How did you get started in Real Estate?

Question

How did you get in to real estate investing? Was it recent (last 1- 5 years) or beyond?

Was it ease for you? 
Was it expensive? 
Can it be done still today with little to no money (not that stupid info mercial BS)?

What would you recommend for a person that wants to be a little more aggressive?

Thanks

Account Closed · Answer

Hi Jarrid,

To answer your questions, I started investing 16 years ago. I got really aggressive in 2009 till now. My background is engineering so I can crunch numbers pretty good, and that was the reason why I was able to avoid the housing bubble in the Silicon Valley. I've always had a passion for real estate, but conservative by nature when it comes to investing so that helps too. The goal was to create a stable stream of income in my golden years, and leaving some assets to my heirs when I'm gone from this world.

Yes, it was easy. Having money, a good paying job, and good credit score really help. 
Yes, it was expensive at first, but the appreciation and the drop in interest rate really help too.  
Yes, it can be done with little to no money down, but like I mentioned above. It would make things a lot easier with the 3 items above.  I'm not a fan of wholesaling, somewhat a fan of sub2, and a big fan of trustee sale until recently.  You can get good deals with short sales and REOs too if you know how to pay the game the right way.

Easier said than done, but get a mentor. Read & learn as much as you can in the shortest amount of time. Partner up with someone who's successful in the real estate investing arena. However, you have to be able to bring something to the table.  If you don't have money, do you have a good job and have good credit?  If you don't have anything to offer, I doubt anyone would want to partner with you.

As a side note, my research indicates that this is an opportunity once in a lifetime to invest in real estate so I'm heavily leveraged. However, I stay very fluid with my reserves and investment $$. My goal is to extract most, if not all, my money from every investment property that I own so I have essentially transferred all of the risk to the lender while staying liquid.  I don't extract money to the point that the property will have negative cashflow.  That's my business model, and it's working out ok so far.

Mike H. · Answer

I got started in my garage at a 4th of July part I was having about 5 or 6 years ago. We were talking and drinking and I was told that one of my sister's neighbors was losing their house. They supposedly owed about 90k on the house and it was worth about 140k.  They didn't have the money to fix it up to sell it so they were walking away.

I went in with my brother in law to talk to the guy and he said they'd do it. Come to find it out from the bank they owed 110k. My brother in law walked from the deal. I closed on it, did the cosmetic stuff myself and closed on the flip 2 weeks after I listed it.

Made 20k and thought I won the lottery. This was when the market was booming mind you.

About 6 months later, I went in on a new construction spec home with my brother in law. He took forever to finish it (18 mos) and, by then, the market had collapsed and I had to turn it into a rental.

We were both supposed to go into rentals from then on because of the way the market was headed. But, at the last minute, my brother in law had an opportunity to build a new construction house for someone and bailed.

I now have 16 rentals and closing on #17 this thursday.

And almost all of my deals are no money down although when you really run the numbers, I end up paying 3 or 4k out of pocket on every other house.

No funny business. But I do have to really cherry pick my stuff to get the LTV"s to work for the end loan financing.

As far as being "more aggressive", I'm not sure what you're thinking there is. Do you mean you have some money to spend and are willing to go "all in" with it?

While all my deals are essentially no to little money down (3 or 4k tops for financing costs), you still need to have some money to really grow the right way. The hard money lenders and banks are going to need to see cash in your bank for meaningful reserves.

Once you get over a certain amount of cash, I don't think they apply that 6 month rule for all properties. For me, the 50k mark seemed to be the magic number.

As far as advice in whether to do it or not. I can say unequivocally, there is no better investment than real estate today or any other day. These prices aren't going to last forever. So, if you have the means, I'd buy every single property you can find a way to get the financing for.

Also, I'd recommend sticking with the lighter rehabs though to keep your turns quick and avoid the more significant risks. The deals are out there.....

Jarrid C. · Answer

I am thank you all for the wealth of information you have shared.  I am very thankful for this sight because it makes it easy.  Easy to learn in the sense that those that patron this sight are looking to learn, share and establish relationships.

I think back to the times when I will see an investor purchase a property in the neighborhood.  I would inquire with just a simple question, "how can I get into this"  Their response is either short, displaying reluctance to share their knowledge or they make it seem 10x as difficult as it maybe.  Granted it is hard, but I mean when people try to make it seem so hard to the point they discourage you from doing it.  I look at it as, it must not be too hard because people are still doing it and there are a ton of apt complexes owned.

I've had co workers do the samething.  Co workers who are really good friends when you are helping them, but as soon as you have a question, just a question, Im not asking for any physical labor, just a question about something they do.  They wont share the information.  It is even more nerve recking because I work in the education field.  Teachers are suppose to teacher and share their knowledge.

Yes, I understand that no one is going to tell me everything I need to know or share it all.  Just allow me to get a little here and a little there to piece this puzzel together.  I will fill in the blanks.

Again thank you all.  I am feeling confident moving forward.

Like Minh - I always wanted to play monopoly in real life. ;)

Shanequa J. · Answer

I bought my first house in 2009. That was my primary residence. When I got accepted to nursing school later that same year, I decided to buy a rental to help supplement my income. I 2011, I bought another one in the same neighborhood. At first, I was sorta kinda looking to buy more but not really. Now I'm serious and have gone away from REOs and are looking at seller's financing. I'm trying to get the best bang for my buck.

James H. · Answer

When I gradauated from college about 4 years ago, my wife and I bough an inexpensive house that enabled us to have a garage and a yard for less than rent would cost in an apartment where we would be willing to live. We figured we'd live there for about 5 years and then rent it out. We just kind of assumed we would at least be able to break even renting it out and have a house that paid for itself, but looking back, we were totally clueless. 4 years later we are ready to move and the house would have maybe broke even, maybe been slightly negative cash flow, but luckily, interest rates are so much lower now than when we bought, we were able to refinance into a payment that will make the house a profit winner.

Last summer, we took 12K that we had saved up and bought another house for cash in dumpy little neighborhood about 20 minutes away from our house. We used our credit card and a line of credit (12 and 14 percent interest!) to add central HVAC and buy materials for the rehab, which I did all of myself except for painting which we hired out. That house has been rented for the last 9 or 10 months for 550 a month and we have since paid off the debt we took out to rehab it. I would say it was pretty aggressive to spend pretty much all of our savings, borrow a faily large amount at high interest and do it all in a low income neighborhood - and it being our first try. Looking back, I feel we did the right thing and am very happy to pick up 550 bucks each month. Insurance and taxes are about 110/month. Since I rehabbed the house, maintenance is not an issue for a while. Found good tenants and I think they are there for at least a few years.

Sometime before or at the end of the year, we are planning to get a new primary residence and convert our current one. So, it will have taken us 5 years to get two rentals under out belt. Once we get 2 years tax returns on our first rental (I call it our practice rental now), DTI ratios will be alleviated for future financing and I think progress will be quicker moving forward.

I'm an engineer now and installed cable TV for about 5 years before I went to college. I also cleaned and repaired carpets before that and have worked as a roofer and an electricians apprentice over the years. So while I am not a GC, I know my way around a house okay and know I always have myself to fall back on.

Mitch Kronowit · Answer

For me, it was fairly straight forward. I purchased my first property in 1992 as my primary residence. After living in it for about 5 years, I moved away and began renting it out. Still own the place and our current tenant has been there over 4 years.

Account Closed · Answer

I actually started in property management and construction.  I then married my wife who had some investment properties and we have continued to invest ever since that was about 18 years ago now.