New to real estate
Hi everyone!
I’ve been listening to the podcast for a while and I’ve always been interested in getting started with real estate.
I built my first home in 2019 and recently decided to downsize. I was able to completely pay off my previous mortgage and I am left with a little over 250k cash.
Originally, my plan was to go the Dave Ramsey route and use the 250k to pay off my new home.
Now, I am thinking about keeping my new mortgage and using the 250k to invest in real estate with the hope of creating some passive income. I plan to put the money in a CD for the next year or so while I expand my knowledge base, and allow this market some time to cool.
I’m here to learn and if anyone has ideas on how I could improve this plan, or advice on where I should start, I'm all ears!!
I would avoid a CD as they are illiquid and will prevent you from using the money if you find a deal. Instead find something more flexible like a money market acct, 5/3 Bank has one around 4% right now. "Waiting for the market to cool" could leave you waiting for years, rates took a drop last week and buyers were out by the many this week forcing properties that have been sitting into multiple offer situations. Inventory is going to stay low for a little while
I agree with @Karl McGarvey . If your plan is dependent on what the market is doing, your plan will always be out of your own control. I'm all for self-education through books/podcasts/courses etc but the best way to learn is by doing. Make a plan that you can execute on today. Build your team and they'll be able to help you achieve your goals.
I love the contrast of the people that decided to sit on the sidelines in 2020, 2021, and the first half of 2022 due to the market being too hot and then when the market cools people still continue to sit on the sidelines. Both are decisions not to act out of fear.
Hi Jim-
Welcome to BP! Just sent you a DM.
@Jim McVay, since you built your first property I assume you have hands-on experience with rehabs. Given so, buy a fixer-upper, rehab the property, rent to a qualified tenant, refinance to pull your money back out, repeat and buy another deal. With your allotted capital and rehab experience, you're a perfect candidate for BRRRR deals. Your best bet is to link up with a successful investor in your market to learn the ropes and establish connections with resourceful vendors to get started. I agree with others, why do you think the market will cool down anytime soon?
Hi Jim and welcome.
Like some others have said using that construction background gives you a leg up on some fix/flip deals. I also get a sense (and this could be way off) that you're dipping your toe in the water which makes sense. And it will be a journey from Dave Ramsey to a lot split ground up three house deal. :)
I would use the old John Wooden "Be quick but don't hurry" as you expose yourself to the process. Maybe even considering partnering at a lower dollar amount as a "come along" investor for somewhat less risk and a way to start to experience it without consuming a full risk deal. Just be really selective about who you pick to partner with.
If you want an intro to some folks in Florida I know some great agents there who specialize with investors and I'd be happy to make one if you'd find value in that.
Congrats on starting your journey!
Thanks everyone for the welcome and tips.
To those saying that I shouldn’t wait until the market cools, you’re probably right, and I will heed your advice!
Taking my first step into real estate investing is a little scary, and I’m trying to be cautious because I don’t want my first mistakes to be big ones.
I’m going to take the next few months to do some research, practice running the numbers on potential deals, and try to soak up as much information as I can from this forum.
I don’t want to wait around forever for the market to cool, but I also want to make sure I’m going into this endeavor with an acceptable level of preparation.
Quote from @Jim McVay:Yup, don't overthink the market. People will always be fearful or make excuses not to buy. When rates are low, they complain about the prices and sit idly. When the market slows as interest rates rise, they complain about that too. If the numbers work, the interest rate isn't a big deal. If they drop, you can always refinance. Historically, these interest rates are pretty average, people just got spoiled off the super low rates lol.
Thanks everyone for the welcome and tips.
To those saying that I shouldn’t wait until the market cools, you’re probably right, and I will heed your advice!Taking my first step into real estate investing is a little scary, and I’m trying to be cautious because I don’t want my first mistakes to be big ones.
I’m going to take the next few months to do some research, practice running the numbers on potential deals, and try to soak up as much information as I can from this forum.
I don’t want to wait around forever for the market to cool, but I also want to make sure I’m going into this endeavor with an acceptable level of preparation.
I say take 90 days to educate yourself, ask questions, listen to podcasts, read books, participate in the forums, and then ACT. Of course, that time of year is a more poppin time of year, but who cares. It might be harder to find the right deal but get it done!
Use hands-busy dead time to listen to Real Estate Rookie podcasts - showering, cooking, cleaning, driving, getting ready for the day / bed. Use hands-free dead time to read Rich Dad, Poor Dad, Atomic Habits, and BiggerPockets books. They have e-books as well and possibly audiobooks (I believe on Audible). You can also invest like $20 in a bookstand if you use physical books, makes it more hands free - perfect while eating meals.
Lay the ground work. Then turn education into action.
See you back over the next 90 days and making offers then!
Before you make any decisions you need to study the risks vs rewards and get educated. For me, its a no brainer, but I am a seasoned investor. I know my path... Reach out if you want to discuss your situation, I am local.
Quote from @Jim McVay:
Thanks everyone for the welcome and tips.
To those saying that I shouldn’t wait until the market cools, you’re probably right, and I will heed your advice!Taking my first step into real estate investing is a little scary, and I’m trying to be cautious because I don’t want my first mistakes to be big ones.
I’m going to take the next few months to do some research, practice running the numbers on potential deals, and try to soak up as much information as I can from this forum.
I don’t want to wait around forever for the market to cool, but I also want to make sure I’m going into this endeavor with an acceptable level of preparation.
Congrats!! Also remember you can factor in market shifts into your deal sheet. So if you think the market is trending down say 6 percent for the year in your area then just factor in some downward pressure on your resale price while you're holding the asset and look for quicker/in and out projects. They are harder to find (lots of competition) but since you're in no hurry just keep looking/writing offers and one will land. What's that old real estate adage "you make your money on the buy... not the sell". If you need any help in the process feel free to DM and I can share what I know/have if it would help you
What a great position to be!! I agree keep your cash liquid! It is murphy's law that as soon as you lock it up something exceptional will come along. Educate and feel free to reach out as I am local too!