencer Strauss.

2. Get your finances in order. Get rid of debt, build a budget, and save. The idea that you can build wealth without putting any money into it is a recipe for disaster and the sales pitch of gurus trying to steal your money. A wise investor will not try to get rich quick with shortcuts. If you can't keep control your finances, you are highly unlikely to succeed in real estate investing. Check out my personal favorite, Set For Life by @Scott Trench , or The Total Money Makeover by Dave Ramsey.

3. As you read these books, watch the biggerpockets podcasts. This will help clarify and reinforce what you are reading. You can hear real-world examples of how others have built their investment portfolio and (hopefully) learn to avoid their mistakes.

4. Now you need to figure out how to find deals and pay for them. Again, the BiggerPockets store has some books for this or you can learn by watching podcasts, reading blogs, and interacting on the forum. There is a handy search bar in the upper right that makes it easy to find previous discussions, blogs, podcasts, and other resources. Biggerpockets also has a calculator you can use to analyze deals and I highly recommend you start this as soon as possible, even if you are not ready to buy. If you consistently analyze properties, it will be much easier to recognize a good deal when it shows up.

5. Jump in! Far too many get stuck in the "paralysis by analysis" stage, thinking they just don't know enough to get started. The truth is, you could read 100 books and still not know enough because certain things need to be learned through trial-and-error. You don't need to know everything to get started; you just need a foundation to build on and the rest will come through experience and then refining your education.

You can build a basic understanding of investing in 3-6 months. How long it takes to be financially ready is different for everyone. Once you're ready, create a goal (e.g. "I will buy at least one single-family home, duplex, triplex, or fourplex before the end of 2019") and then do it. Real estate investing is a pretty forgiving world and the average person can still make money even with some pretty big mistakes.

@Vince Armato Use the VA loan to buy a four-plex house hack!

You'll save a ton on your living expenses, and learn how to be a landlord, while building up more capital to invest elsewhere!

I agree with @David Pere . Explore the idea of using VA to buy a 2-4 unit property in order to maximize your VA benefit. You can acquire a multifamily as your first home with $0 money down.

Start with getting preapproved with a lender who has experience with VA buyers purchasing 2-4 unit properties. Having a lender on your side that fully understands the process is important as many lenders do not fully understand the process of lending for VA and multifamily. A good lender will help you set some financial parameters to begin your property search. Best of luck!

@Nathan G. Thank you for your detailed response. You’re right, I forgot to mention what I’ve done so far. I have yet to actually invest in real estate, but I have read/listened to several of those books/podcasts that you listed above. The concepts make perfect sense, but the number aspect is a little rocky for me. I will definitely look into those links you provided. Thanks again!

Originally posted by @Vince Armato :

@Lawrence Dy Good point about the lender! Didn’t know that. Do you recommend a PM or should you manage the property yourself? If so, is there a method you use to pick a quality PM?

I would recommend trying to manage the property yourself. It's a great opportunity to learn about property management and everything that comes with it. Since you'll be living on the property, you'll be able to keep a close eye on things and address issues immediately. There will be challenges, but I think the knowledge and experience you will gain will be very valuable.

If you decide managing the property isn't for you, there is still the option to hire one later. I've had clients that decided later on that managing the property wasn't for them and hired a PM to manage the other units. 

 

Originally posted by @Vince Armato :

@David Pere That’s what I’ve been told! I need to understand how to “run the numbers” to determine what property to invest in. I appreciate the reply!

 check out the BiggerPockets calculators, and I'm happy to jump on a call sometime if it will be helpful