New to Real Estate Property Investment
Member since 2018 · 2 posts · 0 votes
Hello BP Community,
I am currently New to the real estate investment world and have been doing research the last few months. I currently reside in Southern California and do not plan on investing in SoCal due to funds and the current overall market out here. I have a little over 20k saved up and more than 100k in retirement. I am also looking at duplexes and bigger in AZ, NV, and smaller communities north of Los Angeles.
With just over 20k saved up and that more than likely not being enough, would you guys recommend pulling from my 401k to cover the remaining costs? Also, being a first time buyer for real estate property, what do you think about being a long distance landlord? Thank you in advance.
James
Hey James, welcome aboard.
Being a long distance land lord is all about setting up systems, creating a network and having good people available to you. It can also depend on the property type you buy. buying a single family that's in good shape, may not require as much attention as a fourplex in a run down area. So knowing what you will personally be getting into should help answer your questions. When you first travel to your potential buy area, you should set up meetings with people to establish some sort of network. also post on craigslist or whatever you use that you need property managers, or handy men and meet with them on your visit. see if they are a fit for you. having them handy and being able to have them pop in to solve a problem is amazing. a simple e transfer gets them paid and being that it is a second job for them, their fee should be fairly cheap.
If you have about 20k in cash on your own, i would look to secure another investor or solicit friends and family. create a power point with what you're looking to do and let them know that you could split the deal with you doing all the work, but them sharing the benefits with a 50% investment. This is exactly how i managed my first true buy and it worked out great. I was actually able to find a lender (family) who simply wanted to be repaid at 5%. the deal i found provided amazing cash flow and I was able to have them paid back in less than one year. My power point was amateur, but if you pm me i can send it to you.
Knowing your numbers and having a strong understanding of real estate, taxes and fees will help build your credibility.
All the best,
@James Smith welcome to BP. This is a good place to get ideas and advice, but please do your own homework as free advice may be worth the price. If you were my younger brother, I would tell you the following.
Great job saving $20K. I just read that 40% of Americans cannot cover a $400 unplanned expense. With that said, you should pretend that your 401K and the $20K do not exist. These are good building blocks. Even if you had $100K, I would tell you not to invest your last dollar. You need cash to handle emergencies (car accident, job loss, etc). I also would not recommend long distance ownership in your stage because when people realize that you are inexperienced, they may take advantage of you.
Become an expert in your market. What are rents, price per sq. ft. for certain areas, good streets, bad streets, etc. Once you know what a deal looks like, you will be able to capitalize on it when you find it. Most are not good deals.
@Jason d. Lewis
Thank you for all the info. Great information on getting a team together in the area that i will be buying. How are some ways going about securing an additional investor when there is little to no experience in real estate or managing a property? I understand you can be very knowledgeable and prepared but I haven't made any deals in the past or have any rentals under my belt. Thanks again.
James