New to Investing, What should my First Deal be?

New to Investing, What should my First Deal be?

New to Real Estate · Las Vegas, NV · Member since 2020 · 1 post · 0 votes

Hello Everyone! 

I am really enjoying the Biggerpockets podcasts, forums and everything about it.  It has really made my journey and learning process become a whole lot easier.  I have been learning so much and different methods and creative ways through tons of reading and podcasts and I want to get started on my first deal. I am only working part-time and going to school full-time, but I do not want to be a "poor person" finishing school and getting a job. 

I believe my credit is hovering around 600-620, and I only have about $2k saved up. The most attractive method of real estate investing is definitely the BRRRR method. From my understanding, BRRRRing is paying out cash on a distressed property through a private lender or with hard money loans at a huge discount from market price, rehabbing, renting out, cash out refi to AFV of 65-70% of cash in which is then used to pay back the private lender or hard money, and used to repeat. I LOVE the idea that it requires ZERO amount of my own money and using the power of GOOD debt. However, since it is my first deal, I am not sure if BRRRRing would be a good start for me to get my feet wet. I did consider buying and holding a rental property, but I don't think I will have enough money saved for a down payment + my credit score isn't above 720 for the best interest rates. Another huge concern I have is not finding a good property to BRRRR. Rehabbing is another issue I am also very concerned with in terms of what needs to be fix, trusting or finding a good contractor and estimating the amount of repair expense when looking at a property (used when I crunch the numbers in the BRRRR calculator).

My next method would be house hacking with a FHA loan that I could probably qualify for, and after I've saved up more money living for free, start buying a rental property and then slowly transition into BRRRR.

Can anyone give me advice for a young, aspiring real estate investor??? 

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  • Investor/Accountant/Builder · Meno, OK · Member since 2014 · 1k+ posts · 918 votes
    6y
    Read the book "Buy it, Fix it, Sellit" by Myers
  • Cincinnati, OH · Member since 2020 · 4k+ posts · 3k+ votes
    6y

    @Edward Xiong your understanding of BRRRR is partially correct. You buy an undervalued house that needs rehab, perform rehab, rent it, refi and repeat. The issue is every lender, hard money or not, will require some equity put down. Unfortunately for your situation, the less experience you have the bigger that down payment is.

    Now onto actionable steps: If this is an investment philosophy you are interested in, I would recommend finding part time work in the construction field. Learn as much as you can and get paid to learn. The biggest risk in this process, and the one I think many underestimate, is the rehab piece.  Open a wall and magically your rehab cost can go up $10k or more.  Buy a house where plumbing is stripped out, and you may have a $20k sewer line issue you didn't know about.  

    It is not glamorous or sexy, but it is invaluable, can help you save some more money will help you call out crappy contractors as you start your own investments.  It is also a lot cheaper if you can do most of the rehabs when you have saved the money to buy a house.

  • Dustin MorrisPro Member
    Rental Property Investor · Salem, VA · Member since 2017 · 113 posts · 39 votes
    6y

    @Edward Xiong with low down house hacking might be a good way to go to get some additional experience, but it really depends on what your risk tolerance is

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