Hi all! I am curious what are some things you wish you knew as a first time investor in real estate, and how did you start? I am a CPA with 7 years of experience in which I specialized in real estate partnership taxation. Therefore, I know the tax rules like 1031 exchanges and everything related to NOL carry-forwards & carry-backs, partnership basis rules, etc, but am missing the foundation on how to start, best ways to finance as someone trying to get their foot in the door, best ways to look for deals, what items are a must to know beforehand, etc.
What would someone recommend for my circumstances? I am in my 30's, single, and own my condo (primary residence which has about $50k of equity in if I need the capital). My credit score is above 825, however I think I am limited when it comes to traditional financing with my current salary since I already have my personal mortgage. I think for the first deal it will be ok if it's done in a LLC, but I would like to get more informed should opportunities pop up.
My 2 friends and I are looking at the idea of our first RE investment together (2 accountants and a PhD). We each have $10k to start off with and are thinking residential property in an LLC, but we are open to all ideas. We would prefer multi-family, but I'm not sure if that is feasible with our starting capital. Has anyone used financing other than a standard mortgage, have any recommendations on how to leverage the cash?
We are in Tampa, FL, so although there are many houses coming to market over the next handful of years from the silver tsunami baby boomers leaving their homes, finding affordable housing is still a problem & hard to find with the number of people moving here each year. I know it will be a crisis in 2021 with the decline in travel from COVID on the large number of families losing work that are in the restaurant and tourism industries (not to mention likely upcoming COVID baby boom).
Therefore I was thinking somehow getting into multifamily somehow (perhaps a small hotel/motel that goes out of business as tourism declines, going in and rehabbing it into small studio apartments or something), but I'm not sure how the zoning works if that will be an issue...realistically I just need to get my foot in the door and learn the basics though.
I left public accounting when I moved cross country so I am not super familiar with FL real estate outside the Tampa area. I am currently working in property accounting for a global property management company. This gave me a better look seeing day to day operations within residential real estate, but it has limited my connections tenfold as the investors are now on the global scale as well (much harder for me to talk one on one with someone).
I know I would flourish if I find the right mentor or experienced partner or at least some type of direction from a person who has done it with whom I can ask questions to. I am just not sure how to go about finding this. I would absolutely love to hear any ideas or things that come to mind from others who felt motivated but confused where to start.
Thank you so much in advance!
@Andrea D. welcome to BP
- First learn the various strategies & techniques.
- Learn how to evaluate deals
These first two you can do right here on BP. You might want to start with the Ultimate Beginners Guide under the education/Guides tab above
- Learn your market. This comes from looking at LOTS of deals and evaluating them. You don't do this sitting behind a computer screen.
- Network with other investors attorneys, agents, CPAs, and anyone else that canbenefit your investing. This you can do here on BP also
- Then go make offers.
What he said! Attend REIA meetings and connect with people. Go slow out the gate too. To much info all at once and some investors shut down because they've been down that road and have been burned. Good luck to you!
I have to agree with Ned and Juan above. You have to know your target market and be comfortable running the numbers. Think Cap Rate, Cash on Cash Return and cash flow. I will add that if you are looking at multi-family properties, you need to get your lead funnel producing potential deals. Two sites that you can use to setup automatic searches are Crexi and Loopnet. You can also seek out a broker who deals specifically with multi-family.
There are other methods that you can learn about here on BP, but you can also overwhelm yourself and get analysis paralysis, so stick to the basics in the beginning. By the simple fact that you are a CPA, you are potentially a perfect partner to team up with and people will seek you out, especially at REIA, meetings. I wish I was there because I certainly would!
Unfortunately, or fortunately depending on how you look at it, I am active duty military currently stationed in Germany and I have been trying to get stationed in Tampa for about 10 years. No luck, but I am due to return next summer so I am crossing my fingers. I currently have three single family homes in Georgia near Fort Gordon and I am looking for my next investment. I have two agents in Augusta sending me MLS feeds and one in Tampa. I also have Crexi and Loopnet feeds for both markets. It is very competitive now because of low inventory and low interest rates.
Properties are flying off the MLS almost as soon as they are posted, so my last bit of advice would be to act fast. If the numbers work, jump on it. Don't worry about making a home run on your first property. Just get a base hit to get in the game. There is more value in diving in besides making money. Knowledge and experience goes a long way and it only comes by taking action.
Hope to link up with you soon!
Best of luck to you and your partners.
You've got the business background that I'm finally trying to learn after four properties, so that's great! For the REI specific stuff, it sounds like you're looking for residential buy-and-hold. I really like HOLD, by Keller et al. It provides a good overview and method for analyzing residential (1-4 unit) rental property. The spreadsheet that comes with the book is still my primary tool for analyzing a property. I've made a few changes myself, and as a CPA I'm sure you're far more familiar with excel, so tweaking it to your own preferences will be a breeze.
I'm also in the TB Area (St Pete) so feel free to reach out. I'm fairly new to the area as well, but I know St Pete and S. Tampa pretty well.
I’d suggest reaching out to @Jeff Copeland ..best PM in the area and he knows how to work with investors very well!
50,000 of equity in a house doesn't necessarily you can take the money out, the banks will only normally allow you to access the capital in excess of 75% or 80% of LTV.
I would not partner with 2 people who are not experienced in real estate.
A scenario could be "we need to hire a contractor, who will make a decision on which contractor to use, do you have to run it by the other 2 partners. etc
You likely want to partner with someone who has a skill/trait that you don't have.
If you don't have experience, partner with someone who has experience
If you don't have money, partner with someone who has money
If you don't have time, partner with someone who has time.
Good luck in your journey and happy 9/15!
Free eBook from BiggerPockets!
- Actionable advice for getting started,
- Discover the 10 Most Lucrative Real Estate Niches,
- Learn how to get started with or without money,
- Explore Real-Life Strategies for Building Wealth,
- And a LOT more.
Sign up below to download the eBook for FREE today!
We hate spam just as much as you