New Member: Raymond in San Mateo CA

15 Replies

Hello All! I'm a green horn to real estate investing looking to pick up some helpful tips and tricks from the community to help me get started. I've always been intrigued with real estate investing so I'm finally getting to a position where I can pull the trigger. I'm looking to learn from others that have taken the landlord approach on either SFH or MFH as their first acquisitions and what are some of the pitfalls to look out for.

My background, I'm an Army Veteran that left that world to seek out new opportunities as a civilian. After getting an MBA from SFSU, I found myself in sales, now sharing my expertise as a sales trainer for a SaaS company in Mountain View, CA. I'm married with an energetic 3.5yo daughter and an 11.5yo English bulldog. My interests are in single family homes and multiple family homes that I hold for several years to get a solid ROI before really expanding my portfolio.

I welcome your tips and tricks and look forward to learning more from each of you as I submerge myself in this bank of knowledge.

@Raymond King Welcome to BP family! Thank you very much for your service!

You will find a ton of helpful resources, especially under the Education section of BP.

My recommendation is to pick one niche in real estate and stick to it until you fully learn it and it is operating like a well oiled machine. If you need a further proof, read "One thing" by Gary Keller. 

Also, if you can go directly to multi-family then do that. Economy of scale is so much better! 

Let me know if there's anything else I can help you with. Feel free to PM.

Best of luck!

Thanks @Alina Trigub for the tip. That's my goal and desire, but finding listings that are remotely close to the 2% benchmark is extremely difficult. My interest areas are Phoenix (and surrounding areas) and Wilmington, NC. I'll definitely check out the resources you mentioned but do you have any tips for discovering properties, I find this to be my weakest point

@Johnson Michael , a pleasure to meet you. Are you able to invest locally in this crazy market or other areas?

@Raymond King Finding properties is all about connections: 

1) Reach out and stay connected with RE brokers in your desired areas. When they send you listings to check out let them know why it's not a good fit for you, so they know how to adjust to your criteria. Always follow up and stay in touch with them. 

2) Start a marketing campaign through Yellow Letters by reaching out directly to the property owners in your targeted areas. 

3) Go to REI networking events to meet investors, and other professionals like GCs, property management professionals, insurance brokers and other industry professionals. 

Best of luck!

@Raymond King

Welcome to the BP family! Good to have you here! Here are some recommendations for you:

Find and connect with other BP members that are in your area: http://www.biggerpockets.com/meet
Set up keyword alerts to be notified of the topics that interest you: http://www.biggerpockets.com/alerts
Read Beginner’s Guide: http://www.biggerpockets.com/real-estate-investing
Check out BP Podcasts: http://www.biggerpockets.com/renewsblog/category/podcast/

Wishing you the best!

@Raymond King

Agent from Phoenix here, and the thing to understand about the 2% rule is that it's really intended for properties in the $50-100k range. The numbers simply don't scale. Take California for example. On a $500k house you need to get $10k per month in rent. WTF?!? Who would ever pay that when they could buy it with 3.5% down on a FHA loan with 5% interest rate and have a monthly PITI of $3,671? Even the 1% rule / test / whatever is a dream.

Your best bet is to throw out all rules of thumb like that and learn what the averages and norms are for the market and price range you're looking in. Get specific numbers from other Phoenix investors. Run the numbers on some properties you're considering and find out what the norm is. Then, when a deal comes along with better than average numbers you'll know it's a deal because it performs better than average. 

There's no sense in looking for numbers you'll never find or comparing Missouri numbers with Alaska numbers and so on. If anything, it just causes major frustration. 

One of the biggest problems I see for beginners on this site is they read about some story about a guy buying some property in the middle of nowhere for 70% of what it was worth and think they'll be able to go into a super hot seller's market like those found in California or Arizona and get the same deal. Not gonna happen.

Afterall, real estate is a local thing... it's all about location. So when analyzing potential deals, don't use some generic rule you read on the internet because it'll totally lead you astray. Talk to the local experts and learn what to expect, and that way when something comes along that beats that you know you got a deal, even if the rule of thumb you were following would've said you didn't.

Always here to help, and I hope this advice gets you pointed in the right direction. Looking for 2% deals in Phoenix is going to be a waste of time unless you're sourcing the properties yourself via motivated sellers. 

@Wes Blackwell Great points and I tend to agree with you from a common sense persepctive. However, being that I am new, I was looking to these frameworks/guidelines as principles for every market with the understanding they may not hold true everywhere.

Great to see you are PHX area, I travel there periodically and was raised in the area so I have a general sense of what the locales are like. 

Besides sending out yellow papers (I think I got that right) to homeowners, what are some of the other ways of getting involved early in a MFH sale before it goes public? Def looking to start out with a 2-4 unit place so I don't cry when units are unoccupied too much. haha.

@Raymond King , no I have not invested yet. I do not find it very efficient to invest in rentals in this CA crazy market. I think wholesaling and flipping would work here. But I have zero experience in both.

I work for a real estate fintech company https://www.roofstock.com. I can invest in out of state properties through Roofstock. However, being an employee, we have some restrictions such as waiting period etc. I have to admit that I have been lazy. But I have signed up for the "Own a Real estate investment in the next 90 days challenge challenge by Brandon". I would say already 5 weeks have gone by without any action other than listening to BP Podcasts and webinars.

Lets connect and see if we can help each other.

Cheers,

Johnson

Originally posted by @Raymond King :

@Wes Blackwell Great points and I tend to agree with you from a common sense persepctive. However, being that I am new, I was looking to these frameworks/guidelines as principles for every market with the understanding they may not hold true everywhere.

Great to see you are PHX area, I travel there periodically and was raised in the area so I have a general sense of what the locales are like. 

Besides sending out yellow papers (I think I got that right) to homeowners, what are some of the other ways of getting involved early in a MFH sale before it goes public? Def looking to start out with a 2-4 unit place so I don't cry when units are unoccupied too much. haha.

The only way to know about a property about to go to sale before the rest of the public is to know the person selling it - either the agent or the seller themselves. By the time an agent is involved it's usually too late because it's already been promised to go on the MLS. So yellow letters or other similar strategies are your best bet.

@Wes Blackwell Thanks for the information. As I read the getting started guide more, a lot of my questions are becoming clearer so I do apologize if you read/answered these types of questions hundreds of times before. :) All part of getting more comfortable with the leap. I see you are a licensed agent in AZ and CA. Curious to know which areas you focus on, both commercial/residential and location (if you prefer certain areas over others).

@Johnson Michael Agree that flipping probably makes more sense in the area. Take 1.2M home and invest in some cosmetic upgrades to run the resale up to 1.8M seems to make sense. Honestly can't say I have much experience in either but I'm a very handy person. haha! It would seem difficult to accept a challenge of 90days when you are starting from ground zero. Challenges are great though because it forces you to look at a timeline and backward plan to achieve your goals. But that's not for me right now. Sent a connection request, perhaps there will be an opportunity to band together, maybe. ;)

@Raymond King

Hey no worries! We were all beginners once! The same questions have been answered on these forums hundreds, if not thousands of times. But that's what makes this site so great! We have new people coming here all the time with the same questions, so just by asking them you're helping other people out!

In California, I'm primarily focused in the Sacramento / Stockton area of the Central Valley. Lived in both those markets for 5+ years, have a team and do lots of deals there. Work mostly with Bay Area investors, but also some from SoCal who are also looking for more affordable markets not too far away.

In the Phoenix Metro area, I'm all over the place. Anywhere in Maricopa county. I got a car with four wheels and don't mind driving or doing the legwork to help out of state investors analyze a deal :-)

Most of what I do is SFR and 2-4 unit residential (as that's where the biggest pool of buyers are). Every now and then I'll do a commercial multifamily transaction (Eyeing a 12 unit complex for one of my investors now) but those are a little more rare.

Anyhoo, enough about me... just keep learning, listening to the podcasts, asking questions and before you know it you'll be a expert just like the many others you'll find on here. Best of luck!

@Timothy Stauffer Thanks. There's a wealth of knowledge on this platform that I'm trying to navigate to. Plus, the team on here is very helpful in answering questions and pointing me to helpful resources. Most recently answered the question of needing to form an LLC, which sounds like is a good idea after I reach a point of having several properties. Until then, a good insurance policy will suffice - very good to know!

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