Where to start, when it comes to real estate?

7 Replies

Hello, I have read over multi- family / Duplex /Triplex / Quadplex owning for about three months now. But, that is how far I have gotten. I've learned some of the finances involved but still learning as I go. The plan is to start college next year but investing into a quadplex near my college. I spent most my time overseas the last five years and haven't own much property and not as smart on the paper side of the real estate process. This type of investing has always interested me and I have been looking for some type of guidance since.

I guess the question is, if I were to pursue this avenue what would you suggest I learn before starting?

I.E. Should I go for a real estate license?

Notes:

-I do have some money to play with for down payment on loan.

-I plan to live in one of the units while in school.

-I read about some of the finances on the ownership side but i’m not an expert.

-I know a few of the acronyms used in this field please bear with me if Im confused.

Mr.Burns

Sounds like your talking about House Hacking. I would recommend joining your Local Real Estate Club in your area an rub shoulders with others. also listen to some Podcast on Bigger pockets of House Hacking.

There's probably not a large benefit to you getting a RE license aside from looking at the inventory which is now available to all consumer via Zillow or Realtor.com. Yes you could be getting some of that 2-3% commission for purchase and sales but the few deals you will be doing will not be worth the time, licensing cost, and education you have to get in ascertain a this license. 

Going to local REIA events would be really useful for you and I would go there and just people watch and look at the person who's career is most like the one you'd like to have. Speak to them frankly and ask them to mentor you and offer some service for shadowing. If it's a good mentor they will help you to guide you along the way and give you insight in the industry that you otherwise would not be privy to.

@Christian B. from what I gather you want to buy a 4plex. You do not need to spend so much time "learning" you need to spend your time "buying". You certainly do not need a real estate license.

This means getting your credit score in order and finding a reputable mortgage broker and realtor that will guide you through the process and buying at a fair price.

Do not overcomplicate things in your head or you will still be learning 5 years from now.

Hey Christian, it sounds like you may be in a better position than you think you are to make your way into real estate. If I were you I would do the following 3 things.

1. Continue to educate yourself through podcasts, books and real estate meetups. One easy tip is to turn your car into a learning machine: podcasts on 1.5X speed every time you're in the car will add up more than you could imagine. 

2. Continue to put yourself in a position where you are financially capable to qualify for a loan that fits your house hacking desires. This means keeping your credit score up, living frugally to build up a strong cash position even after you front the down payment for the house and keeping a job that will sustain you after purchasing the property.

3. Pick a strategy and go for it. Because you appear to be a younger single man, you're options are pretty limitless. As you have mentioned, you can target a small multifamily property, but could even go for a single family house, living in one of the bedrooms and renting the other rooms out to other college roommates. This is just two of countless possible strategies that would work for you. 

I know it can be a bit uneasy not understanding "the paper side of real estate", but don't worry, that's what the professionals are for. You focus on your one strategy, and let them take care of the rest. If you are able to get into school, my guess is you will be smart enough to coordinate properly with these professionals and get your first deal done. Best of luck!

@Christian B. , you are receiving good advice here. If you're credit is fair to good, and you have 20% plus closing then buying a fourplex is a great way to go. Remember that the fourplex will be appraised by comparables. This is considered a residential loan. Make sure that the rent of the other three units covers the entire PITI (principal, interest, real estate taxes, property insurance) - if not, can you handle the extra amount. You should actually try to get more since you should set aside 5-10% of rent for each: Capital Expenses (roof, water heater), Vacancy, Maintenance. Again if the rents don't cover that, make sure you can. Have the property professionally inspected, and go back to the owner for every little thing they point out - then decide what has to be done or you walk away. DON'T FALL IN LOVE WITH THE PROPERTY. Interview 4 or 5 agents, tell them you a new, ask them how many quads they sold last year. Make friends of real estate investors and ask them to review your deal.

Oh, one more thing, GO FOR IT. You can't get too hurt with a fourplex, particularly if you are going to live there.