All Forum Posts by: Matthew McKee

2. Get your finances in order. Get rid of debt, build a budget, and save. The idea that you can build wealth without putting any money into it is a recipe for disaster and the sales pitch of gurus trying to steal your money. A wise investor will not try to get rich quick with shortcuts. If you can't keep control of your personal finances, you are highly unlikely to succeed in real estate investing. Check out my personal favorite, Set For Life by Scott Trench , or The Total Money Makeover by Dave Ramsey.

3. As you read these books, watch the BiggerPockets podcasts. This will clarify and reinforce what you are reading. You can hear real-world examples of how others have built their investment portfolio and (hopefully) learn to avoid their mistakes.

4. Now you need to figure out how to find deals and pay for them. Again, the BiggerPockets store has some books for this or you can learn by watching podcasts, reading blogs, and interacting on the forum. There is a handy search bar in the upper right that makes it easy to find previous discussions, blogs, podcasts, and other resources. BiggerPockets also has a calculator you can use to analyze deals and I highly recommend you start this as soon as possible, even if you are not ready to buy. If you consistently analyze properties, it will be much easier to recognize a good deal when it shows up. Find Brandon's videos on YouTube for the "four square" method of analyzing homes and practice. It doesn't take long to learn how to spot a good deal.

5. Study the market. You can learn to do this on your own or get a rockstar REALTOR to lead the way. I highly recommend a well-qualified REALTOR that works with investors and knows how to best help you.

6. Jump in! Far too many get stuck in the "paralysis by analysis" stage, thinking they just don't know enough to get started. The truth is, you could read 100 books and still not know enough because certain things need to be learned through trial-and-error. You don't need to know everything to get started; you just need a foundation to build on and the rest will come through experience and then refining your education.

You can build a basic understanding of investing in 3-6 months. How long it takes to be financially ready is different for everyone. Once you're ready, create a goal (e.g. "I will buy at least one single-family home, duplex, triplex, or fourplex before the end of 2019") and then do it. Real estate investing is a pretty forgiving world and the average person can still make money even with some pretty big mistakes.

This is a phenomenal write up @Nathan Gesner

2 Votes

Los Angeles County, California

Quote from @Michele Velazquez:

Quote from @Matthew McKee:

I’m biased to my market but Boise, ID has been beating the national average on appreciation. Boise market is very soft right now due to psychological whiplash. Cashflow right now is fair but there are contributing factors that would suggest an uptick in cashflow over the next 3-5 years.

-micron(local tech company) is adding 15k jobs over the next 5 years

-meta(Facebook) is moving outside of boise because of low energy cost and taxes.

-California covid tenant protection mandates were turned off months ago and the evictions are reaching the end of their court hearings. Possible mass exodus 2.0 but is purely speculation.

It's good to reach out and get others perspectives but don't get caught in analysis paralysis, your first deal doesn't have to be a homerun. You can also pad cashflow buy getting a STR and giving it over to a repeatable property management company.

speaking of property management(PM), even if you don’t plan on using a PM, which I don’t suggest as your first out of state investment. It’s not a terrible idea to run your numbers with budgeting in a PM. That way you set yourself up for success in the chance that you don’t feel like managing the property yourself after getting started.

I know I threw a lot at you biggest takeaway is fail soon, fail often, fail forward.

Hi there,

I did look into Boise but it all seemed so pricey! I didn't see anything that will cash flow but will keep looking. You don't recommend I use a PM on my first out of state property? Can you expand on that? Curious about your reasoning and eager to hear it.

It is a pricey market to get into but the rents are rising and house costs are lowering. I absolutely recommend a PM, sorry if that wasn’t clear.

1 Vote

Welcome to the family @Joshua Cilas! Are you ready for a new addiction! First step is deciding what your niche is going to be then what market you want to start in. Seems like you’re off to a fantastic start! Unsolicited mindset tips:

Fail soon, fail often, fail forward.

Be the small gosh in every big pond you can

No more music, just podcast and books in the car.

Add value to everyone you meet with

Ask who not how

There’s enough corn in there to get you going. Hope everyone on BP in welcoming to you and I’m sure we’re all excited to see you grow!

1 Vote

Raleigh, North Carolina

-micron(local tech company) is adding 15k jobs over the next 5 years

-meta(Facebook) is moving outside of boise because of low energy cost and taxes.

I know I threw a lot at you biggest takeaway is fail soon, fail often, fail forward.

3 Votes

@Blanca Munoz I’d suggest asking those questions on a forum here. You’ll find many answers, perspectives and connections that way. I don’t mean this to be rude but investors worth being taken under the wing of simply don’t have the time to invest into everyone they’d like for a $4 coffee or $20 lunch. The best way to get an audience with someone like that is to figure out how you can provide value to what they need.

a quick actionable item: throw out music; listen exclusively to podcasts or books during your commute. That’s a free or inexpensive way to get most of your questions answered and will encourage continue growth.

fail soon, fail often, fail forward.

2 Votes

Fort Worth, Texas

I agree with everyone location and price are the most important factors but from a marketing perspective. A professional real estate photographer will pay their weight in gold! All blinds open and the first picture needs to be of the amenities, kitchen or just about anything other than the side of a gray apartment building.

1 Vote

Tucson, Arizona

Quote from @Jeremy Kinard:

Quote from @Matthew McKee:

Hi @Jeremy Kinard, congrats on taking action! Biggest step is your first but don’t let that stop you. In this world mistakes are actually more valuable than home run hits right off the bat. I may have missed it but do you own a primary residence, what’s your runway look like and what markets interest you?

Fail soon, fail often and fail forward my friend!

Matthew,

Thank you for your inspiring message! I will certainly take that mindset shift to heart.

I do own a primary residence. I have a decent amount of cash flow coming in from my day job and am increasing that by becoming a licensed appraiser. We are looking to invest in the local market North of ATL.

Depending on how long you’ve owned your primary residence you might be able to leverage the equity in it with a HELOC and use a second loan (10% down) to do something >50 miles away then use your day dog to further leverage that cash further.

2 Votes

Atlanta, Georgia

Quote from @Rick Baggenstoss:

Congratulations! Great start.

You can find hard money lenders by googling or online. Vet them a bit so you know someone who closed on time, has a reasonable draw process, and finished up/closed out the loan fine. Some lenders are less expensive but difficult to work with -- costing you more money than you saved!

Private lenders linger at REIA meetings or you might find some friends and family willing to go at-risk with you.

Congrats! What a great start! You can hunt for seller carry deals too, have you considered a BRRRR or BRSTRRR method?

1 Vote

Atlanta, Georgia

Quote from @Greg R.:

Not sure if you understood the point of the post. I'm asking if anyone has real-life data so we can evaluate these scenarios.

Let's say back in 1990 someone were to purchase a a 4-plex in the mid-west for 200k. This same investor bought a cottage on the coast, let's say La Jolla San Diego for 200k as well. In this scenario let's assume that the 4-plex generated 700k cash flow over the life of the loan. Let's say that the beach house didn't make anything for the first 5 years of the loan and made modest cash flow from year 6 forward, totaling in 200k positive cash flow throughout the life of the loan.

At this point you can conclude that the 4-plex made 500k more than the beach house over the life of the loan through cash flow. Let's say that we go to sell and the 4-plex is worth 800k and the beach house is worth 1.7 million.

Which property made more money for the investor?

On paper the cottage but there’s other factors than that like time/ease of management and property taxes/ utilities plus in the last few years some landlords weren’t getting getting paid at all I’m some high appreciating markets.

all I’m saying is with my crystal ball in the shop I’m not art enough to design a litmus test that foresees all possibilities and metrics to compare. Speaking for myself, of course.

2 Votes

Dallas, Texas

Quote from @Greg R.:

Quote from @Victor Steffen:

i think this is a "both / and" answer.

wealth is built through asset appreciation so I think it's important to hold those blue chip properties.

The problem is- without positive cashflow there's a ceiling on how many you can carry.

Yeah I agree, 100%. So then I guess the question would be how much greater is the return on a blue chip property 30 years later than the cumulative cash flow of a mid-west rental? if it is significantly better, one might be better off having less blue chip properties to equal the yield from more mid-west rentals.

One other aspect I forgot to mention is the tax implications, which further complicates the analysis.

It depends what you’re doing with that cashflow over the 30 years. Are you paying yourself or putting it back into your business? I would argue that the way in which you leverage that cashflow os more important than high appreciation v cashflow in a 30 year frame

4 Votes

Dallas, Texas

All Forum Posts by: Matthew McKee

Matthew McKee has started 1 posts and replied 164 times.

Post: Tips and Advice for Newbie Getting into real estate

Post: Best Market for MFU to CashFlow and Appreciate

Post: New Investor Introduction

Post: Best Market for MFU to CashFlow and Appreciate

Post: Let's meet for lunch or coffee?

Post: Struggling to find tenant

Post: Up and coming investor in ATL!

Post: Just Closed on a Duplex w/NACA

Post: Is cash flow overrated?

Post: Is cash flow overrated?