First-time Investor in Central Texas

[Arleene Silva]

Hello! I finally decided to start my journey in real estate investing, specifically in Harker Heights or Temple area. Currently going through a bit of analysis paralysis. I've gotten my pre-approval and estimates from 3 lenders. I've been able to look at a couple properties. But now I feel like I'm just looking at numbers and solely going by my realtor's word, as I don't know how to analze a deal, or market. Any advice?! Thank you! 

[Nicholas L.]

@Arleene Silva

we are happy to help, but do you have any questions that are more specific?  "how to analyze a deal" is pretty broad.

a few general reactions.

-definitely don't go by your "realtor's word" - that is utterly irrelevant.  they are not making any promises or commitments as to condition, rent, tenant experience - everything after closing is on you.  not on your PM, your agent, your appraiser - you, all you.

-you don't have analysis paralysis.  that's a made up term by the people selling things to get people like you to buy the things.  you are rightly cautious - buying a property is a huge deal.  they will make money when you transact.  you will not.

-one thing to do is: reset your expectations.  a lot of new investors seem to be overly optimistic about the first few years of ownership.  you should basically expect to be spending money and putting cash in for the first few years.  

-it takes money to buy (closing costs); it takes money to lease out (usually the first month's rent to the agent or PM, plus potentially fees on on top of that); it takes money to get rent ready (things that won't be found until someone is living there.)  then your dishwasher or furnace will break even though it's brand new and isn't supposed to. costs costs costs.  maybe in year 6 or year 12 you actually generate some meaningful cash flow.  not in year 1.

hope this helps.