Getting started, how to get the ball rolling.

12 Replies

Hello, I'm fairly new to the forums, I learned of them from one of the BP books that I just read. I'll try to keep my post as brief as possible. 

I own a trades related business and am sick of it. I own my home outright (approx 350k value) and have another approx 150k saved. I keep thinking that this isn't enough to get into investing because it don't go very far in my area (Minneapolis), but the more forums and stuff I read and the sicker I get of my job/business I realize that with the right moves I can stop doing what I'm doing and dive in with what I have to work with as I see people posting with 25k wondering how to dive in. I have become obsessed with learning all that I can by reading books etc, so I'm doing that. But I'm hoping to get some help/confidence to get myself going. I truly have the drive that it takes, a little money, I know how all about rehabbing homes, I'm hungry to succeed, I'm willing to move, live in a construction zone, live on little money, house hack or do whatever I need to do to get myself going. 

I plan to leave my area to get closer to my Mom in Illinois because she's getting older and going to need my help, so I'm going to be headed to a much much cheaper area.. The areas nearby include Peoria IL, and the Quad Cities. In both areas I could afford to buy multiple homes, put the cash down on multiple multi family properties etc. 

All of this said, aside from reading and learning more, I'm wondering what those of you with experience would do to get things doing if you were in my shoes. Would you buy a couple sf homes outright and start renting them, try to buy a multi fam (or multiple), fix and flip a few or??? 

I would sincerely appreciate any advise from those with experience. I'm sure you see these type of newby posts all the time, but please trust I am hungry and I have the drive to make it in anything I do, I just need the right education and push to make it happen. Thanks in advance. 

I have no idea what the markets are like in Peoria IL and the Quad Cities, but if you sell your place in Minneapolis you will have 500k in cash so would recommend you find duplex, Triplex, or Quad near your mom and house hack. Preferably, something you can rehab yourself and force equity. You also want to evaluate the properties in those market to see where they are in real estate cycle. Do the numbers work to do flips or is there enough cash flow to buy and hold in these markets? Find a good realtor. You have plenty of cash to get started, but if you quite your W2 job getting a mortgage is going to be a challenge. You could BRRRR, with the initial purchase in cash....but traditional mortgage company will probably not do a refi if you dont have job. You might be best getting W2 job while you house hack and buy a couple properties and renovate them on the side. If you could do this and build up some cash flow then you could look at quitting W2.



Just reread you post and see you own your own business....I think your going to need some income from a somewhere (business or W2) unless you can pay cash and flip houses for living. 

Peoria is a good market if you are here to work your business, great ROI but very labor intensive and the City can be aggressive. I run the landlord group here and it's filled with a bunch of great folks willing to share. Your typical "C" neighborhood house would be about 25-30k all in and rent for about $750-$800. PM me and I'll point you to the right people.

@Dustin Rhodes I think your best bet is to purchase a 4-plex with FHA at 3.5% down and live in it, then use the remaining to purchase and rehab another property. After a year buy another 4-plex with a conventional 5% down. After 2 years you would have 8 units plus however many units you purchased that you didn't live in (10-20 depending on market and condition). You could let cash flow and appreciation fund deals after that. You would need to keep your job for the loans, but at least you would have an end in sight.

Originally posted by @Amber Gonion :

@Dustin Rhodes I think your best bet is to purchase a 4-plex with FHA at 3.5% down and live in it, then use the remaining to purchase and rehab another property. After a year buy another 4-plex with a conventional 5% down. After 2 years you would have 8 units plus however many units you purchased that you didn't live in (10-20 depending on market and condition). You could let cash flow and appreciation fund deals after that. You would need to keep your job for the loans, but at least you would have an end in sight.

Thanks a lot for the reply. This is the exact type of advise I was hoping for and it's actually pretty close to what I've started to have in mind about getting going. Thanks again

 

@Account Closed I wanted to zone in on something that you said that I disagree with.  I believe that $150k is plenty of capital to invest in the Twin Cities.  I started with a good bit less and still was able to purchase four different properties (one condo and three duplexes, with a combination of 20% and 25% down).  Sure, it's gotten a bit tighter, however, there are still opportunities out there and $150k would be a pretty good starting point.  Good luck in IL.

Originally posted by @David Barnett :

@Dustin Rhodes I wanted to zone in on something that you said that I disagree with.  I believe that $150k is plenty of capital to invest in the Twin Cities.  I started with a good bit less and still was able to purchase four different properties (one condo and three duplexes, with a combination of 20% and 25% down).  Sure, it's gotten a bit tighter, however, there are still opportunities out there and $150k would be a pretty good starting point.  Good luck in IL.

Thanks for the reply. I'm sure you are right with regard to me having the funds to get going here in the Twin Cities. I think part of my hesitation with this area is the fact that I moved here at the height of the recession and I've watched prices on everything nearly double over the last 7-10 years. So part of me is hesitant because the prices seem so high and the other part making me hesitant is just my lack of experience. Either way I'm doing all I can to learn and hopefully build my confidence. Thanks again for the reply. 

 

@Account Closed You got it!  The hesitation makes sense, especially in a market that historically hasn't grown as fast as it has post-recession.  I'm in a slightly different area of the country where rapid appreciation growth is more "normal."  


I would also say the fact that you have a tradesperson background is a huge advantage.  From what I'm seeing (albeit 1,100 miles away) is that properties that are priced well and look "cute" are flying off of the market.  There is still some room in properties that need some work.  With your background, you could force a huge amount of appreciation if the property is purchased as a deal and improved to be in line with the neighborhood.  


I'd be happy to connect and discuss further if that would be helpful! 

Originally posted by @David Barnett :

@Dustin Rhodes You got it!  The hesitation makes sense, especially in a market that historically hasn't grown as fast as it has post-recession.  I'm in a slightly different area of the country where rapid appreciation growth is more "normal."  

I would also say the fact that you have a tradesperson background is a huge advantage.  From what I'm seeing (albeit 1,100 miles away) is that properties that are priced well and look "cute" are flying off of the market.  There is still some room in properties that need some work.  With your background, you could force a huge amount of appreciation if the property is purchased as a deal and improved to be in line with the neighborhood.  

I'd be happy to connect and discuss further if that would be helpful! 

Thanks again for the response. You're right the multi families (what I think I'm wanting to get into) in the areas that I've been searching seem to fly off the market and it's likely because I've been searching "A" neighborhoods. However, I'm definitely not afraid of a project and I know all of the right trades people to take on nearly any projects, in both my current area and other areas in Illinois that I've been looking at. Some of my good friends own remodeling companies back there and I have plenty of contacts in the Twin Cities, so I have the ability and contacts to take on most projects where I am or where I'm considering investing.  It's good to hear from someone with much more experience that the knowledge that I do have holds some value, because I have felt that this was definitely the best thing I bring to the table thus far. 

I sincerely appreciate the offer to connect and I'd really appreciate the opportunity to do so. Most of what I hope to find from these forums (aside from learning all of the basics) is some people with more experience than me to help with some guidance/confidence building. I've hoped that I could maybe find some people that are already doing what I want to be doing that I could hopefully offer something to in return (My business is hardwood floors), but it's awesome that someone like you would offer as I can't offer much in return. Although, I do know people in the wood flooring business all over the country through my participation in the National Wood Flooring Association and other online forums for our trade. 

So not sure I can be of any help to you in return, and I'm sure you knew that when you sen t this last reply, so again I sincerely appreciate it. Anyway, I'll send you a request to connect and if you have some time here and there to help me out, I'll be vert grateful. Thanks again!!