start up money not the issue, but lots to learn
New to Real Estate · Morrison, CO · Member since 2016 · 3 posts · 5 votes
start up money not the issue, but lots to learn
Most Popular Reply
Paul MoorePro Member
Commercial Real Estate Fund Manager · Lynchburg, VA · Member since 2015 · 1k+ posts · 1k+ votesHi @Nathaniel Winkel! Congratulations on your success so far!
I think real estate investing is fabulous way for you to increase your tax-advantaged cash flow, appreciation and ultimately your wealth. While there are many ways to pull this off, I would not recommend investing actively. It sounds like you have a family and a demanding career. I've talked to hundreds and hundreds of investors who've tried to do REI on the side and they found that it is far more demanding than expected and the returns were not what they saw on HGTV. There is a very high likelihood that you will burn out, and not be able to enjoy your mountain home and it will put a lot of stress on your family and even hurt your career.
If you agree that passive investing is the way to go, there are a lot of places to learn more. Jim Pfeifer's Left Field Investors is a great community. You can also check out Ian Ippolito's Private Investor Club as part of the The Real Estate Crowdfunding Review. If you want to go down the passive route, I highly recommend @Brian Burke's excellent BP book The Hands-Off Investor.
I wish you the greatest success in your career and investments!
18 Replies
- Investor · Twin Falls, ID · Member since 2015 · 200 posts · 116 votes4y
@Nathaniel Winkel Happy to make your acquaintance. I am a real estate investor, I help people invest in real estate passively and I coach students for Jake and Gino who teaches people to buy multifamily apartment buildings.
The first step is to define what your goals are. For example, are you wanting to buy a 5-unit complex down the street or are you wanting to buy a 78-unit building in Oklahoma (I am buying one now). Neither of those are passive, when you are buying multifamily buildings you are becoming an active investor, if you want to be truly passive you can invest with someone like me as an LP or Limited Partner and all you have to do is sit back and collect the benefits of owning real estate.
I am happy to have a conversation about all the options, how they break down, and the pros and cons of each. - Investor · Chicago · Member since 2022 · 128 posts · 85 votes4y
Read David green's book BRRRR. Buy rehab rent refi repeat.
pay cash for your real estate. Rehab the property. Rent it out. Do a cash out or heloc to get your cash out of that property. Then use that cash to repeat the process. And again and again and again.
this way with the price of buying one property you can buy many.
- Multifamily Syndicator · New York, NY · Member since 2020 · 68 posts · 37 votes4y
@Nathaniel Winkel I think @Senate Eskridge's point about defining your criteria is key. There are so many avenues in real estate, being passive vs active would be the first question to answer. Below I have a list of books that I found helpful, they are in order from smaller deals to large syndication type deals. The answer for you could potentially be active in some deals and a passive LP in other deals. I am always happy to talk real estate and answer any questions, best of luck!
- Rental Property Investing - Brandon Turner
- BRRRR - David Greene
- Long Distance Real Estate Investing - David Greene
- The ABC's of Real Estate Investing - Ken McElroy
- Multifamily Millions by David Lindahl
- Best Ever Apartment Syndication Book
- Investor · Chicago · Member since 2022 · 128 posts · 85 votes4yDavid Lindahls book is good but there is a lot of hype there. And since he wrote the book he started a company that will chase after you to join their mentorship program like you are the last person on the planet.
Quote from @John Mazzella:
@Nathaniel Winkel I think @Senate Eskridge's point about defining your criteria is key. There are so many avenues in real estate, being passive vs active would be the first question to answer. Below I have a list of books that I found helpful, they are in order from smaller deals to large syndication type deals. The answer for you could potentially be active in some deals and a passive LP in other deals. I am always happy to talk real estate and answer any questions, best of luck!
- Rental Property Investing - Brandon Turner
- BRRRR - David Greene
- Long Distance Real Estate Investing - David Greene
- The ABC's of Real Estate Investing - Ken McElroy
- Multifamily Millions by David Lindahl
- Best Ever Apartment Syndication Book
It's a good read but overhyped and not so reality based. Especially in today's market. - Real Estate Syndicator · Milwaukee, WI · Member since 2018 · 1k+ posts · 907 votes4y
A good place to start is to decide whether you want to be actively involved in your investments or passive.
Active - connect with brokers in your target market, find a reliable property management company, connect with banks for financing. Will be a grind to find a good deal. And even though you have a property manager, you will still need to be involved in decision making processes (asset management). But you will have full control over the asset and decision making..
Passive - invest in a syndication as an LP. This is the true form of passive investing. Connect with a few syndicators. Have conversations with them and build relationship. Decide which ones you want to do business with. Get on their deal list, review the deals they send, pull the trigger on the deal you like. You will get monthly property updates/financials. Quarterly cashflow distributions. Accelerated depreciation benefits. And wait 5-10 years for the property to sell and 2-3X your money. As an LP in a syndication, you will not have any decision-making power though..
- 4yPaul MoorePro MemberCommercial Real Estate Fund Manager · Lynchburg, VA · Member since 2015 · 1k+ posts · 1k+ votes
Hi @Nathaniel Winkel! Congratulations on your success so far!
I think real estate investing is fabulous way for you to increase your tax-advantaged cash flow, appreciation and ultimately your wealth. While there are many ways to pull this off, I would not recommend investing actively. It sounds like you have a family and a demanding career. I've talked to hundreds and hundreds of investors who've tried to do REI on the side and they found that it is far more demanding than expected and the returns were not what they saw on HGTV. There is a very high likelihood that you will burn out, and not be able to enjoy your mountain home and it will put a lot of stress on your family and even hurt your career.
If you agree that passive investing is the way to go, there are a lot of places to learn more. Jim Pfeifer's Left Field Investors is a great community. You can also check out Ian Ippolito's Private Investor Club as part of the The Real Estate Crowdfunding Review. If you want to go down the passive route, I highly recommend @Brian Burke's excellent BP book The Hands-Off Investor.
I wish you the greatest success in your career and investments!
- Developer · St. Augustine, FL · Member since 2018 · 311 posts · 384 votes4y
Nice to meet you. We do 100% capital operation in NE Florida. Basically once you know the market and the numbers, you just put your money at work. Happy to discuss details with you in our market and you can see if our model works for you in your area.
- Member since 2022 · 12 posts · 1 vote4y
@Brock Mogensen do you have an active or passive approach currently and have you used the other in the past? I'm mainly wondering if this is based on first hand experience or research.
- Lender · Boca Raton, FL · Member since 2022 · 40 posts · 24 votes4y
@Nathaniel Winkel there are 2 different approaches in my opinion, you can either buy the property to either fix & flip or buy & hold, .....or on the flipside, you can be a lender on the deal (with hard money loans). With the second option, you can make a steady 10-11% interest without the hassle of doing the flip yourself, which saves a lot of your time and the headaches that go along with flipping.
I hope this helps!
- Real Estate Syndicator · Milwaukee, WI · Member since 2018 · 1k+ posts · 907 votes4y
Quote from @Scott Spanier:
@Brock Mogensen do you have an active or passive approach currently and have you used the other in the past? I'm mainly wondering if this is based on first hand experience or research.
I have an active approach as I'm the GP on syndication deals. We partner with tons of passive (LP) investors. Being a GP on syndication deals is a ton of work but can be very lucrative.
- 4yJim PfeiferBusiness MemberInvestor · Dublin, OH · Member since 2014 · 241 posts · 495 votes
As others have said here, the first decision is do you want to be active or passive? From the brief description you gave, you seem to be in a great position to be a passive investor. Sometimes single family turnkey and similar approaches are said to be passive. They are not. You will need to do a ton of upfront work to find a market, a property, a property manager then you will need to buy and manage the property. This is a challenge for someone with a family and a career. The people that are most successful as active investors are those who can spend enough time to create an advantage for themselves - in a market or a strategy.
I sold all of my active properties because I was not a good asset manager. Now, I am a full time passive investor in real estate syndications. I effectively hire asset managers to do all of the work for me - my main job is evaluating the sponsor, market, asset class and the deal. Once I send the wire, my job is done - these investments are very illiquid, long term and out of your control which for someone with a full time job is a good thing! The returns you can get are similar, if not better, than you will get investing in turnkeys or other supposedly passive deals.
- Specialist · Southlake, TX · Member since 2021 · 213 posts · 157 votes4y
@Nathaniel Winkel Have you thought about turnkey real estate investing? It offers a truly passive way to invest out of state.
- Rental Property Investor · Centreville, VA · Member since 2019 · 1k+ posts · 799 votes4y
Hi Nathaniel, have you explored investing with turnkey companies out of state? it is one of the easiest ways to be passive in your journey while building a portfolio. Feel free to reach out if you want to discuss.
- 4yNicholas L.Pro MemberFlipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
I agree with @Jim Pfeifer - turn key is not passive. When you own individual properties you are accountable for them. They might be perfectly passive until a tenant stops paying. Then they're not.
I hate to pile on, but @Nathaniel Winkel - it's going to depend on how hands on you want to be, and what your goals are.
If you want to be hands on, having a lot of liquid cash can be an advantage. You can offer more aggressively and look for value add plays like BRRRR. But if you don't want to buy individual properties, then don't.
One step would be to go to REIAs, network, and talk about your goals - try to find others in a similar position as you and see what they're doing. I think BP has resources for every kind of investor at every stage.
- 4yMike D'ArrigoPro MemberTurn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes
@Nathaniel Winkel you're in a good position to get started. The important thing is don't get caught up in analsis/paralysis. Start by clearly identifying your objectives and criteria then identify the markets that will best help you achieve those objectives. You're in a pretty high cost market, so if your goal is cash flow, you're probably going to have to go out of state.The best cash flow markets are typically in the Midwest where things are more affordable. As you're evaluating markets, don't just look for short term cash flow. If you're going to do this, you should be in it for the long haul. That means looking for markets with strong economic and demographic fundamentals. Growing populations, jobs, incomes and modern/diverse economies offer the best chance for appreciation and ability to raise rents over time. Feel free to reach out if you'd like more advice or suggestions.
- 4yDrew SygitBusiness MemberProperty Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
@Nathaniel Winkel see below for some basic info to start with:
Check out our blog here on BP comparing Detroit to other cities and Deep Dives on Metro Detroit cities & neighborhoods: https://www.biggerpockets.com/...
Your biggest question shouldn't be WHERE to invest, but HOW you will invest!
Many OOS investors set themselves up for failure because they don't truly take the time to understand:
1) The Class of the NEIGHBORHOOD they are buying in - which is relative to the overall area.
2) The Class of the PROPERTY they are buying - which is relative to the overall area.
3) The Class of the TENANT POOL the Neighborhood & Property will attract - which is relative to the overall area.
4) The Class of the CONTRACTORS that will work on their Property, given the Neighborhood location - which is relative to the overall area.
5) The Class of the PROPERTY MANAGEMENT COMPANIES (PMC) that will manage their Property, given the Neighborhood location and the Tenants it will attract - which is relative to the overall area.
6) That a Class X NEIGHBORHOOD will have mostly Class X PROPERTIES, which will only attract Class X TENANTS, CONTRACTORS AND PMCs and deliver Class X RESULTS.
7) That OOS property Class rankings are often different than the Class ranking of the local market they live.
8) Class A is relatively easy to manage, can even be DIY remote managed from another state. Can usually allot 5-10% vacancy factor and same for maintenance.
9) Class B usually also okay, but needs more attention from owner and/or PMC. Vacancy and maintenance factors should be higher than for Class A as homes will be older, have more deferred maintenance and tenants will be harder on them.
10) Class C can be relatively successful with a great PMC (do NOT hire the cheapest!), but very difficult to DIY remote manage. Vacancy and maintenance factors should be higher than for Class A or B. Homes will have even more deferred maintenance and tenants will be even harder on them.
11) Class D pretty much requires an OWNER to be on location and at the property 3-4 times/week. Most quality PMCs will not manage these properties as they understand most owners won’t pay them enough for the time required and even then it’s too difficult successfully manage them.
***Only exception is if an owner has plan & funds to reposition Class D to Class C or higher.Also, SERIOUSLY consider - do you really have the time to be a DIY landlord or should you hire a PMC?
Good luck with whatever you decide😊
Logical Property Management4.9450 Reviews - 4yMatthew Irish-JonesBusiness MemberReal Estate Agent · Buffalo, NY · Member since 2017 · 2k+ posts · 2k+ votes
@Nathaniel Winkel
1. Set your goals
2. Pick a market
3. Build a team of professionals in that market
4. Put 25% down to purchase
5. Manage the team
Irish Jones Realty4.947 Reviews - Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes4y
I'd start by optimizing my revenue on my mountain condo and lake home. The PMs you find may have referrals and info. The practice interacting with RE pros and research is beneficial.
The mindset shift to optimizing returns vs experiences may be a hurdle. Figure out why real estate. Tax diversification strikes me, but you have to ask yourself why 7 times to see if RE is for you.
Then go in an active or passive direction. I went active and it was. Going forward I will be passive if I choose RE at all. Timing matters.
Join the conversationCreate a free account to reply, vote on answers and follow this thread.