I am new to investing and have done some self-educating over the past few years by reading books, forums, blogs, and listening to podcasts and webinars. I still feel like I could learn a lot more: I feel like I generally know what to do but lack understanding of how to do it/not sure I remember all the steps. Should I just start diving in and learn as I go or should I wait and learn more? I would like a mentor but have yet to find one and wonder if I should start anyway because at least then I'd be doing deals. What would you do in my noob position?
@Ben Feder
Hey Ben, what’s your financial situation like? Are you able to qualify for a loan? If you can start with something simple like house-hacking that gives you a clear goal.
There are a multitude of ways to build wealth through RE so you can’t expect to learn everything about all of them before getting started.
What you need to do is decide what your long-term goal is (why do you want to invest in RE?), then look at your financial situation and determine what avenue of investing makes the most sense.
If you find that something like house-hacking is the most logical first step then you know exactly what you need to learn before starting (how to screen tenants, what areas are in the path of progress, etc).
-Dan
@Ben Feder I would say start yesterday! What does your financial situation look like? What type of investing are you trying to do? I’d be happy to answer any questions I could for you about rentals and how to stack up a portfolio of small multi family units without a lot of your own money. If you are looking for advise on Wholesaling or Flipping then I’m probably not your guy. Good luck!
I have no cash to invest--meaning nothing for a down payment, nothing for repairs, and nothing to hire people on my team such as contractors, lawyers, management companies, etc. I need to use 100% OPM to get deals done, and trying to find out how to do that. I want to invest in multifamily properties with a BRRRR strategy, so rentals are definitely something I'd want in my portfolio. I want to start as soon as I can, just not sure how to at the moment financially.
@Ben Feder The cheapest price of admission for investing is house hacking. Buy a small multi 2-4 units. FHA will allow you to put 3.5%, certain areas have programs for zero down. You live in it for a year and move out to another multi and get an owner occupied loan of 5% or less. Move 10 times in 10 years you can accumulate 20-40 cash flowing units.
I would prefer not to house hack, just rent it all out but if that's the way I need to do it in order to get such a cheap loan, then I could be willing to do that. However, I barely have any finances at all so I don't know if I'd have that down payment, even if it is just 3.5%. I'd need to find a good deal in the right area, but not sure how difficult that would be.
@Ben Feder
In today's economy, I look for a 4-6% cash on cash return on my Investment. Some think that's not good but mind you thats after all expenses including maintenance AND thats not counting the loan pay down as well as any future appreciation which is all positive cashflow in the end. IRR (Internal Rate of Return) is more important than the Cash on Cash return that most look for in the present.
Take what you read on this platform with a grain of salt. Although this is an AMAZING platform with tons of free knowledge from big players in the game, 80% of the folks on here will never pull the trigger and invest in RE.
I am new to investing and have done some self-educating over the past few years by reading books, forums, blogs, and listening to podcasts and webinars. I still feel like I could learn a lot more: I feel like I generally know what to do but lack understanding of how to do it/not sure I remember all the steps. Should I just start diving in and learn as I go or should I wait and learn more? I would like a mentor but have yet to find one and wonder if I should start anyway because at least then I'd be doing deals. What would you do in my noob position?
There are education options which do not involve gurus, boot-camps or seminars. Connect with me and we can discuss.
Going out uneducated can have some - shall we say - "interesting" results. Listen to some of Brandon Turner's podcasts where he describes his early losses due to lack of education. For the same money, he could have paid for his education five times, avoided the losses in the first place and made better profits in the long run.
My $0.02 ...
I am in the Houston market so I can't speak for yours. Like you, I spent quite a bit of time educating myself before the plunge. I am 1 deal in and there was a lot of good and the opposite I have learned from both. Your eyes won't be open or start to open until you do the first one. Structure yourself, create some systems, it won't be perfect and prepare to fail and learn.
@Ben Feder don't wait to buy real estate, buy real estate and wait
@Ben Feder that’s a very loaded question, and for good reason. There are so many paths to financial success, especially through real estate.
My opinion?
Step one is to go through the steps of Dave Ramsey’s “Total Money Makeover”. If you’re already in a good financial position, that could be really quick.
Step 2 would be to take a little time to adopt some of the principals of the FI (Financial Independence) community. Minimize what you spend, saving more for investments.
Step 3 would be to buy your own home if you haven’t already. If you have, buy another one and rent out the first one. I recommend this because a 30 year mortgage should give you enough wiggle room to make mistakes as you grow. Keep doing that until you have 4 units and then start getting more creative.
Step 4 is “retirement”. Once your investments have replaced your day job income you should focus more on real estate and the things that truly go make you happy. Go volunteer, help the church, spend time with your kids, travel, etc.
Starting from a solid foundation is key in my opinion. I’ve watched a lot of people “jump in” and there’s a 50/50 chance of success when you do that. In fact, my first attempt failed miserably.
Hope that helps!
@Ben Feder
try volunteering at habit for humanity. it will give you good hands on experience with how a house is built. i started doing this years ago and can now do roofing, siding, and much more. this also gives you access to experts in building and could potentially pick their brains if you develop a relationship.
How did you qualify for a no-money-down loan? I would need something like that to invest. I don't have the funds myself for a down payment or expenses.
@Ben Feder that’s a very loaded question, and for good reason. There are so many paths to financial success, especially through real estate.
My opinion?
Step one is to go through the steps of Dave Ramsey’s “Total Money Makeover”. If you’re already in a good financial position, that could be really quick.
Step 2 would be to take a little time to adopt some of the principals of the FI (Financial Independence) community. Minimize what you spend, saving more for investments.
Step 3 would be to buy your own home if you haven’t already. If you have, buy another one and rent out the first one. I recommend this because a 30 year mortgage should give you enough wiggle room to make mistakes as you grow. Keep doing that until you have 4 units and then start getting more creative.
Step 4 is “retirement”. Once your investments have replaced your day job income you should focus more on real estate and the things that truly go make you happy. Go volunteer, help the church, spend time with your kids, travel, etc.
Starting from a solid foundation is key in my opinion. I’ve watched a lot of people “jump in” and there’s a 50/50 chance of success when you do that. In fact, my first attempt failed miserably.
Hope that helps!
I do not have any money, but I have no debt. I am good with saving money already, I just haven't built up much yet so can't afford a down payment or expenses (for rehab, capital expenditures, insurance, etc.). I need a loan that I can afford or a partner. I am looking for a partner for my first deal and/or a mentor to at least learn from for now.
@Ben Feder
In today's economy, I look for a 4-6% cash on cash return on my Investment. Some think that's not good but mind you thats after all expenses including maintenance AND thats not counting the loan pay down as well as any future appreciation which is all positive cashflow in the end. IRR (Internal Rate of Return) is more important than the Cash on Cash return that most look for in the present.
Take what you read on this platform with a grain of salt. Although this is an AMAZING platform with tons of free knowledge from big players in the game, 80% of the folks on here will never pull the trigger and invest in RE.
I once knew what cash-on-cash return met and think I still remember. Is that the annual cash flow made divided by the total cash invested in the property?
I have no debt and consistent employment which I'm sure helped, i'm not saying no money down is the way to go to rush in and get into a property, for some it may make sense, for me it made more sense to wait and save up money for a conventional loan.
If you don't have any money I would suggest finding ways of making more money first before getting into a property. In my opinion at the very least since whatever property you get you should be able to cover 100% of the expenses and some, while also being able to save. It doesn't make sense to rush into a property with a high interest rate no money down loan while having no money saved up, and scrambling to find tenants / relying on credit cards. Maybe a no money down makes more sense if you have 10-20k saved up and you want to preserve your capital instead of putting it into equity of your property in the form of a down payment. Just know the conditions and terms of the loan you're getting into. In the mean time while you save it definitely doesn't hurt to talk to an agent and a lender and get a plan in place and discuss what needs to be done \ how much you will need to save / put down if you want to buy a property for x amount.
@Ben Feder It’s okay not to have any cash if you have good credit and no debt. One strategy I used was seeking Out of State Absentee Owners with 100% equity. (from List Source. Max Maxwell has a great video on the site)
I sent out a mailer offering the same thing to all of them: 20% down payment financed by the seller at 8% for 5 years with a balloon of 80% at 5 years. With a reasonable appreciation you'll end up with at least 75% LTV* at the end of the 5 years with a comfortable cash flow position during the seller financed period.
*75% LTV is because you have a principal reduction and conservative appreciation.
PS, if you’re in a huge market, you can filter that list to owners over 65.... who are most likely to want to exit their portfolio in a tax advantageous way, like seller financing.
@Ben Feder It’s okay not to have any cash if you have good credit and no debt. One strategy I used was seeking Out of State Absentee Owners with 100% equity. (from List Source. Max Maxwell has a great video on the site)
I sent out a mailer offering the same thing to all of them: 20% down payment financed by the seller at 8% for 5 years with a balloon of 80% at 5 years. With a reasonable appreciation you'll end up with at least 75% LTV* at the end of the 5 years with a comfortable cash flow position during the seller financed period.
*75% LTV is because you have a principal reduction and conservative appreciation.
PS, if you’re in a huge market, you can filter that list to owners over 65.... who are most likely to want to exit their portfolio in a tax advantageous way, like seller financing.
What does a balloon of 80% at five years mean? Does that mean you owe 80% of the total price of the home after only five years?
Also, what is LTV?
@Ben Feder
A balloon means you owe the balance of the loan all at once. You will pay 20% (the standard down payment for a “Conforming” loan) over the course of the first 5 years to the Seller, and then you need to go get a bank to refinance that 80% because that’s what you owe the Seller.
LTV is Loan To Value. In order to "conform" to government loan standards (Fannie Mae/Freddie Mac, etc) you can't have an LTV higher than 80%. For a $100,000 home you can only get a mortgage for $80,000. That's where the 20% down comes from.
In this example, you’re basically financing your down payment with the seller. In exchange for him/her financing it, you’re going to agree to pay full price for the property. It’s a win win if you do it right.
@Ben Feder if you want to DM me, I’ll walk you through all of the ways financing works when you have no money up front. Also, if you’re gonna come to the forum, consider buying the book from Bigger Pockets. Go to the store. I think it’s like $15?
@Ben Feder if you want to DM me, I’ll walk you through all of the ways financing works when you have no money up front. Also, if you’re gonna come to the forum, consider buying the book from Bigger Pockets. Go to the store. I think it’s like $15?
I would love to hear about all my financing options! I clicked "Connect" on you, so we should be connected now. Which book are you suggesting? I have read several real estate books that aren't from BP, and also read the beginner's guide from BP. Reading a second guide from BP now on house flipping even though I'm seeking BRRRR (since I will be rehabbing and selling the property anyway).
@Ben Feder I think it’s called Investing with Low or No Money Down.
"Life shrinks, or expands, in direct proportion to your willingness to assume risk.... the right time is always, right now." - Casey Neistat
Obviously I'm not recommending anyone throw money into something they aren't yet comfortable with so maybe you are giving yourself the wrong choice - to invest, or not to invest.
You should always be seeking experience in real estate investing no matter how far along you are.. whether it is with your money or someone else's, whether you're an interested bystander, or a hands-on partner... if you want to get in there.. do it. But don't necessarily get "into" real estate investing by forcing yourself to put your money into it out of the gate. The reality is, if you don't know how to start.. then you probably aren't ready to have a financially vested interest in it yet. But that doesn't mean you can't start.
Feel free to PM me anytime with questions I always love talking, and I'm happy to give you my input at the very least.
Best,
Ryan
Started this year and I'm 21 as of now. I got hooked in RE while checking out properties and picking out the best ones in Zumbly! Lots of forums and articles on the web! Good luck!
@Ben Feder
Hey Ben! I’m also new to this but from what I’m garnering it helps to know what you want. You have to have criterias because just like what the others commented here RE is a vast field. We have to pick a nichè then go a little deeper by setting up criterias - buying rules (numbers, market, etc). After this, build a business plan on how you plan to execute the tasks after you find a property that fits your criteria. Use what you read, which I assume is a lot given that you’ve been educating yourself for years.
For anyone reading this that wants to correct me please do so. I need to learn.
Good luck to us!
@Ben Feder If you have been studying for “years” all you need to do is to jump in. However, you need to have cash on hand. If you are going to partner up with someone, then you need to offer up some serious value if you don’t have the money.
You have to really want it to get into real estate. The winners aren’t the hardest working, they are the ones that jump in and do. Then they get really good, and become valuable to others. Go work for free for an investor, become hungry for a deal and success. You don’t need a mentor, you need drive and ambition, along with the willingness to do whatever it takes.
@Ben Feder start networking and building connections. It’s always good to have your own capital as down payment for get started.