Tips for getting started part-time

[Account Closed]

Hi all,

I’m considering / planning to get into rental real estate over the next few years, and I’d like to get some wisdom from the community to help me focus my early efforts. Apologies if this kind of post is all too common, I'm using this post as a way to stop reading and start doing! Appreciate you taking the time to read and share your tips!

Some factors at play for my situation:

• - Real estate will be a part time focus - I really like my job and my career, the goal for real estate is to create passive income to supplement my salary, but I’m not trying to quit my job.
  • - My hunch is that I will need to focus on setting up management early, to avoid being overwhelmed by a small number of properties.
  • - Need to find the right team to make fully remote deal finding work.
• - Geographical diversification is important to me - I want to avoid having all-eggs-in-one-market-basket, would appreciate advice on how big I should go in each market to balance this goal against the overhead of having too small a portfolio in each market.
• - We’re planning to move our primary residence over the next couple years as well — are there any concerns with getting a decent rate mortgage for our personal home if we get a bunch of rental property mortgages in the meantime?

Goals and starting capital:

• - Let’s say I set a goal to have $100k-$200k yearly income (after expenses, before tax) within 3-5 years. How reasonable / unreasonable do you think this is for a part time investor?
• - How much starting capital do you think I need to commit to make this achievable? Would $200k,$400k,$600k be enough to make this achievable in this timeline?
  • - Obviously creative financing is always an option, but from what I can tell it seems more time consuming to find deals that work like that.
  • - I imagine I’d be better off starting in a $100k-$200k market to get more units early on?

Appreciate any and all tips for where to focus my efforts at the beginning. I've listened to the podcast a decent amount so I have been exposed to a lot of the basics, but curious what more experienced folks will suggest for where to get started for my specific situation :)

[Nathan Gesner]

Quote from @Account Closed:

Welcome to the BiggerPockets forums!

There are too many variables to answer these questions. Is $100,000 salary enough to start investing? It is in some parts of the country, but even that depends on your budget and how well you can save.

You're worried about management, but you haven't even bought a house yet. You're talking geographical diversification, but you haven't bought a house yet. You're worried about mortgage rates . . . in a couple years.

Don't put the cart before the horse. Focus on first things first. Get the job, get debt free, build a savings. While you're working on that, spend time reading books and listening to podcasts to educate yourself. Look for the market you want to start in and start studying it, analyzing properties (even if you don't intend to buy), and laying the groundwork for when you are ready to invest.

1. Start with BiggerPockets Ultimate Beginners Guide (free). It will familiarize you with the basic terminology and benefits. Then you can read a more in-depth book like The Book On Rental Property Investing by Brandon Turner or The Unofficial Guide to Real Estate Investing by Spencer Strauss.

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.