I am seeking advice as a beginner as to where to start

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I am seeking advice as a beginner as to where to start

Randy Ray
Rockford, IL · Member since 2021 · 7 posts · 16 votes

So I am a 27 year old single dad looking to begin my lifelong journey of my passion I've always thought about going forth with it but now is the time I would like any help or advice as to where to begin I have strong skills with being able to fix anything in the house I have many years of Maintenance experience and I know I probably will have to buy and sell a few homes before I can buy then rent but I would greatly appreciate any ones advise as to where they may have started and what was successful for them or what I should not mistakenly do I have the passion and the drive I just needed a hand I am currently working with $10,000 sitting in my savings and a credit score in the 700 range PS I'm in Rockford Illinois

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Dan M.
Real Estate Investor · Unadilla NY · Member since 2017 · 418 posts · 297 votes
5y

If I could go back to being 27 I would not have bought a big house to start. I would find a property where I could house hack - my meaning of house hack means purchase a property and rent half of it out so your cost of living / cost to have a roof over your head is very small or next to nothing. That will really help you save. Ideally this property could be one where I could "live in flip" meaning I would do the work over say a 2 to 3 year period a little at a time until finally I added more value to the home and can sell it tax free ( talk to an accountant - I am not an accountant ) and then do the same thing all over again. This will help you get money. You will need money - alot of money -to be successful in the game. Yes it can be done with little to no money down but it is very difficult to get anywhere using these types of strategies. Definitely possible, but it is infinitely easier especially in this market to have money and make purchases and repairs needed. 

If you do that a few times you will only be around 35 years old and should be sitting on a pretty sizeable nest egg to invest with, where you can have an LLC and put 20% down on future properties no problem. Putting 20% down allows you to not pay for PMI which is a small leech on your income for a long time.

Where I am now for reference is I did the American Dream thing, bought a large house I have too much space for and although I have built equity over the long term by paying the mortgage I would probably be retired now if I did the live in flip process instead. Why I think this would be a great strategy for you is because you have 1) time and 2) you say your handy with fixing things. 

Also like Tim mentions go to the club and meet with people that have experience who may have properties that they want to offload because they are at a different point in their life where 1000 / m isnt that exciting anymore but selling a property and traveling around the world for a couple years is. You could get a good deal that way or just listen to stories to learn things and get contacts. If you hate it you don't have to show up ever again but to not spend a couple hours to find out would be a bad investment. 

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  • Abel Guzman
    Rental Property Investor · Haverhill, MA · Member since 2021 · 2 posts · 10 votes
    5y

    @Randy Ray Hi Randy! I can tell you what I did: FHA on a 3 family. I suggest doing an FHA 203 loan for a fixer upper due to the current market. If you find the right property, you could end up with equity. Above all, educate yourself! The more you know the better. Best of luck!

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  • Patricia Taveras
    New Bern, NC · Member since 2017 · 246 posts · 173 votes
    5y

    @Randy Ray

    Hi Randy. You can use an FHA loan or another owner occupied loan to buy a duplex, or up to a 4 unit if you are going to live there. These have down payments as low as 3.5% down. Talk to a few banks to compare what they offer. Listen a Bigger Pockets podcasts to figure out other ways to find properties when other than the MLS. Good luck!

    0Reply
  • Natalie Schanne
    Real Estate Agent · Princeton, NJ · Member since 2016 · 1k+ posts · 1k+ votes
    5y

    @Randy Ray - Finding a place - a real estate agent can set you up on an auto search for 2-4 units within x miles of where you want to live. Then you will get daily emails when a new property is available or a price drops. You can then review the photos, address and schedule a tour if you like it.

    In my area there aren’t a lot of duplexes so for my first property as a 25 year old, I bought a 2400sf split level house and I rented out spare furnished bedrooms to working professionals. You walked in on a 600sf kitchen/living room area. Upstairs was 3 beds 2 baths. Downstairs was 2 beds 1 bath, common hall laundry room and second fridge. So I got about $2200 plus 4/5 total utilities renting 4/5 bedrooms and my mortgage was $1500. I was making $500-700/mo living in my own house for free while I worked full time. Roommates were low drama because I wouldn’t allow any nonsense. After you fix it up nicely for the initial rent out, not a lot of stuff breaks. My house was 3 years after freshly rehabbed and I got lucky with a foreclosure. I painted out the smoke smell, put on a new roof, built a kitchen island, furnished it, and it rented really fast. The rooms were like $500-650/mo plus $100 of utilities vs a $1200 apt plus $$$ utilities so it was a no brainer for a lot of people. Plus you can write off some of your expenses against your revenue so you don’t have to pay many taxes on it. (Free housing, $6000/year cash and limited taxes with legit deductiobs? Sign me up!) You can listen to this method on episode 392 or check out craig curelop book.

    Unfortunately $10,000 isn’t likely to get you very far especially in today’s housing market. If you want to save up more money, you should probably consider renting someone’s walk out basement or something for 1/2 of apartment rent yourself until you have enough money for downpayment and materials on a rehab. Once you’ve toured a few opportunities, you can get a good sense of what a deal is. You MAY be able to get seller financing from another landlord like in Tim’s group. Just make sure you understand anything you’re signing. The communities can be small where many people know each other, so you want to maintain a professional reputation in all your interactions. Good luck. Let us know how it goes.

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  • Nick Rutkowski
    Rental Property Investor · Ithaca, NY · Member since 2015 · 1k+ posts · 1k+ votes
    5y

    @Randy Ray

    Buy a duplex or a 4plex, use an FHA loan to purchase. House hacking is how I got started, it decreased my expenses and paid for the house. I saved up a lot and had equity to spill in my next deal.

    1Reply
  • Dylan D.
    Investor · Mohnton, PA · Member since 2016 · 20 posts · 13 votes
    5y

    I would suggest reading a couple of bigger pockets books and see what strategy sticks out most to you. These books will teach you so much. I would start with the book on how to invest in real estate found in the bookstore on this website. There's alot to learn before jumping in and every bigger pockets book I've read has made me realize there is more to it than most people think. While reading these books study your market and figure out what areas you'd like to invest in. I'm a beginner and with doing this I'm closing on my first investment property which will also be a learning experience as well. Overall just always try to learn and improve but don't forget to move forward while doing so. 

    0Reply
  • David Dachtera
    Rental Property Investor · Rockford, IL · Member since 2014 · 4k+ posts · 2k+ votes
    5y
    Originally posted by @Randy Ray:

    So I am a 27 year old single dad looking to begin my lifelong journey of my passion I've always thought about going forth with it but now is the time I would like any help or advice as to where to begin I have strong skills with being able to fix anything in the house I have many years of Maintenance experience and I know I probably will have to buy and sell a few homes before I can buy then rent but I would greatly appreciate any ones advise as to where they may have started and what was successful for them or what I should not mistakenly do I have the passion and the drive I just needed a hand I am currently working with $10,000 sitting in my savings and a credit score in the 700 range PS I'm in Rockford Illinois

    My "standard" advice for anyone starting out is to first get educated about REI. Most folks miss that important first step and up losing enough money on their first deal to pay for their education multiple times. The ones who do get educated first often make the cost of their education back and then some on their first deal if not before then by learning to better manage their income and taxes.

    My $0.02 ...

    1Reply
  • Tyler Fontaine
    Investor · Cranston, RI · Member since 2019 · 9 posts · 8 votes
    5y

    @Randy Ray I’m also 27 and purchased my first investment last August. Best thing you can do, in my opinion, is househack.

    Try to find something that you can't put sweat equity into that qualifies for an FHA Low Downpayment loan.

    Contact a local lender and apply for a mortgage.

    Figure out exactly what you need to do in order the get approved for the loan.

    Start looking for a 2-4 unit property in an area that has strong rents.

    Buy it, rent the extra units out, live in it for a year, fix it up, refinance if you can and repeat

    1Reply
  • Tyler Fontaine
    Investor · Cranston, RI · Member since 2019 · 9 posts · 8 votes
    5y

    @Randy Ray another thing, ask your lender what it will take to get into a second and then third loan after your first purchase, what the timelines are etc... this way you can build a long term strat

    1Reply
  • Alex Novakovsky
    Specialist · NJ · Member since 2021 · 2 posts · 1 vote
    5y

    @Bilal Hussain hello Bilal, i am just getting into the Real estate investing market and was wondering if i can pick your brain. Thx

    1Reply
  • Louis Jeffries
    Lender · Chicago, IL · Member since 2010 · 149 posts · 127 votes
    5y

    @Randy Ray

    Use a Realtor. Look for property that need work. Properties listed on Zillow and Redfin are not the best options for investors and they represent a small fraction of listed properties. 

    1Reply
  • Bilal Hussain
    Real Estate Agent · Chicago, IL · Member since 2020 · 25 posts · 16 votes
    5y

    @Alex Novakovsky Sure, send me a PM!

    1Reply
  • Renee Fulcer
    Rental Property Investor · Winnebago, IL · Member since 2013 · 80 posts · 56 votes
    5y

    @Randy Ray - If you haven't already, change your search settings in Zillow to include multis (like this) - select to have the listings sent "instant" vs daily and save the search as Winnebago county Multis or something like that.  I've seen a few super-cute duplexes come up in Rockford lately:

    1Reply
  • Mark Savalle
    Lender · Tucson, AZ · Member since 2016 · 20 posts · 7 votes
    4y
    Quote from @Randy Ray:

    @Mark Savalle

    Hi Randy, 

    I would say speak to a local agent that also invests in your local market. Learn your local market and find out where the strong rental areas are and start there. So MLS would be my first response then keep an eye out on loopnet.com.

    Good Luck!

    Thank you very much very helpful!

    As far as finding a multi-family duplex where would you say is the best place to look as far as apps and or websites Etc


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