Best place to start?

26 Replies

Hey everyone!

My name is Justin and I would like to first of all just say thank you for any and all advice I get from this post.

I am a former police officer and am using my retirement from that to invest. After taxes I'll have about $22,000 and was wondering where to start. I am brand new to REI and can't wait to get started but I just don't know where to start. I love the idea of BRRRR but have heard so many different things about that I'm not sure if it's right for me yet. I've also heard a lot about wholesaling but I'm not sure about that one either.

My goals are to have multiple rentals and ultimately end up on the commercial side.

So to sum it all up, where would you start if you had 20 grand?

Again thank you for your help!!

If you don't have a primary residence and don't hate having roommates, buy a place and bring in a few roommates. Huge potential income stream, and if you buy it right, you'll have a property that'll cash flow once you move on to the next one.

Is that $20k in cash? Or is it still in some kind of retirement account?

@Justin Walsh that answers that, then! 

First, I'd recommend you make a habit of going to local real estate networking events. As many as you can, maybe start with the goal of 2 a month. 

Your purpose will be to meet people who have been successful in real estate, learn about what they did and where they came from.

Don't buy any coaching programs or products until you're totally committed to a particular path. 

I give that recommendation because I don't think anyone can pick a strategy for you better than you can. Further, you're going to be more committed to a strategy you pick for yourself. But you can only pick a strategy once you know what's out there!

You're close enough to Fort Worth that there should be quite a few options near you. 

@Justin Walsh

Hi Justin,

You might want to think about letting the cash stack up for 3 years until you have $66k (in the bank), and spend that time learning what you want to do (and how to do it) and learning what you do not want to do.

That way you are more in control of your situation than asking others what to do with the money, and you will have a stronger cash foundation to build your real estate business on (cash is King).

(The first horse out of the gate doesn't always win the race)

Good Luck!

Start by building relationships with seasoned investors in your area and always be very, very cautious. That $20K can disappear in a heartbeat with one bad investment. First determine what your goal is...right now you're not sure what you want or how to get their. Once you know what your goal is, spend the money wisely finding an investment grade property since this is where it all starts. Finding a "deal" is seldom easy and it will take both time and money. I spend a lot on marketing an typically get back money the day I close on my investments because I've built the right relationships and built trust. Remember, with the right relationships, you can learn and profit much, much faster. Don't go it alone!

@Guy Gimenez

It seems to me that building relationships is definitely super important so I have attended 2 meetups which I found on this site. However, with the exception of 1 person (the host of the group) not much has come from that other then spam mail about so called "deals" and programs I need to pay for hitting my inbox. 

Could you give my any advice on where I can find the "right" like minded, and experienced people? I wouldn't mind partnering with someone who is willing to teach me, but I guess my skeptical cop brain makes me weary to trust anyone. I'm trying to think out side of the box here but this is definitely a hurdle of mine for sure. 

Thank you for your advice, I will continue to work on this every day. 

@Taylor L.

Thanks for the reply! 

I have not been able to find any meetups or networking groups in the Fort Worth side of the the DFW area. They are mostly in Dallas. I don't really mind the drive, but would you recommend trying to start one locally myself? Or would my lack of knowledge on the subject matter deter people such as yourself? 

@Justin Walsh $22,000 is enough to start with a low cost single family buy and hold rental if you want to start relatively low risk to get experience. You can use conventional financing with 15% or 20% down for a rental property that you will not be living in.

Look for some towns nearby that have a large rental market with relatively low cost homes. (~80,000) and use rentometer.com to see what they will rent out for. Then calculate your cash flow after taxes, insurance, vacancy, repair, optional property management, and maybe HOA.

After you do this analysis on a lot of SFH properties you can start to see what would be a good deal!

I often say, there are more actors in this industry than there are in Hollywood. Keep your BS meter on high and due diligence is a necessity. I know a guy who did two wholesale deals, made almost no money on either, and wrote an e-book about how to become a successful "wholesaler". It's just the world we live in now unfortunately. 

You'll have to network like a mad man from now on. The industry as a whole is large but the true active investor community (those doing 12 or more deals a year) is much smaller than you may think. Keep attending every REI MeetUp and group you can attend. Let people know who you are. It will take a lot of breakfast and lunch meetings with potential partners before you can narrow the fakers and takers from the seasoned investor. Don't be afraid to ask them point blank how many deals they do a month? What types of deals they do? What areas they buy/sell properties in. The research the tax records and deed records to see if their name or company name is listed on a bunch of properties, or if their name comes up as a trustee on a bunch of properties. If not, ask for addresses of the properties they've purchased or sold (not just assigned to others) so you can drive by the houses and see what types of neighborhoods they're located in. You will simply have to trudge through a lot of muck (attend a lot of REI meetings) before you find one or two seasoned investors who are willing to help you learn while you earn. When you find a solid investor/partner, make sure they're making the majority of the money on any deals you do since they're bringing the most value. This is simply the cost of your education in this business, and it gives the investor a greater reason to continue the relationship.

@Justin Walsh , yes I would 110% recommend that you start a meetup yourself!!! I started my own over two years ago. It has grown (through lots of work) and made me money as well. You have to stick with it to make it work, but it's well worth the effort. Plus you can do it however you want!

There's a massive pool of people near you. If there truly aren't any Fort Worth based Real estate events, that's a gold mine of investors, partners, and people you can meet.

Commit!!! One person came to my second meetup. I was unhappy but I didn't give up. Now I get anywhere from 20-50 attendees. Keep doing it.

@Maggie Musquez

Thanks so much for the advice! Like I mentioned I really like the BRRRR idea and I think ultimately I want to have enough rentals to boost me to the commercial realm. So I've really been thinking about starting out with rentals. What is your opinion on maybe flipping a few to start out? Try and build up some "quicker" capital?

@Justin Walsh I am also looking into BRRRR as well! Building up rentals and getting cash out through refinancing seems super attractive. We started out doing our first few deals "safe" to make some connections to get better BRRRR deals through our connections, as most of these deals are through hard money lenders or cash.

I definitely recommend David Greene’s book “Buy, Rehab, Rent, Refinance, Repeat”. You can listen to it as an audiobook.

Goodluck with this Justin! I am on this journey as well wanting to own multiple properties to rent out. I am looking into loan options to help achieve my goals. I've also seen that Tellus offer loans by using the home I already have for credit towards a new property investment, I would check it out! I use them currently for my rental management software but they just released this news. Worth looking into to help out on this journey.

@Justin Walsh

I’m in your area and it’s hard to find deals. However, you can find some deals around 100k. I would buy one in that price range with 20% down. Learn the process and gain some experience. I bought one in Arlington for 99k 18 months ago and get $1,150 for rent. It’s not making me rich, but I’ve learned a lot and it’s appreciated quite a bit already. Good luck.

@Guy Gimenez That is great advice... thank you very much! I have found a couple local meet ups and plan on attending them all. If you are ever in the Fort Worth area let me know, I would love to meet up. Also as I am continuing to learn I'm seeing more and more that I need to be able to add value to those helping me as well so with that being said if there is any way I can help you especially in my neck of the woods, I will. Thanks again

Hey Justin, no doubt, I'd say stick to Bigger Pockets. Go through the threads of topics that interest you, read, and engage. Read the blog posts. You'll be sure to find something that might be doable. Just the other day, I read about investing in a duplex with an FHA loan. You become an owner-occupant and the other tenant pays for the entire mortgage, or at least most of it. I learned that is has the least resistance to entry. So this is one of the things I discover here. So, my recommendation as a newbie, troll through these posts and you'll find inspiration.

@Taylor L. I have found a few since I made this post, but I really agree with you and think I may start my own. One thing I read about the benefit to that is being the "hub"  which everyone will get to know if it it successful. 

Originally posted by @Justin Walsh :

@John Morgan I've noticed deals are slim on places like Realtor and Zillow, but what about off market stuff? Have you had any luck there? Are you looking at any other areas?

 

Unless you have cash, deals are hard to find in the DFW area. I bought a couple SFR off market with loans out here, but I knew the seller and the properties weren't listed on the MLS yet.