Well needed advice for a first-time homebuyer and investor
Member since 2022 · 1 post · 0 votes
Well needed advice for a first-time homebuyer and investor
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Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
3yQuote from @DeVon Williams:
I've setup everything for my business...
This is a common mistake. It's like building a basketball court on your property and then wondering how to play like Lebron. You've put the cart before the horse. Learn how to invest in property, invest in property, manage the property, then turn it into a business.
You don't need a mentor. You can learn everything you need to know through free information in the forums, reading a few books, listening to some podcasts, and networking with other investors./
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.
The DIY Landlord Book4.7248 Reviews
8 Replies
- Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes3y
Quote from @DeVon Williams:
I've setup everything for my business...
This is a common mistake. It's like building a basketball court on your property and then wondering how to play like Lebron. You've put the cart before the horse. Learn how to invest in property, invest in property, manage the property, then turn it into a business.
You don't need a mentor. You can learn everything you need to know through free information in the forums, reading a few books, listening to some podcasts, and networking with other investors./
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.
The DIY Landlord Book4.7248 Reviews - Real Estate Agent · Atlanta, GA · Member since 2020 · 1k+ posts · 1k+ votes3y
@DeVon Williams, contrary to what other investors may advocate, you need capital to get started in real estate. The whole "low and no money down" has been overplayed time and again now and quite frankly I'm getting sick of seeing newer investors fall into the hype. As I've reiterated in many forum posts before, it's very difficult/nearly impossible to jump into real estate investing full-time with zero capital. If your investment strategy is to house hack, the most suitable financing means will be through a conventional lender or government-backed loan product (FHA). Owner-occupied mortgage products will allow you to get into a property for as little as 3%-5% down. For a 300k duplex, you're looking at a 9k-15k downpayment (not including other points and fees). To be blunt, for a house hack investment you do not need a mentor necessarily. Furthermore, you need to get more creative when sourcing for deals. As opposed to only looking at small multifamily properties, widen your search criteria to include SFHs with either an in-law suite, ADU, or basement that can be converted into a unit. Hope this all makes sense and helps!
- Real Estate Agent · NJ · Member since 2021 · 568 posts · 127 votes3y
More than happy to help out, I've done quite a bit of investing and an agent and lender as well, reach out we can set something up.
- 3yTy AshBusiness MemberReal Estate Agent · Milwaukee, WI · Member since 2018 · 201 posts · 132 votes
Hi @DeVon Williams!
I'd recommend that you keep/start learning! This can be done through Podcasts, Books, and Mentors you find by networking in your area.
I'd pick up a copy of Set for Life by Scott Trench as it has a good framework for financial independence, especially for a newer investor. Real Estate is just a part of your total financial picture so don't become too focused on just real estate. You'll want to learn more ways to increase your income now and in the future, keep your expenses low, and take the difference to invest into assets, real estate/business. Like @Michael Dumler, said you should have some capital to get started and this book walks through a framework for that.
As already mentioned above, a house hack will probably be one of the best strategies for you to get started and take action while giving you a great return because of the low % down needed to get started. Once you get to this point, make sure to run your numbers for both while living in the house hack (lowering your living expense to less than what it would be to rent in your area) and post move out where you need to be at least break even after accounting for your monthly payment + maintenance, capex, vacancy, property management.
Here's a great resource right here on BP:
https://www.biggerpockets.com/real-estate-investing/house-hacking-strategy
Best of luck getting started! Here for you with any questions you have along the way!
- Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes3y
Call realtors, wholesalers, and ask if they know of any duplexes or triplexes. With the cost of construction to convert a single family into a duplex you might as well flip a home and buy a rental cash and have that pay your note off on your primary residence
- Property Manager · Atlanta, GA · Member since 2016 · 83 posts · 42 votes3y
There are several multifamily properties on the market in metro Atlanta to buy and house hack.
The first step is speaking with a lender about financing. you want to have money lined up in order to buy a great deal when it presents itself.
The second step is determining your criteria and the deadline by when you want to close on your first house hack.I sent you a connection request. I can help you get started; check your inbox
- Real Estate Agent · Austin, TX · Member since 2020 · 1k+ posts · 941 votes3y
Quote from @DeVon Williams:
I've setup everything for my business but haven't found a way to buy my first property for investing. I'm passionate about getting this off the ground but honestly don't know how. I would love to house hack, but I haven't seen any duplexes, triplexes, or quadplexes on the market here. With the help of YouTube, I've ran across some ideas on how to convert properties into what I'm looking for, but I don't know how to do it or fund it. I would love to have a mentor that could help guide me through and help me avoid making costly mistakes.
The easiest way to find a mentor is by getting agent that is doing what you want to be doing! Find someone that is house hacking in that market and they will 'mentor you' through the purchase process. They still get paid from the transaction so it's a win win.
- Real Estate Agent · Seattle, WA · Member since 2019 · 301 posts · 188 votes3y
Hey DeVon, thanks for posting this! A few things:
There's no need to set up a legal entity for house hacking. You'll just buy it and have the loan in your personal name.
Continue saving up capital for a house hack. Increase the difference between income and expenses best you can. Remember you need 3-5% down and hopefully an agent that can negotiate the seller pays closing costs.
Consider focusing your search more on single family house hacks. You'll likely see way more inventory here and, with some creativity, some better cash flow numbers.
You're welcome to reach out to me with any more questions. I would recommend finding a good agent in your area and they will effectively become your mentor. Good luck DeVon!
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