Looking to get started in Real Estate investing

[Leandro Bongiovanni]

Hello everybody this is my first post and I sincerely appreciate any feedback. I am 24 years old working a (mostly) cash job so my income on paper is insufficient for a loan and my credit isn't great. I recently came into a fairly significant lump sum of money totaling around 150k. I've always been dead set on real estate but don't really know where to start. I know this is plenty of money to get started and eventually catapult me to financial freedom. I am looking for some suggestions, ideas, tips, or anything that might lead me in the right direction. Again, I sincerely appreciate all feedback. Also, id like to mention if anyone is interested in a partnership or is in need of financing id look to go in that direction as well. 

[Nathan Gesner]

Quote from @Leandro Bongiovanni:

Welcome to the BiggerPockets forums!

The first thing I would do: acknowledge that you came into this money by good fortune, not by skill, and that you can just as easily squander it, as so many do.

A good investor will have control of their personal finances before investing. This means no debt, a good budget, responsible spending. If you can get personal finances mastered, then you can invest from a position of strength.

As for investing, I would start with a house hack. Buy a four-unit building with as little as 5% down. That gives you a place to live and three rentals to manage. Continue reading books, becoming a better Landlord, and really learning if real estate is the right method of investment for you. If it is, start looking for the next deal. With $150,000 and the right market, you should be able to purchase a fourplex to househack and another to manage. That's seven rentals and a place to live in one year. Within 1-2 years you should have enough saved up to househack a third fourplex and rent out your first apartment. Now you'll have 11 rentals and a place to live. After 1-2 years, you should have enough saved up to purchase a single-family home and the cashflow from your rentals will pay for all of it.

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.