How did you get started? Advice to newbies!
Investor · Germany · Member since 2021 · 23 posts · 33 votes
How did you get started? Advice to newbies!
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Flipper/Rehabber · Albany · Member since 2022 · 1 post · 12 votes
4yThis is just a tip, select a market you want to invest in, call it your nitch. Zipcodes could make it easier to remember especially if it's out of state.
Start window shopping in the price range you looking for, by setting alerts on the MLS. Go to realtor.com or zillow.com and save the properties in your favorite this way you get daily or weekly alerts for what properties are available and if your price range is realistic or what are their conditions.
Find ways to finance now. If you have money save, borrowing from your 401k, friends or family or even your credit cards, but just be realistic with yourself if you can handle it.
After your window shopping you will get a fair idea of the market prices in your location and at time on realtor.com you see in the neighborhood section what other house are selling around the location.
The rest of everything is all up to you taking the leap of faith, being determined to get it done during the process and being consistent. Seek advice when necessary. Always but title insurance and casualty insurance to protect yourself and your asset.
Best of Luck.
Prime yourself with the market
54 Replies
- Investor · Germany · Member since 2021 · 23 posts · 33 votes4y
Quote from @Eric Bilderback:
The most bestest, safest, most practical way to get started in real estate investing is to house hack. I was going over this with an ambitious young man just the other day. If instead of renting an apartment with his wife for 1800 a month (about 21600 a year). He bought a 700k duplex and they moved in one side they could hopefully cut their expenses down to 800 a month (9600 a year), if they purchased with an FHA 3.5% down we estimated with current interest rate they would pay off 13k in principle the first year, then we speculated that our market would increase 5% the first year which is (700k*5%= 35k). So the guy goes from negative 21,600 paying rent to positive 38k+ their wealth increase by 60k year one.
What if you never did anything except move into a new duplex each year for 5-10 years they will have bought $3.5-7 million in real estate and they will have many more options for their and their kids life. Their problems will go from "the boss is making me work this weekend" to "how do make sure our kids don't get to spoiled."
Good luck to you I hope you kill it!
Eric,
Thank you so much for taking the time to offer your advice. This is amazing and you're absolutely right, house hacking is an easy way to win at real estate. Thank you so much for breaking it down with an easy to follow example. I definitely can't wait until I have the "how do we make sure our kids don't get too spoiled" realization.
Thank you so much again. Wishing you all the best on your journey.
- Shannon
- Investor · Germany · Member since 2021 · 23 posts · 33 votes4y
Quote from @Brian Cerezo:
@Shannon Glanton hey! I'm still a newbie just closed on my first property and tbh… I went the turnkey route. I've been in analysis paralysis for 2+ years and I felt like no matter how many podcasts I listened to or read, it would never be enough to pull the trigger. I would want to flip houses but for some reason I can't find the courage to try that. I'll eventually try BRRRR a house or so and see if I can actually do it but turnkey felt the easiest way for me to get into rei.
I do feel like I paid a premium for a property, but atleast it was rehabbed for me, property management is set up as well as a tenant. Putting down 20% sucks when you hear stories of people putting in little to nothing but we all gotta go through different hoops to get in.
And this being my first property, I don’t expect it to be the most amazing cash flow or deal but it did open the door for me to do more as well as all the tax benefits I’ll be able to take advantage of as well.
Bru,
Thank you so much for taking the time out to share your experience. Big congratulations on closing on your first property, and there is nothing wrong with a turn key property. At least you got started, and I think most can agree that that is what is most important. You took the jump, YOU WERE BRAVE ENOUGH! I can definitely relate on the analysis paralysis, literally my life for the last 2 years as well. You're going to learn so many lessons, and this might give you the confidence that you needed to branch out.
I wish you the absolute best on your journey!
- Shannon
- Investor · Germany · Member since 2021 · 23 posts · 33 votes4y
Quote from @Larry Turowski:
@Shannon Glanton I started in 2008. I had some money saved, had a HELOC, attended a local REIA group, started networking, found out I could flip rentals by buying a non-performing or under-performing rental, fixing it up, etc, and selling it to a buy-and-hold investor. The price points in my city were very doable for this and I figured, worst case scenario, I'd have a rental that had pretty good returns. It turns out I bought just before the bottom dropped out and I did end up holding the rental. I never wanted to be a landlord. I wanted to flip.
Well, here it is 14 years later and I've got about 40 doors and have flipped or otherwise been in maybe 50 other deals.
As @Mike Gonzalez said, you can only learn so much from books, podcasts, etc. While forums are even better, nothing beats talking with other investors and asking them this question. Hear how they got started, why they chose the particular path they are now in, the pros and cons, etc. You'll find you start to resonate with some strategies and not with others and it'll help you decide what you want to start with. But like me, from there it might branch out into other things as well.
Larry,
Thank you so much for taking the time to share your experience. You definitely got in at an amazing time, and you didn't even know what a blessing you were about to step into. So awesome!
Wishing you all the best on your continued journey!
- Investor · Germany · Member since 2021 · 23 posts · 33 votes4y
Quote from @Dave G.:
Ok, the beginning of my "journey" was as follows:
It started in pre-internet days. I was 22 years old and ~1 year out of college. Full of ambition & broke as hell, a RE investment book caught my eye at a used book store. I couldn't read it fast enough. Then I promptly read all the real estate books I could get my hands on from all the public libraries in my county. Then I decided to become a realtor to 1) help learn the transaction process 2) give me access to the MLS and 3) I hated my job at the time so I needed new one anyway.
Within 6 months, I bought 3 properties, all no money down. I quickly got tenants in each property after closing, but I was over-leveraged and had negative cash flow. I had no reserves either. And as a new realtor in a horrible market, my "employment" income was barely enough for me to live on, let alone feed the alligators. I had made serious errors that were not recoverable and was forced to dump all three properties within 18 months.
Please don't do what I did.
Dave,
Thank you so much for taking the time to share your experience. I love that you jumped in with the realness. Seems like you started off on fire for information, and I resonate with that. Thank you for sharing your experience! I am sure you learned so much from your mistakes. I am glad you stayed tenacious, as I am sure it paid in dividend.
Thank you again. Wishing you the best in your continued journey.
- Shannon
- Investor · Germany · Member since 2021 · 23 posts · 33 votes4y
Quote from @Taylor Dasch:
Hey Shannon, I got started just by moving out of my primary residence and renting it out. However, In my mind, I truly got started after reading rich dad poor dad. I sold the house that I was living in and down sized significantly. I refinanced my first primary residence and purchased two properties - one LTR and one STR. Then while prospecting for listings - door knocking - I came across a vacant property and it turned out to be a killer deal. I paid him quite a bit more than what he wanted. This will be my next project and I am using hard money for it. All of this happened within the past year because I'm familiar with my market and am pretty comfortable with rehab costs, ARV, and rental rates for Temple, TX. So my advice for everyone is to analyze deals daily - you will find that you can know just about what any property will rent for or sell for without having to do any analyzing at all, this puts you ahead of other investors which is crucial in this crazy market!
Taylor,
Thank you so much for taking the time to share your experience. Huge fan of Rich Dad Poor Dad. Downsizing your life showed true commitment, it's hard to walk away from your comfort zone. I love Temple, my old stomping ground. Such nice houses out there. I'll definitely take your advice of analyzing deals daily, I know it's easier to recognize patterns after you see them often.
Thank you so much for sharing your experience. Wishing you all the best in your continued journey.
- Shannon
- Rental Property Investor · Gwynn Oak, MD · Member since 2015 · 42 posts · 19 votes4y
@Shannon Glanton Keep it simple yet very lucrative. Start with Lease options: Sandwich Lease options and Wholesaling lease options. Here are 3 no bs or fluff resources. 1) Google The Simple Man's Guide to Real Estate, Bill Vaughan 2) Joe Bodek 3) Justin Chamness. As regards to software REI Pro and the Automated REI.
- Rental Property Investor · Richmond Virginia · Member since 2020 · 4 posts · 1 vote4y
Hey Shannon,
Welcome! First off this site is a wealth of information and I go through as much as you can before first deciding what type of investing you want to do (house hack, buy and hold, flip, multifamily, etc). Disclaimer: each one of these are DRASTICALLY different is risk tolerance, cash needed, and returns so do your homework!
I am fairly new to this myself, having purchased my first property about 2 years ago and just closed on property number 2 just a few weeks ago but I was immediately drawn to the buy and hold. I am married with 2 little kids so house hacking (while extremely financially attractive) was not an option for me so I went the conventional route. This decision was best for my families needs, however, requires a lot more upfront cash since it is considered an investment property and not a primary residence with your lender.
Step 1: talk with a lender and see what you are qualified for and go through the different options you are interested in doing (you may be limited here so good idea to find this out early). No one really wants to say this out loud, but your income needs to be very strong in order to do this well and still be in good shape financially. If your income is not $150k+ with zero consumer debt I would strongly advise you to wait until you get your financial house in order. Its ok to wait until you are ready!
Step 2: Find a real estate agent you like, knows the area well, and gets what you are trying to do (and see value in the partnership). They can help advise on areas they recommend and places that are "not so great".
Step 3: Start looking! Do NOT get set on one particular house/property! This draws in emotion, which leads to bad decisions in most cases. If you really liked a property but lost it, its ok there will be another one. Do not get attached ever! These are investment properties for your business, nothing more.
Step 4: Once your offer is accepted I would strongly encourage to find a great property manager (even if you are house hacking). They will do all the background check, income verifications, leasing agreements, and renewals (and keep you updated on things needing to be repaired). They can also be an amazing resource for what/if any areas of the property should be "updated" to bring in more rent. Some things are obvious, but not all and depend greatly on what else is available in the area.
Hope this helps! Last thing. For the first property I would be very conservative. Please don't try a big flipper project or multifamily right out of the gate. Learn everything you can with the first one and step up slowly. Good luck!
- Rental Property Investor · Napa, CA · Member since 2016 · 68 posts · 57 votes4y
@Shannon Glanton congrats on the start of your journey! This is a great place to learn and build confidence/knowledge. I started by journey in 2015 by reading the BP books, forums, and listening the podcasts. I did a house hack on a 4-unit property in Oakland, CA on a FHA loan for my first investment. It was intimidating to get started in an ultra competitive market but I found my "unfair advantage" was my flexibility to live in a up-and-coming area, put a low down payment on it, and add value myself. I made a few mistakes along the way but it ended up being the best purchase I'll ever made become of the experience/confidence I gained though the process.
- 4yJordan MoorheadBusiness MemberReal Estate Agent · Austin, TX · Member since 2015 · 5k+ posts · 3k+ votes
@Shannon Glanton I started househacking and did a minor rehab to my first. That allowed me to get into more challenging projects and have the capital to start doing that within the first year. I've continued to househack for the last 6 years and am living in my 4th. It's made me over $500,000 in equity and cash I've used to buy more rentals. I'll continue to househack in some form or another for the foreseeable future!
The Moorhead Team5140 Reviews - Real Estate Agent · Los Angeles, CA · Member since 2018 · 2k+ posts · 1k+ votes4y
Hey Shannon,
Being in Los Angeles, prices are higher so I had to get creative. My first property was a fixer condo in a good part of town. I raised my interest rate to as high as possible in exchange for a lender credit to help pay for the closing costs, fixed up the condo, and rented out the second room. I then refinanced twice in six months because the numbers made sense. Because Los Angeles is an appreciating market, I used a HELOC and bought a second house hack while renting out the condo.
A couple of things when getting started:
1. There is always going to be some level of risk, just understand what yours is.
2. People will always tote buying a fixer because of the equity gains but they never talk about carrying costs. If you decide to buy a fixer, know that you may not be living there during the remodel and need to factor that in. Start small to get your feet wet and to reduce the risk.
3. Real Estate is a long term play. As Brandon Turner said in one of the episodes, "real estate is forgiving." It's okay to screw up as things take time.
Good luck!
- Real Estate Agent · Colorado Springs, CO · Member since 2019 · 26 posts · 15 votes4y
The easiest way to start is with the home you currently live in. Rent it out and use a VA/FHA loan and buy a home you can house hack (single home with an ADU/duplex/triplex/4-plex). Don't own a house? Get a VA/FHA loan and buy one. Do that a few times, you'll soon have the equity in the others that you can use to buy investment properties to buy and hold. My favorite are BRRRRs. Find homes you can force equity, get your original investment back from a cash out refi and be able to charge higher rents in. Once you get to about 5, time to start thinking about commercial loans, putting your houses in trusts and making the beneficiary an LLC. Lot's of options for sure, but the best place to start is with the home you live in (if you already own it). Don't want to move or don't have the 3.5%+ for a down payment? Consider sectioning off a part of your home and using it as a short term rental to save some cash. Bottom line, "There's no place like home".
- Real Estate Broker · Portland, OR · Member since 2018 · 123 posts · 71 votes4y
The easiest and most comfortable way to start real estate investing is by owner occupying it. You are living in it and managing it. That could be a duplex/triplex, a house hack, a single family with an ADU in the basement, etc. Living in it makes it really hands on. You get better rates on financing since you are owner occ and you can really get your feet wet, get comfortable, etc before you dive into a bigger project.
- 4yDan H.Pro MemberInvestor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
I started by house hacking a single family home (renting out a BR) that needed a little TLC. I upgraded both bathrooms, the ketchen, all the flooring while living in it. When it was time to upgrade to a bigger/nicer property, i converted the SFH into a rental. I upgraded the windows and sewer piping when I moved out but prior to renting.
It worked, but knowing what I know today, I would improve on the way I started.
Instead of a SFH I would start with a detached duplex in need of asome TLC. FHA counts the income from the second unit for your income qualification which is not the case for ADU. FHA requires triplex and quads to be self sustaining which they typically are not in the higher priced markets. That leaves a duplex. My SFH that used to be my home is my worse performing RE (but has still been outstanding). Why is it the worse? It was purchased to be a nice home for me and not with much regard to the investment potential (I figured it would be good, but I did not compare it to other options). A detached duplex in my market would have had similar appreciation to the SFH and much better cash flow.
So if I were to start today, I would look for a detached duplex in need of some TLC and purchase it with a high LTV loan such as FHA or better, if you qualify, a VA loan. I would move into the unit that was in more need of the TLC and rehab it while living in it (sweat equity). Note usually rehabbed units are empty and the mortgage has to be covered without anyone paying or living in the property. Once the upgrades were complete I would rent the upgraded unit at top of market price (it would have just completed an upgrade) and move into the other unit and then upgrade that unit. With a high LTV loan it is not too likely that a refi (which typically would not be at as high an LTV) is unlikely to extract any value. However, you have increased the equity thorough your efforts.
So basically I would combine house hack of a detached duplex with the value add of the rehab.
good luck
- Palm Desert, CA · Member since 2017 · 52 posts · 11 votes4y
@Shannon Glanton
Hi Shannon, I'm actually in the same boat... I've been studying for awhile, and I'm still not sure where to start. I want more of the wholesaling, creative financing strategies, like what the Wolff Couple share, as I don't have any money to start or good credit. I would really like a mentor, but with no money, they're hard to find.
Anyway, if you find a good starting point, let me know where it's at.
I hope you find something.
- Investor · Rathdrum, ID · Member since 2021 · 47 posts · 42 votes4y
Hi, Shannon! My wife and I started by getting a flip property using hard money. When that sold, we paid off the Hard Money, and used the profits to put a down payment on a FHA loan primary residence. Appreciation happened, and we were able to get a HELOC. That HELOC has since funded another flip, and we loaned out the rest to another investor where we are in 1st Lien position for their loan. There's faster ways to start learning from what we've done. If you can find a duplex or if you're able to rent out the rooms in your home, you can house hack. Especially if you find something that needs some TLC, and have means to repair the property. Get that BRRRR going. Hope that helps! You're welcome to message with any questions
- Rental Property Investor · Member since 2021 · 29 posts · 34 votes4y
@Shannon Glanton
I guess some people are calling us house-hackers now, but my wife and I started with what used to be called an owner-occupied duplex and I'd recommend it. I'd go into it just planning to buy a duplex to live in. It takes a lot of the pressure off, telling yourself you just want to buy a duplex rather than wondering where to start to end up with "200 doors". In my head, I compare it to eating an elephant: I buy something (take a bite) and then I have to "chew" for awhile. I've always thought of getting comfortable owning a property as chewing. When I got comfortable owning one, I swallowed and started looking for another. Our second property was a small commercial that we weren't looking for. I thought it would be good for my Dad, who had recently retired but he has NO interest in real estate. The more I looked at it, I couldn't let it go and we bought it. It helped me early on to just look for one property with the intent to buy one, whatever it was, get used to that and eventually I'd get the itch again.
I was recently searching on Loopnet to find where there might be better cash flow than the two markets we're in right now, and Killeen and Copperas Cove caught my eye. I've been thinking about going down there to try to figure out why we shouldn't buy something there. I know you can at least find cash flow in that area. Best of luck to you!
- Investor · USA · Member since 2019 · 117 posts · 57 votes4y
"If you can't see the whole staircase, just take the first step" - Martin Luther King
- 4yAndy RouschPro MemberInvestor · Mt. Arlington NJ · Member since 2018 · 251 posts · 143 votes
@Shannon Glanton
Learn as much as you can, analyze smart but don’t over analyze or you’ll never start
- CPA · Miami, FL · Member since 2015 · 132 posts · 83 votes4y
@Shannon Glanton, Just jump on it! Start small so it is more manageable. That is how I started - with an apartment that I bought with my sister. I would also suggest that you buy your first property in your town, especially if you have a full time job, that way you can be involved and learn the business.
If you are single, or even married without kids, you can do short term rental (if you think that is something you may like - watch some videos about the pros and cons). Either way. Make sure to run the numbers as if you were to do long term rent.
Good luck and enjoy the ride!
- 4yJoe HammelBusiness MemberReal Estate Agent · Metro Detroit, MI · Member since 2018 · 612 posts · 666 votes
@Shannon Glanton
If you’re single or single income the #1 method is to househack. Get rid of a monthly mortgage payment. Can get in to a househack for 3.5-10% down and then save up to guy buy another rental with savings. That can put you at 3 doors quick.
If you’re dual income, just save one salary and start buying $100k houses at 15-20% down. It compounds.
Question
“Where do I find cash flowing properties for $100k?”
Answer
“The ring cities of metro detroit”
FIRE Realty Team - Keller Williams5377 Reviews - 4yJoshua JanusBusiness MemberRealtor · Cleveland, OH · Member since 2021 · 1k+ posts · 1k+ votes
@Shannon Glanton Is a house hack a goal of yours in the future? Study the requirements for an FHA loan like a book and make sure to set yourself up for success. Examples would be building up your credit, getting the most recent tax returns for the last 2 years in the same field, building up capital for the down payment, closing costs and 6 months in reserves so you can use as much of the rental income from the other units as your own income when you getting qualified. These are some barriers I had to make sure to be able to climb over. Let me know what questions you have.
I drove for Uber during college for roughly 18 months to get 2 years of the same 1099 income on my tax returns. Theoretically you could do it in just 13 months but you want to make sure you have enough income shown to qualify. I wrote off too many items and miles the first year and didn't realize the consequences of that. In terms of cash, I have conservatively allocated 20k for my house hack. 6125 (3.5% of down payment) + 4000 (closing costs) + 7000 (6 months of cash reserves to maximize the rental income I can pull from the other units to help me qualify) = 17.125k. The extra 3k is for any cosmetic upgrades or repairs that I make to add some value although that isn't the main goal with this house hack. It is to live for free and build equity! - Rental Property Investor · Boston, MA · Member since 2019 · 2k+ posts · 1k+ votes4y
Welcome Shannon! My BEST piece of advice.
BE FEARLESS. Only listen to folks IN THE GAME! Ignore anyone and everyone who is not investing in Real Estate.
They. Do. Not. Have. A. Clue.
Lastly and most important, HAVE FUN + MAKE LOTS OF $ !
- Lender · Virginia Beach, VA · Member since 2018 · 49 posts · 38 votes4y
“The average millionaire has 7 sources of income”
So your whole beginning should be with the mindset to produce sources of income.
Example… rental income
I would start with a home purchase as a primary residence first. This gives you the best option for acquisition costs. You can buy 0% down payment if you use a VA Loan, as low as 3.5% down payment with FHA Loan. You may get the sellers to cover all or some of the closing costs. Your interest rate will be lower as a primary residence than if you were to buy it as an investment property.
While you are living in the house you get to see all the maintenance items that come with home ownership, good to know for future investment properties. You can start to rent out a space (room(s), loft, garage, backyard) in your primary residence. This will get you knowledgeable on listing your space, screening tenants, background/credit check process, lease agreements, collecting rents, renewing lease agreements, evictions. It will be much easier to do and learn while it’s right next to you and not across town or in another state.
Once you feel you have all the basic fundamentals squared away above, it can be time for you to start looking for another primary residence to move into. Keeping the original home as a full rental property to rent out in many different ways (AirB&B, month to month, furnished finder’s, yearly , house hack).
Hope this sheds some light as a much easier entry point and education system of being a multi rental property owner.
Crawl, walk, run, fly!!! - Rental Property Investor · Columbia, SC · Member since 2020 · 302 posts · 186 votes4y
@Shannon Glanton I bought my first property out of college and got hooked. From there, I joined eXp and worked on growing my portfolio and the portfolios of my clients.
I agree with @Eric Bilderback I would definitely start with a house hack. It's going to lower your expenses. Multifamily is great, but you can also do SFH and rent by room if you can't find multifamily. Also, consider converting a house to multifamily as well.
It is definitely a personal choice of what to focus on and in order to know what to focus on you need to know your goals. It is a fun adventure. Best of luck!
- Rental Property Investor · Littleton, CO · Member since 2014 · 150 posts · 114 votes4y
I regret not starting sooner. After years of thinking about it we started in 2017, bought a house with little cottage in Colorado Springs, then a triplex then a house we added a cottage to, all in the Springs. Last year we bought a duplex plus cottage we turned into nurse rentals in Pueblo. We actually just listed the first house with cottage property for sale, and are going to buy something in Arizona, which is where we will eventually retire. Its been a great little investment, and I hate to give it up! As long as you have cash flow, you can't go wrong!
The springs has lots of house/cottages or ranches with basements that would make great second units for house hacking.
Best of luck.
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