Risk Management For A New Investor

[Russ Maynard]

Hi

I am new to this site and intend to finally get into real estate investing. I’d like to start with a small Single family or duplex to get the first deal going, learn something and build from there.

I understand “He who will not risk, cannot win”-John Paul Jones 

I also dealt with risk in the military and now commercial aviation. In both arenas we mitigate risk through detailed planning and great training as well as putting “handcuffs” or limits on ourselves. A new guy won’t fly into the same weather as a seasoned aviator. What are some controls you have used early on to keep yourself out of trouble?  Leverage is great when it’s working for you…how about when it’s not?

In aviation, we never put ourselves in a box where there’s only one option like having an alternate destination if the weather at our intended destination is bad. How do you structure acquisitions so that you don’t end up with nowhere to land (in real estate I guess the closest analogy would be losing the property, your investment and lowering your credit worthiness).

Thanks in advance. Sorry for the aviation analogies…it’s what I know.  My other interest of music doesn’t seem like it has a good analogy 😂

[Erik Browning]

Hey @Russ Maynard welcome. I'm a veteran also and worked in aviation as a Marine (Miramar) as well as worked in GA after I got out. From there I switched industries and began investing while working in my full time job in semiconductors. eventually quit to pursue lending and further my investing career - it's entirely possible. 

Totally understand where you are coming from regarding risk taking. Here's my advice: learn as much as you can but also jump in sooner rather than later.

You will spend days and hours learning about RE investing and to be honest, the learning is never ending. Don't hold yourself back from making the leap into it because you think you don't know enough - the truth is, you don't. The experience you get while jumping in is worth every penny - just do your best to make sure you don't land a crap deal or put yourself into trouble. Understand the basics, you will be ok.

You are on the right track with the single family or duplex. House hacking is a great way to start as well as a duplex. The reason is because you are already purchasing something you can afford on your own. Having the roommate or tenant next door will give you real life experience as a landlord, which will come with unique issues that can only be learned through experience. 

Good luck!