Concerned about jumping into real estate prematurely.

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Concerned about jumping into real estate prematurely.

Jose Gonzalez
Brewster, NY · Member since 2019 · 68 posts · 19 votes

Hello BP,

I have been lurking on BP for months reading posts and listening to podcasts, Studying real estate reading books. I worked on my credit (743) and obtained a second job. I also obtained a partner from work that wants to go into real estate with me. 

So this takes me to my point, now that I believe I have all my ducks in a row, I am getting cold feet. I don't know where to start looking, I don't know if I'll get a good deal. What if I jump to a bad deal and can't find good renters for the property I acquire, the market I live on is to Expensive, these are all the things running trough my head. 

So I took the next step and called an Agent in the Utica NY area (3 hours North from the city) to start looking at Multi Family homes up there. 

What are some good questions to ask an Agent to make sure you're working with the right one? On my visit what should I look for? 

I know some about Due diligence (check for liens, taxes ect). Basically what advice can you seasoned investors give me before I take the leap. 

Thank you in advanced. 

1Reply
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Most Popular Reply

Caleb Heimsoth
Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes
7y

@Jose Gonzalez to be completely honest, your first deal will probably scare the crap out of you.

No amount of preparation can prepare you for everything. After about 4 deals it’s been pretty straight forward for me

17Reply
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  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    7y

    Go to the BiggerPockets Bookstore and buy "Long Distance Real Estate Investing" by David Greene. Or get it at Amazon. Or at least listen to Podcast 257

    The DIY Landlord Book4.7247 Reviews
    WebsiteView Page
    5Reply
  • Dennis M.
    Rental Property Investor · Erie, PA · Member since 2018 · 6k+ posts · 9k+ votes
    7y

    Tell the agent your only interested in multi family homes where the projected monthly rent is atleast 1% of the  purchase price  

    4Reply
  • Jim K.
    Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes
    7y

    @Jose Gonzalez

    When you buy a multifamily or even an SFR with tenants in situ (tenants in place), it's important to get certificates/letters of estoppel from the tenants beforehand. That's a fancy French term for a very simple concept -- the landlord getting rid of the property can be expected to lie or misrepresent what the rents are, what security deposits s/he's holding, what the terms of each rental contract is, etc. You need to verify in writing both from the LL but also from the tenants what the tenants are paying monthly, when their lease runs out, what security deposit the LL is holding on them, before you close the deal. You do this by knocking on doors and meeting your new tenants, who will probably not be ecstatic to meet you, an unknown quantity. You have to distribute and get back a simple form letter from each of the tenants with a copy of their existing lease.

    Now, the tenants can also be expected to lie and misrepresent. That's why you have to get it in writing AND you have to get a copy of their existing lease from them beforehand. Do not trust the LL to give you a thoroughly accurate copy of their lease. Tenants are not known for being champion record keepers, especially the ones who have been month-to-month for years. This gets weird occasionally. Stick it out and get it done before you sign on the dotted line, or you'll very likely get a nasty surprise after the fact.

    3Reply
  • Alina Trigub
    Rental Property Investor · Glen Rock, NJ · Member since 2015 · 3k+ posts · 2k+ votes
    7y

    @Jose Gonzalez

    The main reason why you're getting cold feet is probably you're not fully ready to jump in. Read more books on MFH investing. Start with the two of David Lindahl's books!  Also, if neither you nor your partner have aggressive personality, perhaps it's a matter of finding another partner. A partnership should be well balanced (one person is pulling it back and reserved and the other one is aggressive and helps to push it forward). 

    Best of luck!

    2Reply
  • Caleb Heimsoth
    Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes
    7y

    @Jose Gonzalez to be completely honest, your first deal will probably scare the crap out of you.

    No amount of preparation can prepare you for everything. After about 4 deals it’s been pretty straight forward for me

    17Reply
  • Jose Gonzalez
    OP
    Brewster, NY · Member since 2019 · 68 posts · 19 votes
    7y

    @Nathan G.

    Thank you For the suggestion. I have an hour drive everyday so I’ll buy the audiobook version of it. Listening to the podcast now. Thanks.

    3Reply
  • Jose Gonzalez
    OP
    Brewster, NY · Member since 2019 · 68 posts · 19 votes
    7y

    @Dennis M.

    Good point, will do. Thanks.

    0Reply
  • Jose Gonzalez
    OP
    Brewster, NY · Member since 2019 · 68 posts · 19 votes
    7y

    @Jim K.

    Thank you for that advice. Did not even cross my mind to do that. Thank you.

    0Reply
  • Jose Gonzalez
    OP
    Brewster, NY · Member since 2019 · 68 posts · 19 votes
    7y

    @Alina Trigub

    Yes definitely there has to be a balance, i am the ambitious aggressive go getter type and he’s very passive. Im just not experienced at this yet. Thank you for your advice.

    0Reply
  • Jose Gonzalez
    OP
    Brewster, NY · Member since 2019 · 68 posts · 19 votes
    7y

    @Caleb Heimsoth

    I do agree I should take the leap and learn by doing. I just wanted some last minute advice from experienced investors before I took the trip out there. Thank you.

    1Reply
  • Alexander Keyes
    Real Estate Agent · Seattle · Member since 2018 · 3 posts · 3 votes
    7y

    I believe a good realtor will be your partner (at least that's how I try to approach it). Make sure you feel comfortable with them and trust them and they don't push you too much. My first deal was at foreclosure auction and it was terrifying. Everything went well though and now everything else seems approachable!

    3Reply
  • Steve Mikinic
    Member since 2019 · 11 posts · 9 votes
    7y

    Just like swimming, the only way to get comfortable is to get your feet wet. Don't rush into anything but start meeting with agents and lenders to get used to the process. Then jump on that sweet deal when you find it.

    2Reply
  • Dennis M.
    Rental Property Investor · Erie, PA · Member since 2018 · 6k+ posts · 9k+ votes
    7y
    Originally posted by @Caleb Heimsoth:

    @Jose Gonzalez to be completely honest, your first deal will probably scare the crap out of you.

    No amount of preparation can prepare you for everything. After about 4 deals it’s been pretty straight forward for me

    That’s exactly right . To be honest I still get scared some if I missed something like a foundation issue or bad water line but for the most part I will know right away and be confident in my choice now . My first deal I was scared $hitle$$ that I’m going to go bankrupt lol 

    1Reply
  • Allan Szlafrok
    Rental Property Investor · Long Island, NY · Member since 2015 · 490 posts · 301 votes
    7y

    @Jose Gonzalez Definitely bring a contractor or home inspector with you to a property before you make an offer at least until you’ve developed the sort of eye for repairs and pitfalls that a seasoned investor has. If you can get a ballpark figure for repairs for a property before making a bid it makes making that bid a lot less scary.

    3Reply
  • Brent Crosby
    Rental Property Investor · Farmington, UT · Member since 2018 · 171 posts · 148 votes
    7y

    @Jose Gonzalez find an agent who is also an investor. Don’t waste your time with those who aren’t as they will never ‘get it’

    3Reply
  • Yogesh BhadanePro Member
    Rental Property Investor · Fairfield, CA · Member since 2019 · 54 posts · 8 votes
    7y

    @Dennis M.

    Any suggestions when Agent’s rent comps does not match reality? Meaning sometimes the rent which Agent recommended is off my ~$100-150. Is this reasonable when cash flow is tight. Has anyone experienced this?

    0Reply
  • Josh Rogers
    Cheyenne, WY · Member since 2016 · 23 posts · 94 votes
    7y

    @Jose Gonzalez

    I've found working with an agent that is also an investor is very helpful.  That is always my first question to any of them.  Nice job finally getting started though!  Better now than never!

    1Reply
  • Jose Gonzalez
    OP
    Brewster, NY · Member since 2019 · 68 posts · 19 votes
    7y

    @Alexander Keyes A good agent is definitely a must, I got a great one for my primary home but now I ma venture up north and look for one I feel comfortable with. 

    0Reply
  • Jose Gonzalez
    OP
    Brewster, NY · Member since 2019 · 68 posts · 19 votes
    7y

    @Steve Mikinic  Agree, although it's a little scary taking the leap I've started the process. Meeting with an agent then with an investor. thanks.

    0Reply
  • Jose Gonzalez
    OP
    Brewster, NY · Member since 2019 · 68 posts · 19 votes
    7y

    @Dennis M. Exactly lol that's what gets to me the thought of loosing the money I been saving for so long lol. Thanks for the response. 

    0Reply
  • Jose Gonzalez
    OP
    Brewster, NY · Member since 2019 · 68 posts · 19 votes
    7y

    @Allan Szlafrok good point, have to shop around for a good reliable contractor. Thanks.

    0Reply
  • Jose Gonzalez
    OP
    Brewster, NY · Member since 2019 · 68 posts · 19 votes
    7y

    @Brent Crosby I agree, I've heard this over and over again. I have realized that a lot of Agents don't own real estate so I'll definitely find the right agent that gets it. Thanks.  

    1Reply
  • Jose Gonzalez
    OP
    Brewster, NY · Member since 2019 · 68 posts · 19 votes
    7y

    @Josh Rogers Thank you. Definitely better now than never, I discovered real estate investing not to long ago, looking forward to get my journey started. 

    0Reply
  • Clint G.
    Rental Property Investor · Corpus Christi, TX · Member since 2019 · 306 posts · 176 votes
    7y

    @Jose Gonzalez

    Like others have mentioned, my best advice is to find a realtor who is also an investor in the area.

    Had I not done this, I still dont think I'd have my first property under my belt. They'll ease your mind by sharing contacts, discussing scenarios, laws, tenant selection, rent rates etc. They can really help your deal become more "turn key" rather than you trying to hunt down all of this info for the first time. They might even help place your first tenant/contract for free like mine did (might add that in your contract with them).

    I might also suggest a SFH to get started. I wanted to do multifamily as well on my first deal, but I've found a SFH was a good ice breaker. Just my thoughts, but if you're good with a multi then roll with it and make some $$!

    1Reply
  • Mike Dymski
    Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes
    7y

    If you want to go swimming, you're gonna have to get wet.  Some answers only come with taking action.  Being scared and sometimes failing at new stuff is natural...we all go through it.  The good stuff is on the other side of your comfort zone.

    5Reply
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