I want to educate myself before I invest.  There are an overwhelming number of avenues to do so, but deciphering which information to trust and implement has me baffled.  Advice from those with personal experience is always welcome, and in this instance, humbly requested.  Please note demographic influences, if applicable. Thank you!

@Casey Helmick welcome.  Do you have any more specific questions?  And can you explain what you mean by 'demographic influences'?  Do you own or rent your primary? Is there a specific market you're looking at?  Are there any strategies or niches you're interested in?

I started "investing" when I moved out of a condo - my first primary - and kept it as a rental.  It doesn't cash flow - I break even every month - but I kept it because ( 1 ) it's in an 'A' neighborhood, ( 2 ) it's appreciating in value, and ( 3 ) I don't have any reason to sell it.  I then purchased 2 more mediocre deals.  Then I discovered BiggerPockets.

Originally posted by @Casey Helmick :

I want to educate myself before I invest.  There are an overwhelming number of avenues to do so, but deciphering which information to trust and implement has me baffled.  Advice from those with personal experience is always welcome, and in this instance, humbly requested.  Please note demographic influences, if applicable. Thank you!

 With so many different ways to invest in RE, it can be hard to narrow one strategy down and focus on it. House hacking tends to be one of the easier ways to get started but you have to start with your personal situation & goals. 

What are you trying to get out of RE? What sort of financial position are you in personally? What skills do you already have?

Answers to these questions will allow us to give far more useful advice!

-Dan

Originally posted by @Nicholas L. :

@Casey Helmick welcome.  Do you have any more specific questions?  And can you explain what you mean by 'demographic influences'?  Do you own or rent your primary? Is there a specific market you're looking at?  Are there any strategies or niches you're interested in?

I started "investing" when I moved out of a condo - my first primary - and kept it as a rental.  It doesn't cash flow - I break even every month - but I kept it because ( 1 ) it's in an 'A' neighborhood, ( 2 ) it's appreciating in value, and ( 3 ) I don't have any reason to sell it.  I then purchased 2 more mediocre deals.  Then I discovered BiggerPockets.

I suppose I’d be most interested in avenues that are more low risk for now.  I just graduated college, and I am working on putting back a decent safety net (large enough to have both a good amount of savings and a down payment). My girlfriend works for an attorney, and I work with National Home Builders and Custom Home Design-Build firms...so it might make the most sense for me to begin with flipping since I have contacts.  I’m genuinely just tying to figure out what’s the best way to begin this journey without putting anything on a credit card.  I also listened to Karen Rittenhouse in episode 2 of the podcast, and I loved the idea of taking over someone’s lease (I’m honest and hard-working enough to take the burden/opportunity seriously).  I would like to take over a lease, renovate, and either rent or sell, depending.  Demographic influences refer to things in your area that affect the market, such as, the ever prevalent covid in large cities.  Another example: I am in CO, and all the skiing towns are extremely expensive and seasonally demanded.  I currently rent since I may have to move to DC or NYC in 2022.  I would be totally fine breaking even; it sounds like you’re paying off two mortgages without losing money and that’s a great place to start!

Originally posted by @Daniel Haberkost :

Originally posted by @Casey Helmick:

I want to educate myself before I invest.  There are an overwhelming number of avenues to do so, but deciphering which information to trust and implement has me baffled.  Advice from those with personal experience is always welcome, and in this instance, humbly requested.  Please note demographic influences, if applicable. Thank you!

 With so many different ways to invest in RE, it can be hard to narrow one strategy down and focus on it. House hacking tends to be one of the easier ways to get started but you have to start with your personal situation & goals. 

What are you trying to get out of RE? What sort of financial position are you in personally? What skills do you already have?

Answers to these questions will allow us to give far more useful advice!

-Dan

Hi Dan!  A fellow Coloradan :)

My personal goal is to begin investing by the end of next year, so I have a hefty amount in my savings.  I want to begin this journey without putting anything on a credit card; I have always avoided debt.  Since I am so newly out of college, I want to begin with lower risk.  I have an assortment of builders and interior designers in my contacts, so a renovation/house flip may be more appropriate.  I like the idea of taking over a lease, renovating, and either renting or selling.  However, I’m open to suggestions.

Like most everyone on this platform, I want to build a business that provides me with financial freedom.  I have a very good job that’s considered high income.

My skills: I have years of customer service and sales experience.  I also work in B2B sales and handle accounts for National Builders and Custom Home Design-Build Firms, as well as, distributors and interior designers.

If you want lower risk, buy a duplex or house with a secondary suite for a long term rental.  Live in half and rent out the other half.  After a few years, move out and buy another one.

Short term rentals are a lot of work, flipping is really risky and more time consuming.

@Casey Helmick it’s best to link up with other local investors who are already doing what you’d like to do. Investment advice from one part of country may not apply in a different part.

@Casey Helmick

That’s cool, what city ?

And gotcha, you could start by flipping houses, but that’s fairly risky and it’s quite a challenge in our current environment to buy low enough to make the numbers work.

I would highly recommend house hacking as it’s a great first step into RE. It’s easier to manage tenants as you’re right there living next to them and eliminating your housing expense drastically increases your savings rate which makes deal #2 come much quicker!

Here in CO Springs there’s a huge demand for room rentals and I know Denver is the same way which also makes house hacking work really well.

Have you considered that option ?

@Casey Helmick makes sense.  A few thoughts in no order:

-Renting is a great deal in the short-term, so if you're thinking of moving to DC or NY as you stated, continue renting, and then rent when you get there.  Yes, you don't build equity when you rent, but you get tremendous flexibility - no closing or financing costs to start or end a lease!  I just moved out of the DC area so I'm pretty familiar with the market there.  It's expensive, but there are also lots of people making money in it, and there are some tremendous REIAs.  (My condo is in Arlington.)

-Brandon typically says on the webinars that your first deal probably isn't going to be a home run, but as long as you don't buy a bad deal, you'll probably be okay.  I think that, provided you have strong cash reserves, this is probably true.  Say you buy a rental, miscalculate the expenses, and you end up negative cash flowing $34 a month.  Okay - lesson learned.  What levers can you pull - can you switch to self managing to get rid of property management costs?  Can you make some cosmetic improvements to raise the rent?  Can you sell it?  What you wouldn't want to do is buy something that you're negative $1000 a month, since that would burn through any savings you had pretty fast - but if you follow the advice on BP that seems unlikely.

-I think by 'demographic influences' you might mean 'choosing a market to invest in' - but let me know if that's not the case.  If you browse the forums on BP, you'll basically learn what you probably already know, which is that the south and midwest have lower barriers to entry than the northeast, the west, and the expensive big city markets.  But... there are investors making money in every market and every city!  So it just depends on where and how you want to get started.  In Virginia, higher cash flow is going to be found in the outer suburbs and exurbs... but there are also savvy investors making major money on flips and condo conversions in DC.  They tend to be very experienced, though; familiar with the DC permitting and reno processes; and with access to significant capital.

-I agree with others in this thread that house hacking is a great, low risk way to get started.  In DC (to include the Virginia and Maryland suburbs) there are very, very few multifamily properties, but you can still house hack - you'd just be doing it by the room.  Some of the older Virginia suburbs probably have single family houses you could buy, house hack, and reno.

@Casey Helmick Read "Rich Dad, Poor Dad" for mindset education and motivation. Read "Millionaire Real Estate Investor" by Gary Keller (owner/founder of Keller-Williams Realty). These two books kept me motivated and furthered my education in RE investing. 

Personally, I told myself that I just wanted to be in the game. I wanted to understand every aspect of real estate and know it well. My first deal was a small 2 bed 1 bath single family home, and I liquidated my IRA to pay for the down payment. I'm really glad I took the leap of faith because that property has cash-flowed well and helped me acquire other properties.

I picked one thing to focus on and took action. That's all you can do when you're first starting out. If you overthink things and try to avoid EVERY issue you'll never get started. Pick something that you see yourself doing and run with it. Best of luck to you!

My best advice is to train yourself to spot opportunities in your market when you see them.  You accomplish this by knowing your market.  How much should a fixer sell for in Neighborhood A versus neighborhood B?   How about a renovated house? 
What are the rents in these neighborhoods for a 1 bedroom, 2 bedroom, 3 bedroom? For a condo versus a SFR? condo downtown versus in the boonies? How much life does the roof have of the prospect you are looking at? What is the cost of a new roof? composite shingles or some other covering? an HVAC system? Will you have to replace the sewer lateral by county ordinance if you buy? What sources of capital are available to you at what rates?

Real estate investment, like any other, is essentially about finding arbitrage opportunities, mispriced assets.  Market knowledge lets you see them.       

Originally posted by @Daniel Haberkost :

@Casey Helmick

That’s cool, what city ?

And gotcha, you could start by flipping houses, but that’s fairly risky and it’s quite a challenge in our current environment to buy low enough to make the numbers work.

I would highly recommend house hacking as it’s a great first step into RE. It’s easier to manage tenants as you’re right there living next to them and eliminating your housing expense drastically increases your savings rate which makes deal #2 come much quicker!

Here in CO Springs there’s a huge demand for room rentals and I know Denver is the same way which also makes house hacking work really well.

Have you considered that option ?

 I am in downtown Denver.  I frequently travel much of CO and sometimes Seattle due to my work, though.

I have not considered house hacking, but I will have to further educate myself on this, thank you.

Originally posted by @John Lyszczyk :

@Casey Helmick Read "Rich Dad, Poor Dad" for mindset education and motivation. Read "Millionaire Real Estate Investor" by Gary Keller (owner/founder of Keller-Williams Realty). These two books kept me motivated and furthered my education in RE investing. 

Personally, I told myself that I just wanted to be in the game. I wanted to understand every aspect of real estate and know it well. My first deal was a small 2 bed 1 bath single family home, and I liquidated my IRA to pay for the down payment. I'm really glad I took the leap of faith because that property has cash-flowed well and helped me acquire other properties.

I picked one thing to focus on and took action. That's all you can do when you're first starting out. If you overthink things and try to avoid EVERY issue you'll never get started. Pick something that you see yourself doing and run with it. Best of luck to you!

  

I will put those 2 books at the top of my reading list.

It really is a leap of faith, but I understand that “with great risk, comes great reward.”  For my first few deals, though, I am very focused on weighted risks.  I am reading articles and books to figure out how I want to pay for my first leap.  I would love nothing more to be able to pay for other deals with money I make from my first deal, like you.

That is absolutely fantastic advice.  Thank you for your time and expertise.

Hi Casey,

I am in love with Colorado! Would love to find properties (even one for myself eventually) in Denver or Golden/Boulder. 

Anyway, I am in your exact boat. HOW do people decide what route is best for them when there are so many to choose from? I thought for sure I was going to start with a BRRRR. Got the book, read the whole thing. But it's way too intimidating to take on a full-on remodel like that if you ask me, as a total newbie. No way.

I'd love to do the house hack. I basically have done that the entire time I have owned. I had boyfriends who paid half or more of the mortgage, lol!!!!! 

They paid half of market rent price, basically. But now I don't live anywhere. I live in my travel trailer and travel full-time so I can't house hack. I have to keep residence in Florida (Domiciled) to keep my health insurance.

I'm currently leaning towards duplex buy and hold/fix up for better rent. I want cash-flow properties. (Easier said than done/found)

Feel free to connect with me if you want/need head to bounce thoughts off of. I think people tend to 'get' things better when they speak out loud about  them. Thoughts are THINGS. We can make whatever we want to happen, happen, basically. 

Good luck and maybe I'll hear from ya!

Hey Casey! From what I can tell, I am currently where you want to be at the end of next year (we are on the verge of buying our second property!). I highly encourage you to keep reading all the comments from the seasoned investors and wanted to share my advice from the past year of learning, planning, and practicing for launching our business. 

Background: My husband and I have been preparing to buy our second property for a year now. We bought our first property (a duplex) about 2 and a half years ago. It wasn't a risky first-time buy, but it made us realize we needed to #1 Save #2 Learn #3 Plan. 

Looking back: In the past 3 months I have been doing home renovations along with contacting accountants, commercial lenders, private lenders, hard money lenders, property managers, real estate agents, and other business owners. I have learned more in the past 3 months than I did in a year of reading books, listening to podcasts and planning. I don't want to dismiss the saving, learning and planning stage but I do want to encourage you to get hungry to start. You might need to save less than you think. Or you may be able to start with house hacking a duplex similar to what we did starting out- even if you are still in school! You are already strides ahead by being active in a REI network like BiggerPockets.

Take away: You can still be active in real estate investing without buying. Join a REI group, take on a home projects for family or friends, watch the market in your area, tour other apartments or houses for fun. The more you are active the faster you learn and the more people get to know your face!

I'm just finishing Millionaire Real Estate Investor, it's a great book! I also really liked The Weekend Millionaire's Secrets to Investing in Real Estate. I've spent the last several months reading as many books as I can in my spare time and listening to as many podcasts as possible in my daily commute. I find recurring themes and strategies that come up over and over, gaining the knowledge from multiple sources has helped to narrow my focus and weed out the strategies that don't seem to fit me and my plan and also has helped me to discern what information seems to be bogus. I also have started talking to industry professionals such as my mortgage lender at the credit union, an RE investor that I work with in my "day job", and a RE Agent I'm an acquainted with. My plan is to acquire as much knowledge as possible and complete my written business plan with a timeline for achievements. I'm a few weeks from completing a studio apartment I'm building in my primary residence and I have a tenant ready for an Aug 1st move in date. I'm starting with this house hack and then I'll follow my plan that I want to implement as soon as this first project is complete.

Steps I'm taking...

1. Acquire as much knowledge as possible (Books/Podcasts/Interviewing Industry Professionals and Investors)

2. Writing up a formalized Business/Investment plan (Who, what, when, where, why, how)

3. Begin Marketing by letting people know what I intend to do and when. Making and handing out business cards, etc.

4. Implement and follow my plan and timeline. (Adjust or Pivot as necessary as I move forward, nothing is static.)

There is a heap of information out there, devour as much as possible from as many sources as possible! Good luck in your upcoming endeavors!

Hi @Casey Helmick ! I live in Colorado and know the feeling all too well! There is so much information out there that we over analyse everything and spend countless hours reading and listening to podcasts educating. Before you know it, a year goes by and no actionable or measurable steps have been taking. It also does not help that Denver is one of the most competitive and expensive markets out there.

Luckily my wife and I stumbled across house hacking. It is a very achievable 1st step to getting your foot in the door with real estate investing and being a active landlord. We landed our first Denver House Hack April of 2019 and we ABSOLUTELY LOVE IT!!! We plan on diving into a second one in late 2021 and turning our current house hack into a full time rental.

There are some very reliable realtors out there that are specialized in this unique type of investing. I would have never been able to get my wife onboard with real estate investing w/out there help.

Feel free to reach out if you would like more information or to hear more about our house hack process and financials.

Best of luck

Ben

I think "analysis paralysis" is the number one hurdle that most beginning investors have (fail) to get over.  Real Estate is very expensive compared to the typical costs most people deal with in their lives.  That makes it scary.

And it is tricky trying to give advice about this.  I mean, I don't want to encourage you to do something stupid!  ;)  At the same time, I do want to encourage you to trust in your own common sense.  I can (and I think many others here can), from personal experience, pretty much guarantee you that your first investment will have all sorts of negatives that you didn't know about.  Accept that.  And then move forward anyway.  You will learn a lot.  And your 2nd investment will be better, but you'll still learn ($$$) even more, making your 3rd investment better still, etc.  I like to think of this not inexpensive process as a different way of paying tuition for the education I need.  ;)

One nice thing about real estate is that it actually is pretty versatile.  Maybe you buy a house to flip, but can't find a buyer, so you turn it into a rental.  Real Estate has intrinsic value, and there is (almost) always away you can turn it into profit.  So you have more flexibility on an investment than you likely realize.

Learn as much as you can.  Seek advice.  Make the best decision you can.  And then pull the trigger.

I've been investing in the Denver market for a while and have had success with value add small multifamily. You can see more about my deals in my profile. From reading your comments, it sounds like you're young and still renting? If that's the case, for someone like you I'd recommend starting with a primary residence in an up and coming neighborhood, making improvements to add value, and living with housemates/a significant other to offset your mortgage payments. Sort of a "live in flip" combined with a "house hack", perhaps even combined with a "BRRRR" if you refinance out your down payment funds in a few years, to borrow the parlance of BP.

Here are some of the strategies that I see people executing successfully here in CO:

--Starting off with a condo. They are less expensive and thereby easier to find one that has positive cash flow due to the lower price point than a single family home. With condos it's important to verify that the association allows rentals and that the association is managed well and has reserves for Capex such as roofs and driveways, (in order to avoid getting hit with a big special assessment unexpectedly). Condos generally appreciate slower than other property types, and are the first sector to lose value in a downturn, but they offer the lowest barrier to entry and in Denver its easier to find a condo that cashflows as a rental than it is a single family home.

--House hacking/ renting by the room. It's more management intensive but you can get a lot more in rent by renting the rooms of a home out individually. People are making this work in this market. Covid-19 has probably made this strategy a little more challenging due to people being less inclined to live with a bunch of roommates right now, and occupancy limits for non-related residents is also something to consider with this strategy, but it can be a great way to maximize rent in a single family home that otherwise wouldn't provide much (or any) cash flow.

--Buying a fixer, fixing it, and renting it. Sort of like a fix and flip but holding it instead of flipping. This is an active strategy but I like it because you build in initial equity, and you can create positive cashflow (assuming you get enough of a discount on the property due to its condition). It can be harder to find financing on truly distressed properties, so many people use cash or hard money lenders to get started and then refinance into a conventional loan to access their equity when the project is completed (known as the BRRRR method, Buy, Rehab, Rent, Refinance, Repeat).

--Investing out of the metro area. I have friends and clients who are building their portfolios in areas about 45min to 1hr. outside the city, where prices are much lower and price to rent ratios are more favorable for rental properties. Some examples include Frederick, Firestone, Johnstown, Longmont, Loveland, or even areas closer to the metro that are less expensive but rapidly improving like Aurora (especially north Aurora), Cole, Barnum, East and West Colfax, Commerce City, etc. There are still pockets of affordable areas all over the city that are on the upswing.

--Long distance investing. I know several people here who have gone this direction. I also know several who got burned pretty badly so be careful. It can definitely be done but comes with additional challenges and risks over investing locally. If you consider this avenue, I would recommend looking at places where you have someone on the ground you can trust 110%.

--If you can afford to go straight into multifamily, the economies of scale in this category make it much easier to generate initial cash flow. However MF properties are hard to find and have a high barrier to entry (25% down on a ~$500k+ purchase is basically where MF properties start, and a $1M purchase price budget opens up a lot more options).

It all boils down to what your personal situation and goals are. Most people are looking for at least some initial cash flow and many are priced out of multifamily so they start with one of the other above strategies. Other people are just looking to park some money and are okay without much initial cashflow, so they might go for a small multifamily with a low cap rate, in a low risk sub-market, and bank on getting their return from rent increases over time, appreciation, principle pay-down and depreciation tax benefits.

Flipping I'd say is a risky strategy to get into as a beginner at this point in the market cycle especially considering the current economic uncertainty, but on the other hand demand is also super high and inventory super low, which supports being able to sell a flip fast, so maybe it is a good time to flip. I know a few people who are having continued success flipping so it can certainly be done. If you do go for a flip here, keep timing in mind as our market is very seasonal. Flippers usually buy in November/December when sellers are most motivated, fix the property in the winter when contractors are slow and available, and list in the spring when our "selling season" begins and buyers are most active. 

For me the strategy that makes the most sense is small multifamily, in areas that are improving, and I like to buy somewhat distressed properties where I can make improvements, increase rents over time, and add value.

It helps to consider what your personal strengths are and play to your strengths. For example if you are handy and know construction/have contacts in that realm, that opens a lot of doors for you in terms of the condition of the property you're comfortable with taking on. If you have connections here and are able to source off market deals through your personal network of friends and family, that could be a huge competitive advantage as finding deals may be the biggest challenge here. Maybe you're good at managing and the best strategy for you is finding a poorly managed property and turning it around. Consider what you can bring to the table and go with a strategy that fits you personally.

Good luck and let me know if I can help further. 

Steve

@Steve K.

Great post!!! Glad to see people really putting effort into helping new people!

Originally posted by @Anna Shanks :

Hey Casey! From what I can tell, I am currently where you want to be at the end of next year (we are on the verge of buying our second property!). I highly encourage you to keep reading all the comments from the seasoned investors and wanted to share my advice from the past year of learning, planning, and practicing for launching our business. 

Background: My husband and I have been preparing to buy our second property for a year now. We bought our first property (a duplex) about 2 and a half years ago. It wasn't a risky first-time buy, but it made us realize we needed to #1 Save #2 Learn #3 Plan. 

Looking back: In the past 3 months I have been doing home renovations along with contacting accountants, commercial lenders, private lenders, hard money lenders, property managers, real estate agents, and other business owners. I have learned more in the past 3 months than I did in a year of reading books, listening to podcasts and planning. I don't want to dismiss the saving, learning and planning stage but I do want to encourage you to get hungry to start. You might need to save less than you think. Or you may be able to start with house hacking a duplex similar to what we did starting out- even if you are still in school! You are already strides ahead by being active in a REI network like BiggerPockets.

Take away: You can still be active in real estate investing without buying. Join a REI group, take on a home projects for family or friends, watch the market in your area, tour other apartments or houses for fun. The more you are active the faster you learn and the more people get to know your face!

House hacking a duplex sounds like the best avenue to begin!

I am quite anxious to begin investing, especially after reading all of the feedback!  Networking with others has taught me much more than reading books.  Thank you for the motivation and encouraging words, as well as, your advice.

Originally posted by @Michael Freed :

I'm just finishing Millionaire Real Estate Investor, it's a great book! I also really liked The Weekend Millionaire's Secrets to Investing in Real Estate. I've spent the last several months reading as many books as I can in my spare time and listening to as many podcasts as possible in my daily commute. I find recurring themes and strategies that come up over and over, gaining the knowledge from multiple sources has helped to narrow my focus and weed out the strategies that don't seem to fit me and my plan and also has helped me to discern what information seems to be bogus. I also have started talking to industry professionals such as my mortgage lender at the credit union, an RE investor that I work with in my "day job", and a RE Agent I'm an acquainted with. My plan is to acquire as much knowledge as possible and complete my written business plan with a timeline for achievements. I'm a few weeks from completing a studio apartment I'm building in my primary residence and I have a tenant ready for an Aug 1st move in date. I'm starting with this house hack and then I'll follow my plan that I want to implement as soon as this first project is complete.

Steps I'm taking...

1. Acquire as much knowledge as possible (Books/Podcasts/Interviewing Industry Professionals and Investors)

2. Writing up a formalized Business/Investment plan (Who, what, when, where, why, how)

3. Begin Marketing by letting people know what I intend to do and when. Making and handing out business cards, etc.

4. Implement and follow my plan and timeline. (Adjust or Pivot as necessary as I move forward, nothing is static.)

There is a heap of information out there, devour as much as possible from as many sources as possible! Good luck in your upcoming endeavors!

Thank you very much, Michael.  I hope you don’t mind that I screenshot your steps :)  We seem to have a very similar mindset.

To everyone that has commented:

All of the input I have received thus far has been tremendously enlightening, and I am very grateful for all of the selfless individuals that have taken the time to respond to this post.  Thank you all so, so much.

To everyone that will comment:

I look forward to reading your feedback and dearly thank you, as well.

Originally posted by @George Pauley :

I think "analysis paralysis" is the number one hurdle that most beginning investors have (fail) to get over.  Real Estate is very expensive compared to the typical costs most people deal with in their lives.  That makes it scary.

And it is tricky trying to give advice about this.  I mean, I don't want to encourage you to do something stupid!  ;)  At the same time, I do want to encourage you to trust in your own common sense.  I can (and I think many others here can), from personal experience, pretty much guarantee you that your first investment will have all sorts of negatives that you didn't know about.  Accept that.  And then move forward anyway.  You will learn a lot.  And your 2nd investment will be better, but you'll still learn ($$$) even more, making your 3rd investment better still, etc.  I like to think of this not inexpensive process as a different way of paying tuition for the education I need.  ;)

One nice thing about real estate is that it actually is pretty versatile.  Maybe you buy a house to flip, but can't find a buyer, so you turn it into a rental.  Real Estate has intrinsic value, and there is (almost) always away you can turn it into profit.  So you have more flexibility on an investment than you likely realize.

Learn as much as you can.  Seek advice.  Make the best decision you can.  And then pull the trigger.

I honestly appreciate all the motivation and decisiveness.  The idea of having to go into debt, especially in this magnitude, is daunting.  I find myself on a rollercoaster of emotions, constantly oscillating between terrified and equally excited.