Author Topic: Complete, 100% Newbie at Real Estate Investing  (Read 1530 times)

Richie

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Complete, 100% Newbie at Real Estate Investing
« on: February 20, 2019, 06:59:26 PM »
Greetings,

We are considering investing in a rental property.  TBH, we are kind of overwhelmed with where to start.  Where does a complete newbie start?  I ordered some of the books in the pinned topics.  Anything else I should do or think about?

turtlefire

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Re: Complete, 100% Newbie at Real Estate Investing
« Reply #1 on: February 21, 2019, 05:59:33 PM »
Something that helped me was becoming involved in the bigger pockets forum, and reading as much information about certain topics you're unsure about. Another bit of advice would be to get in contact with a local investment group.

Jon Bon

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Re: Complete, 100% Newbie at Real Estate Investing
« Reply #2 on: February 22, 2019, 10:29:13 AM »
Depends what you want to do. Whats your dream scenario here and we can try and help you.

BP is ok place to start. There are some good folks on there but there are a TON of scammy get rich quick people on there as well.  I kind of liked some of their early podcasts where they interviewed a lot of different kinds of investors. Some appealed to me and some sounded terrible.  Also and more importantly real estate is intensely local. Some of the tactics listed on BP are straight up illegal in different parts of the country.

A few questions to answer for yourself:

Acquisition Strategy?
Local or Long Distance?
Turnkey or Renovation?
Self Manage or PM?
Single, Double, Quad, etc?
A,B,C Neighborhood?
DIY chops?
Subcontractor Rolodex?


and so on.

waltworks

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Re: Complete, 100% Newbie at Real Estate Investing
« Reply #3 on: February 22, 2019, 12:27:54 PM »
I will disagree somewhat with JonBon on BetterPockets. It's become scammy and full of morons. The signal/noise ratio is just awful there now and it's been mostly overrun by RE cheerleaders rather than intelligent investors. That makes sense given the crazy run RE in the US has been on, I guess, but it's IMO not very useful anymore.

JB's other point is a good one, though. Flipping is different than SFH is different than Multi. Local is different than remote. Paying cash is different than financing to the hilt. All of that stuff will determine what will work out (and more importantly, what won't) for you.

I think your first step is probably to understand the costs involved in RE. This will mean understanding the basic ideas behind the 1% and 50% "rules" and being able to apply those ideas to analyzing specific properties.

The #1 mistake RE investors make is not understanding their overhead (ie "the rent payment is more than the mortgage, I win!")  If you can avoid that mistake, you're pretty much good.

-W

Uturn

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Re: Complete, 100% Newbie at Real Estate Investing
« Reply #4 on: February 22, 2019, 02:00:00 PM »
Find a local RE investing club.  There is tons of knowledge there and you will learn about aspects of RE that you didn't even know existed. 

Jon Bon

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Re: Complete, 100% Newbie at Real Estate Investing
« Reply #5 on: February 22, 2019, 07:30:08 PM »
I will disagree somewhat with JonBon on BetterPockets. It's become scammy and full of morons. The signal/noise ratio is just awful there now and it's been mostly overrun by RE cheerleaders rather than intelligent investors. That makes sense given the crazy run RE in the US has been on, I guess, but it's IMO not very useful anymore.

JB's other point is a good one, though. Flipping is different than SFH is different than Multi. Local is different than remote. Paying cash is different than financing to the hilt. All of that stuff will determine what will work out (and more importantly, what won't) for you.

I think your first step is probably to understand the costs involved in RE. This will mean understanding the basic ideas behind the 1% and 50% "rules" and being able to apply those ideas to analyzing specific properties.

The #1 mistake RE investors make is not understanding their overhead (ie "the rent payment is more than the mortgage, I win!")  If you can avoid that mistake, you're pretty much good.

-W

Lol its been a while since I have been over to BP, I guess I am not missing anything!

waltworks

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Re: Complete, 100% Newbie at Real Estate Investing
« Reply #6 on: February 22, 2019, 10:00:40 PM »
Lol its been a while since I have been over to BP, I guess I am not missing anything!

TBH it went down the shitter about 3 years ago. :(

-W

Richie

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Re: Complete, 100% Newbie at Real Estate Investing
« Reply #7 on: February 24, 2019, 03:28:55 PM »
Thanks everyone for your insight so far!

Depends what you want to do. Whats your dream scenario here and we can try and help you.

I am probably stuck in my current location for at least ten years.  Not for financial reasons, more so for family reasons.  I'm still young, so time is on my side.  I have the resources now to purchase an investment property, as my overhead is pretty low at the moment.  (I'm living in a paid off property which I jointly own with two other siblings who also live there.  I also have a legit job.)  Once I'm able to leave, I definitely want to move out of my present city.  So, I was thinking of purchasing a property somewhere else that I may want to move in the future (but also within several hours driving distance).  Ideally, a property which needs some work.  I'm fairly confident in my ability to learn new skills, though I do have the resources to pay for some things to be done by professionals.  I could slowly fix this property up over the next ten years (doing as much as I can myself), rent it out eventually, and eventually live there myself.

Thoughts on this scenario?

BicycleB

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Re: Complete, 100% Newbie at Real Estate Investing
« Reply #8 on: February 24, 2019, 05:18:46 PM »
Sounds kind of complicated. Probably if you look, there are projects nearby that can hone your skills without a long commute. Then when it's time to move, you'll ramp up quickly in the new location because you bring your skill package with you. Plus, you're not locked in to just one location 10 years from now.

If you want to develop handyman skills, why not work for someone nearby in your spare time who does real estate maintenance, or start a handyman service, or work for a property management company?

In the meantime, Learn your own town in detail by analyzing numerous deals using the ratios from the books you're reading. Introduce yourself to people in the local real estate business and ask them about the relevant ratios in regard to recent deals they did.

Just ideas, but you're young and looking for activity - these are activities that would work anywhere and give you diverse skills.
« Last Edit: February 24, 2019, 05:22:08 PM by BicycleB »

Schwatt

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Re: Complete, 100% Newbie at Real Estate Investing
« Reply #9 on: February 27, 2019, 11:21:33 AM »
BP has a lot of junk posters to filter through, I agree.

If you have a question though, doing a search will get a you a bunch of results on BP and you can figure out pretty quick who the knowledgeable posters are, and who to take advice from.

Listen to some of the older BP podcasts from years ago, there is some valuable info there. Heck, if it wasn't for BP, I wouldn't be here. The "Money Show" podcast is what led me to this site.

getting there pnw

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Re: Complete, 100% Newbie at Real Estate Investing
« Reply #10 on: March 01, 2019, 04:49:52 PM »
I am probably stuck in my current location for at least ten years.  Not for financial reasons, more so for family reasons.  I'm still young, so time is on my side.  I have the resources now to purchase an investment property, as my overhead is pretty low at the moment.  (I'm living in a paid off property which I jointly own with two other siblings who also live there.  I also have a legit job.)  Once I'm able to leave, I definitely want to move out of my present city.  So, I was thinking of purchasing a property somewhere else that I may want to move in the future (but also within several hours driving distance).  Ideally, a property which needs some work.  I'm fairly confident in my ability to learn new skills, though I do have the resources to pay for some things to be done by professionals.  I could slowly fix this property up over the next ten years (doing as much as I can myself), rent it out eventually, and eventually live there myself.

Thoughts on this scenario?

Your time estimates are painful to hear. First, I hope you aren't stuck somewhere you don't want to be for ten years. Work on that imho.

Second, you absolutely cannot take ten years to fix the other property. Way too long, even if you do have to stay at the first property for ten years. Take a few months to do the fix up. The faster the better, to cut carrying costs and/or start the income stream asap.

SwordGuy

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Re: Complete, 100% Newbie at Real Estate Investing
« Reply #11 on: March 02, 2019, 06:11:54 PM »
Read the books you ordered from the pinned, particularly Gallinelli's book.  (And get his pronto if you didn't order that one.)

Join your local Real Estate Investor's Association.

Start evaluating properties via sites like Zillow and Rentometer.  Learn how to look up local property taxes and liens on properties.     Run the numbers on those sites you found with a guestimate of how much it will cost to repair them based on the photos.   Then drive over and walk around the potentially most profitable ones and check them out in person.  Look in the windows and take good photos, particularly where things need work.  Take a pad and write down the issues of concern.  Take outside measurements if the square footage isn't listed in the advert or if a carport got turned into living space so you have reasonably accurate sq footage.
  Find out what those repairs you noted needed doing might cost to do for both parts and labor.   You'll only be able to get rough-guess estimates but those are useful.

This process, if done for 6 months to a year on a frequent basis, will get you pretty familiar with your area, what rents are and what repairs cost.   This will help you do better estimates.   

This is all stuff that you can do while you are reading those books.   It will hone your RE investing skills.  And if you find a gem, act on it promptly.

Villanelle

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Re: Complete, 100% Newbie at Real Estate Investing
« Reply #12 on: March 02, 2019, 06:42:21 PM »
So your plan is to have a house sitting empty for ~10 years while you tinker with it? 

If I am understanding that correctly, then put your money in a broad Vanguard index fun instead.

Archipelago

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Re: Complete, 100% Newbie at Real Estate Investing
« Reply #13 on: March 10, 2019, 03:11:11 PM »
I will disagree somewhat with JonBon on BetterPockets. It's become scammy and full of morons. The signal/noise ratio is just awful there now and it's been mostly overrun by RE cheerleaders rather than intelligent investors. That makes sense given the crazy run RE in the US has been on, I guess, but it's IMO not very useful anymore.

JB's other point is a good one, though. Flipping is different than SFH is different than Multi. Local is different than remote. Paying cash is different than financing to the hilt. All of that stuff will determine what will work out (and more importantly, what won't) for you.

I think your first step is probably to understand the costs involved in RE. This will mean understanding the basic ideas behind the 1% and 50% "rules" and being able to apply those ideas to analyzing specific properties.

The #1 mistake RE investors make is not understanding their overhead (ie "the rent payment is more than the mortgage, I win!")  If you can avoid that mistake, you're pretty much good.

-W

Holy cow @waltworks . You're incredibly spot on about RE investing. I'm glad you're part of this community.