What order to start RE investing?

Question

As a RE investor, should I have a business set up/lawyer/accountant before I even start looking at properties looking to get pre-approved for lending? Or do you guys all get pre-approved for lending first, find a house and then get everything in order when starting out?

Bill Gulley · Answer

What do you know about real estate? Learn real estate before trying to deal in real estate. You don't need to be an expert, just learn the basics.

Then visit a lender, see what you're qualified for. Don't waste your time trying to buy something you can't buy.

Then look to strategies, different ways of doing a deal. Knowing the basics keeps you out of trouble in trying to follow guru stuff, develop a good BS Meter.

Understanding real estate allows you to approach the big picture, identify opportunities and apply strategies that turn opportunities into profits. Don't be a one trick pony.

When you find a deal, then consider the tax angle, that can guide you in your approach of your strategy. Your accountant can guide you here.

Look to exit strategies if not not holding long term, even if you are you want a marketable property that is easily financed.

Contract time, see your attorney.

Now bring in your inspectors.

Back to the finance guy.

Meet the appraiser or check it out.

Go close, your lender will guide you.

Establish business entities for business reasons, not so much liability ploys, have insurance and make sure those you deal with have insurance.

You take on more risk driving your car than owning a single family rental. It's different if you jump into apartments and that's not a first time deal for most.

Stay current with your education.

Continue to march, another opportunity is always out there.

Good luck ! :)

Steven Hamilton II · Answer

As an accountant who has seen a lot of people not complete deals but open entities, my advice is do a deal first. Then get an entity unless you have a high net worth.  Get pre-approved before you do anything just to make sure you can financially move forward.

The first rule of making money is don't lose money.

Account Closed · Answer

@Joel Bowen

It is not required, but cleaner if you have an entity setup before you finalize that first purchase. This allows you take ownership of the property in the entities name. This could/should involve talking with an attorney and/or cpa about which entity type will work best to meet your goals.  In my opinion you could figure out the answer to that question right here, buy asking and reading.

Good luck.

Joel Bowen · Answer

Thanks everyone great responses!

Joe Villeneuve · Answer

What you just described is part of your Power Team.  There isn't an order of appearance necessarily, other than you need all of them in place before you start investing.

RE Agent, Financing, Legal, Rehab crew(s), buyer and seller lists, analysis tools, analysis of market(s) you will be investing in, potential partners (with cash and/or credit), and the two most important things of all....

1 - Education on what you are going to be doing...like knowledge of a number of different types of entrance and exit strategies for instance

2 - ...an actual Plan for investing.  Not a statement like, "My Plan is to flip # of properties, and buy and hole # of Properties this year".  That's not a play...or a goal.  That's nothing but a statement of...I'm not sure what.  It's kind of like getting in a car, pointing it in a general direction, for no particular reason, closing your eyes and hitting the accelerator.  That statement, just like that driving method, will only get you into trouble.

Elizabeth Colegrove · Answer

We personally just got started and it was the best thing we ever did. We bought a house fixed it up and than rented it out when we transferred because of the military. We made TONS of mistakes but it prevented us from getting analysis paralysis.

Jerry W. · Answer

Start studying your market now, go get pre approval if you can for a loan, then start looking at houses and make an offer.  Get inspections and run the numbers carefully.  Get advice from someone who knows your area and knows what they are doing.  Get an attorney to help with rental agreements or contracts for construction workers.  Get an accountant to help set up your books and do taxes.  You can start learning your market now.  You don't need accountants and lawyers before you buy.

What order to start RE investing?

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