Concerned about jumping into real estate prematurely.

55 Replies

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. 

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

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

@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.

@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!

@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

@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.

@Jim K.

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

@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.

@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.

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!

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.

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 

@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.

@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’

@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?

@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!

@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. 

@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.

@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. 

@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.  

@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. 

@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 $$!

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