How Soon is Too Soon?

Question

Hey everyone,

I am a new investor who's in the learning phase of my real estate ventures, and have a definite sense of urgency to act. Over the past few months, I've been doing a lot to build my knowledge, and am wondering: how long did you study and analyze before completing your first deal? Would you recommend that newbies jump in sooner rather than later, or do you think it's better to wait 6 months, a year, two years, etc.? A lot of posts I've read say that the best way to learn is to jump in and get your first property, but I also understand that many investors make impulsive decisions and that can potentially prevent someone from future success. I appreciate any feedback!

Matt Ziegler · Answer

The best time to plant a tree is 30 yrs ago... second best time is today.

You are bound to make mistakes, we all do, just keep making new ones!

Best of luck on your journey

Ryan Hill · Answer

@Matt Byrne it depends on what your plan is. I'd say you want to make sure to have a few things in place before you start making offers. This may be stuff you have all in place so if you get an offer accepted you're good to go but I'm going to say them anyways!

- Property managers (If you're managing the investments yourself you obviously won't have to worry about this).

- Access to money or your own money (Hard money and/or private money)

- General criteria of what you're looking for

- Access to off market deals

- A few contractors (if you plan to buy something that may need some work) and a project manager to manage the contractor.

Some of this may not be relevant to you depending on what your strategy is..I know this is a lot of stuff but it doesn't take longer than a few afternoons of phone calls to set up.

What would you say is holding you back right now?

Nicholas L. · Answer

@Matt Byrne do you have solid reserves, i.e. savings?  I'd strongly encourage you to have an emergency fund + a cushion + enough to invest.  If you don't, but will in 6 months, then start investing in 6 months.  People often post on BP saying they're going to spend every last penny they have on their first property - this is not a good idea.  Do you rent or own?

David M. · Answer

@Matt Byrne

The real question is can your AFFORD to learn?  In the not so good case, you are going to lose money—hopefully not all your money.  This is your “price of admission.”  Hopefully, your price of admission is you make a little les money or didn’t handle your accounting/bookkeeping just right

It’s true there is no substitute for doing something yourself.  It’s difficult to know what to ask, let alone research and learn something) if you don’t know what to ask does.

How do you know you are ready?  Depends on how savvy you think (yeah, self evaluation can be dangerous) you’ve become, or what/who can you fall back onto for help when you have problems.

Good luck

Andrea Weule · Answer

Run the Numbers, Run the Numbers and Run the Numbers by someone else.  If its a good deal, it's a good deal.  Take the plunge and get investing if you're ready.  The only impulse disasters are when the investor trusted/listened to someone else and didn't do their homework (that's what we did on any deal we messed up on).  Just make sure it's truly a good deal and take the plunge.

Best of Success!

Matt Byrne · Answer

Thank you all for your replies!

@Andrea Weule Running the numbers is what has convinced me that this is a viable and achievable way of creating passive income. Literally everything seems to boil down to the numbers, and the numbers don't lie, which is true across basically every industry and area of life. I'm working on developing criteria to go by, and plan to start making offers on properties that meet the criteria, even if they seem like they won't get accepted.

Matt Byrne · Answer

@Ryan Hill I really appreciate the input - I don't have all of these things in place. I have been looking at different markets throughout the US, and am starting to narrow in on and focus on  a few, as I want to commit to a growing area and start building connections and a foundation there. Long-distance investing seems like it might be the better option in terms of improving the likelihood of finding deals. I do have access to (some) money and do have pretty specific criteria on what kind of deals I am looking for; I do not have access to off-market deals and don't have property managers or contractors (or any team) in place.

Really, what's holding me back is fear that I'm 'not ready' yet. Like ambivalence in reaching out to professionals in markets due to lack of knowledge, uncertainty in how things will go, and belief that I need to learn more before putting myself out there.

@Nicholas L. I do have some savings, and my expenses are pretty low (I'm currently in a situation living with family and I don't have to pay rent). I also have a business partner who's in a similar situation to me with learning and ambition, and he and I have been outlining our goals, strategies, ideas, etc., so I won't be going at it alone and do not have to risk everything of mine necessarily. I know it's not a good idea to spend everything on my first property, but it's also tempting if the circumstances are right and the numbers work.

How Soon is Too Soon?

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