New Member in PA, how can do I start?

Question

My name is John and I live in south central PA. I am hoping someone is willing to help or direct a newbie like me to is hoping to learn about the criteria involved in finding their first deal. My interest is a rental property: Single Family home or (<4) Condo/Apartments. I am good with math and welcome the chance to crunch some numbers. As a newbie, I don't even know where to begin other than my initial costs, somehow planning for possible repair/other costs, and factoring in income based on rent. I know there is a heck of a lot I'm missing. Would anyone be willing to tell me or point me to a site where I can find the needed information? This way I can search for a home and know how to at least weed-out the majority of properties which wouldn't make a good investment.

Thank you in advance,

John

Thank you in advance,

John

Thomas Franklin · Answer

@John James Welcome to the community, of BiggerPockets! Be sure to check out the forums, the blogs, podcasts as well as other parts of this amazing website and like minded community. The people here have a vast amount of knowledge and are more than willing to share their experience and provide sound insight and advice. Do not hesitate, to post questions and bounce ideas around in applicable forums.

Since you are interested in learning about what expenses, to budget for, financing scenarios, etc, I invite you to visit my ACT Investment Properties, LLC Website. Click on the tab "Investment Strategy," scroll down until you see a photo, click on the photo and a PDF will open. ( http://www.actinvestmentproperty.com/wp-content/uploads/2015/08/Apartment-Building.pdf ) This Property Report is of an actual Apartment Building I owned. Even though this is a Commercial Property and you are focused on Residential Properties, focus on the Operating Expenses. Regardless of the property owned, it is important to factor Capital Reserves and Property Management. For Capital Reserves, I take 10% of the Gross Monthly Income and place it, in a Corporate Savings Account. I build Capital Reserves equal to 10% of a Property's Value, in the event a major repair is required such as roof replacement, a repair to a major utility system, sewer, etc. This way when a major expense is required, you are not scrambling around, to find the needed cash. I would also factor Property Management into your numbers. Why you ask? As the number of your Investment Properties increase, it will become too overwhelming, to self manage. The typical Property Management Fee is 6-10%, of the Monthly Gross Income. I run my numbers conservatively; therefore, I use 10% of the Monthly Gross Income, for Property Management as an expense. Vacancy Rate, Advertising and Marketing Expenses should also be included, to account for when you need a new tenant. These are only a few that I highlighted that many Investors overlook. Much to your success!

John James · Answer

Thank you one and all.  I am almost a bit overwhelmed with how kind and personal everyone here has been so far (in less than a day).  You all took the time to write such nice and helpful points and I want to say thank you to each of you.  I will take the time to read through your advice carefully, follow along and check out the link provided by Thomas Franklin.   I am sure I will be coming back with questions soon, but it's important to me that you all know I am grateful for the time you took to reply to my message.

Natalia Collini · Answer

Hey John,

Welcome to BiggerPockets! From one newbie to another my advice would be this. subscribe to the newsletter and read every article in each newsletter. Listen to the podcast any time you are out driving around or doing housework or other mindless activities. Spend 10 minutes on the forums every day reading and participating. Before long you won't be asking "what am I missing?" anymore but instead you will be asking yourself "now that I know what to do what actionable steps can I take to get to my next step?" There is so much information available here for free that you really don't need to go anywhere else.

I hope that helps and if you want to connect, I'm here. Good luck and see you around the forums!

~Natalia

Michael Lee · Answer

Hello and welcome to BP!  This site educates you and there other people that you can communicate with you.  There are short term and long term investments in real estate.  The first thing you should do is educate yourself and one of the next things you should do is to form a business.  Then you have to find/get Team members that are local and experienced.  The most typical Team members are Attornies, Real estate Agents, CPA's (or accountants), Inspectors, and General Contractors.  When you close on your property get an insurance policy to protect yourself against a loss.  Only do what you like.  Do not try to do everything.  Also, as soon as you comfortably do it, change the exterior door locks.  If the locks are stil in good shape just use them at another address. Do not cut any corners to make something look better.

I am59 years old and I found BP about 7 months ago and I am still trying to decide what to do.  I also went to colleye, not that it is mandatory, and I got a business degree that emphasized real estate.  Since I was in Texas for school and planned on being there forever I looked into it and found out that I was qualified to take a broker test without having to take anything extra so I got it.  I kept a broker license for about 30 years and I did a few deals for other people.  Regardless of what I had I felt more comfortable with the construction business.  I have been in construction business since I was 17.  My father has been in real estate sales for about 40 years and he has taught me a little bit.  If you think that I can help you please contact me through BP at any time.  Good luck!

Paul Timmins · Answer

@John James

Welcome. You will do well its all about the numbers. Fill in the foundation below.

Check out the Start Here page http://www.biggerpockets.com/starthere

Check out BiggerPockets Ultimate Beginner's Guide - A fantastic free book that walks through many of the key topics of real estate investing.

Locate and attend 3 different local REIA club meetings great place to meet people gather resources and info. Here you will meet wholesalers who provide deals and rehabbers (cash buyers). Find them through Google and meetup.com

Two Great reads, I bought both J. Scott The Book on Flipping Houses,  The Book on Estimating ReHab Costs  http://www.biggerpockets.com/flippingbook

Consider checking out HUD homes for small multi's owner occupied gets first crack.

Download BP’s newest book here some good due diligence in Chapter 10. Real Estate Rewind Starting over

http://www.biggerpockets.com/files/user/brandonatbp/file/real-estate-rewind-a-biggerpockets-community-book

Good Luck

Paul

New Member in PA, how can do I start?

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