How to start in such a hot market

Question

Hello! My name is Mason, i currently live in Dallas Fort Worth. I am looking to began my investing journey by the end of 2022. I have been reading and learning a lot over the past 2 years. I am just reluctant to pull the trigger on any big moves because i guess i lack knowledge on lending and finding homes. I think the BRRRR method is the best way for me to be able to own a home without a lot of capital. How would y'all recommend going about finding the right hard money lender? and do i need to do that before seeking out homes?

I am very eager to get started and own a home that i can turn into an AirBnb. I just need some guidance or a mentor to help on the first couple of steps of getting these processes started. Any advice?

Andrew Postell · Answer

@Mason Arispe thanks for posting.  Always great to hear from a fellow Texan.  The first thing I would guide you to do is network with some other investors.  Learn about what they are doing.  See what works in our market.  I mean, posting here is a form of networking but there are several groups that meet in our area and many of them meet in person.  Ask other local investors who they are using for this or for that.  They've already done all the hard work for you!  And many of these networking groups are educationally based.  You might be surprised what you can learn in this year alone.  Here's some of the groups I would recommend to you:

Real Estate Groups

DFW REI Club – www.dfwreiclub.com
– meet about 50 times per year.  Lots of different topics and a very friendly group.

Impact Grapevine
- https://www.meetup.com/DFW-REI-Network-Investing-Meetup/
 - Started in Bigger Pockets and super friendly atmosphere. This is the one Sherry Patterson hosts

Impact Arlington - https://www.meetup.com/impactarlington/  - Tony Jardieu hosts and has good speakers

The REMeetup - https://www.instagram.com/theremeetup/  - Meets in Grapevine about once per quarter

Texas Tuesday Real Estate Mastermind – www.ttdfwrem.com - https://www.facebook.com/texastuesdaydfwremastermind

Jerry Tello · Answer

Yes absolutely get really good at analyzing properties and identifying what is a deal and what is not. Also beware of what city you do it in. some places like Arlington have designated areas for Short Term Rentals (STR). I'll be happy to answer any questions you might have about the area or how to find deals.

Jeremy Kitchen · Answer

Hey, Mason! I would definitely start with finding the right deals if possible. I'd start with analyzing a LOT of deals in your area.  See what things are selling for post renovation, find a property with the 70% rule (buy a property to buy  for no more than 70% of its after repair value, which includes all fees and renovation budget), find a good wholesaler in your area or another way to purchase off market properties and go from there.  If you have the deal, the money will be easy to find by leveraging your network of wholesalers/real estate agentsHard money lenders criteria are different than conventional financing. You usually have to have the property under contract, or close to before you can shop hard money lenders.  We don't start with a credit check or a pre approval letter or anything because it's mostly deal and investor dependent, with many variables.  I do it in Idaho.  There's still typically 20% down and other lender fees up front to show you have skin in the game.

Also, make sure you have your criteria in order.  A hard money lender is going to ask your exit strategy for their short term loan.  Whether that's flipping or refi.  If you're going to keep it for an AirBnb (awesome idea btw), just make sure you do your market research with Mashvisor and airdna.

Hope that helps!

Masha Rizzi · Answer

I'm also more of a newbie and would personally be a bit wary about getting a hard money lender for my first deal. Hard Money lenders usually have a timeline and, being new, your project may exceed that timeline which could get you in some trouble. Is there a reason why you want to use a hard money lender rather than traditional financing on your first deal? Either way, definitely shop around for the best terms and rates available to you!

How to start in such a hot market

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