Where to start as a newbie investor.

Question

Hey guys, thanks for all the warm greetings on this site. I've read MANY books on REI, attended a ton of meetups, seminars, bought a ton of materials hitch over promised and under delivered. Spent a ridiculous amount of money on programs and today I have yet to close 1 deal, know how to affectively view a good deal, etc. I've heard from a ton of gurus where they feel newbies should start in investing. Now I want to hear from people who are ACTIVELY investing on a day to day basis. Where is the BEST place for a newbie to start investing (what strategy is best), especially for one with very low capital and is looking to build capital for future projects? Is it essential to get a RE license to invest? Please feel free to add any thing worthwhile that can help myself or other newbies succeed in this business. Many newbies get easily discouraged and give up. As for me I'm a person who faces all odds regardless of how hard things seem to be. All advice will be put to practice and anyone willing to assist me on a one on one basis will be greatly appreciated. I can be a great asset to anyone whose already succeeded causing a win-win situation.

Dev Horn · Answer

Really appreciate the honesty in your post, Marc Cesar.  There are more people like you than you may realize.  Probably 95% of the people that learn about this business never do a single deal.

Think about what YOU bring to the table and network with others that are more experienced - tell them how you can help them make more $$.  Can you help find deals?  Manage contractors?  Manage rentals?  Find a way to get involved before you have to take on too much risk.  It's the risk that scares people (stating the obvious).  If you can help someone that you can learn from, you'll get valuable experience (and $ too, I'm not suggesting volunteer work here) that will help you when it's time to do deals on your own.

George Ghiorse · Answer

Decide if you want to be a wholesaler, flip properties or buy and hold as a landlord.  I would say for the beginner, the best thing is to find a mentor to help you pull the trigger on the first deal.  A mentor will improve your odds of success significantly and you will more likely continue to be a real estate investor.  Many who fail on their first endevour quit the game.

Account Closed · Answer

I'm sorry I don't have any words of wisdom for you on this topic, but I wanted to mention that I am brand new to the site and I am in exactly the same position as you.  I have read tons of information, heard all the pitches, and bottom line is, I want to hear from REAL people who are succeeding in Real Estate investing, and get an HONEST opinion about how to start out as someone eager, yet with little investment capital.  I thought you worded your post perfectly, and wanted to piggy-back on your desire for honest feedback.

Thanks!

Ryan R. · Answer

Marc Cesar, I'm a somewhat new investor but here's my advice.

Keep It Simple. This game is all about the spread. Find deals that you can buy and sell for more money. There are various avenues to do this; wholesaling, rehabbing, working with a local investor etc.

The ONLY way you can do this is to know your local market. If you can accurately assess a property's value, and rehab costs, you have the potential to make money.

The old adage holds true; you make money when you buy.

J Scott · Answer

Unfortunately (or not), that's going to be a requirement with ANY type of real estate investing you're planning to do.  If you can analyze deals, how will you be able to tell the difference between a good one and bad one?

J Scott · Answer

What type of investing do you want to be doing?

Why exactly is it that you think you haven't done a deal?

Where in the process are you stuck?

Johnny Kang · Answer

Marc,

One thing you might want to consider is to align yourself with an investor who's already doing deals so you can get exposed to many types of deals in real life. Reach out to investors on BP and find the ones you think are honest and willing to teach you; but remember, you have to bring something to the table so they benefit from the time spending with you; doing what you said you'll do, showing up to their office 1, or 2 times a week or whatever you can do, be willing to market (bandit signs, direct mail, driving for dollars, etc).

A strategy that may sound good from having read in a book may not be what you thought it would be. By working with an investor, you'll get hands on experience, which might give you a better idea about which direction you want to be headed.

Hope this helped.

Johnny

M H. · Answer

@Marc Cesar  am looking to start investing in my local area of NYC (brooklyn, queens, etc...) Only issue is that my area is a very competitive area as there are tons of wholesalers out and about. I am basically a fish in a shark tank out here

You may want to start in a smaller area, find properties there and sell them ti buyers in your area. We are in western NY and although it is very competitive, you can find properties for much less than the properties in NYC.

Ryan R. · Answer

Marc Cesar, here is a good way to start learning values in your market.

Go to the hudhomestore website. Type in your state and county and look at the foreclosures in your area. Look at each house and write down what neighborhood they're in, how many square feet they are, how many bedrooms and bathrooms, their age, exterior facade, look at the property condition report and look at the listed price. Start grading properties based on all of these factors and assign a grade to each house, A+,A, A-, B+, B, B- etc.

Now when these properties disappear, it means they've probably sold. Go to the same website and click on the Bid Results link. Type in you state and county. If a property sold, it will show how much it sold for. Now write down how much this property sold for compared to the asking price. This will give you an idea of how much discount you can get in your area off the listed asking price.

Now, watch your local MLS for these properties to show up for sale or for rent. How much are they renting for? How much are they selling for? Sometimes investors will buy these houses as Owner Occupied and then immediately list them for sale. I think this illegal but it doesn't stop them in my area...

The point is, from your computer, you should be able to start figuring out what properties are worth.

J Scott · Answer

First, there are some good threads here on BP about determining ARV.  That said, you'll probably want to look at about 100 or so houses that are listed for sale in your farm area to get an idea of what houses are selling for in various conditions.

Second, once you have a basic understanding the house values in your area, having someone on your team that can accurately determine ARV is a must.

The best options are for that are:

1.  Find a real estate agent who will pull comps for you (either for a fee or in return for representing you on deals);

2.  Hire an appraiser;

3.  Get your license.

But again, go look at a 100+ houses in your area and you'll start to get a feel for what houses in various conditions are worth...

Where to start as a newbie investor.

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