Strategies for starting out

9 Replies

Hello everyone!

So I’m really just getting started in real estate investing. I have not purchased my first rental property, being Im still in the learning stage of things. Listening to Podcasts, reading books, etc.

So I'm looking at some of these properties and I see where I might could get started quicker if I choose not to BRRRR my first property if I can manage to save upfront capital and only pay 20%.

Is this a death wish for someone just starting out to only put down 20% and then save for the next one?

The numbers seem to make sense on some of these SFHs and Duplexes if I only pay 20% and still be cash flow positive. As anyone started this way and then moved to more of a BRRRR method?

Thanks everyone!

Hi @Logan Overcash

Getting started in real estate by buying properties with 20% down and financing is not a bad choice. You will start earning some cash flow, you will start building your equity, you will get some appreciation, and most importantly you will learn more than you will learn from any book or podcast. As your portfolio grows, you could evaluate different strategies to increase your income or to utilize equity to scale faster. 

"Is this a death wish..." -> No, it is a great learning opportunity and with great deals could be very beneficial. However, scaling will be the issue. The process will be slow to start and as you get enough properties and build up enough equity, you can expand your portfolio.

For me personally, I work full-time outside of real estate. I am looking to eventually have enough passive income to be "work optional". I wanted to get started with investing while minimizing my time and risk. I decided turnkey was good route for me to get started (see post below). Even from purchasing my first property, I have learned so much about investing and things to look at or do for future investments. I plan to buy a few more turnkey properties over the next few years before looking at alternatives. 

https://www.biggerpockets.com/forums/850/topics/895660-my-first-investment-property-an-out-of-state-deal

Best Wishes!

@Logan Overcash Putting 20% is not a death wish at all. If your higher and best use of your time is in your job, then go for it! BRRRR might help you recycle cash and be more effective long-term, but you have to add far more hustle into the equation to make it happen. Buying retail will help you get into the game, learn it and then you can figure out your best scaling strategy from there. PM me with Q's!

@Whitney Hutten Thank you very much for your input. I am going to put 20% down on my first couple and even try to owner finance some if I can until I can build up enough cashflow to BRRRR to maximize my ROI and expand my portfolio quicker.

Putting 20% down is not a bad thing at all. If you have X-amount only and the 20% down eats up your savings, then it will just be a slower process to build your portfolio. A lot of people have taken this approach. BRRRR helps you acquire more properties sooner while recycling your initial investment.

If possible, I would recommend house hacking to get started, especially the first year. This way you are only putting down 2-5%, and you have money in reserves.

Your strategy of putting 20% is totally fine and safe. BRRRR Is amazing, but it does require an extraordinary amount of hustle, time, and knowledge to do correctly. It will also take a lot more of your time, and probably be pretty tough with a day job. Plenty of investors have done it with day jobs though, just depends on how much you're willing to work after hours. I have a few clients that have a very nice portfolio after 20 or so years, just buying a property a year or every couple of years with 20% down. Once that lightbulb hits and they realize they can recycle their cash and scale a lot faster, it's a pretty big game changer. 

 

Originally posted by @Logan Overcash :

@Craig Anderson what if I don’t want to live on the property? I live in a home that my grandparents own for EXTREMELY low rent and more comfortable living there.

I'm just suggesting options for having a low down payment.  However, if you think about it differently, then you can see more opportunities. 

You stated that you live at your grandparents place for extremely low rent.  What if you could live rent free or cash flowing while you live in your home?  This can happen when you house hack.  Or, you could be living for extremely low rent with a low down payment. Imagine if you got a home for 3% down, rented a room or two (or if it was a duplex/tri-plex), in your home.  The tenants pay your mortgage or most of your mortgage in a home that you own. Then, in a year, you move out or back to your grandparents house, and you are now making even more money because you are renting out the room that you were in for the last year.

There are so many options with investing, you just to choose what works best for your situation.

Good luck.