Any recommendations upon how to learn real estate before first deal?

Question

I have read the BRRRR book by David Greene as well as listened to around 100 podcasts on Spotify by Biggerpockets. I plan on getting my real estate license as well to help me be a bit more informed before going into real estate and so I can find my own deals via the MLS as well as being able to cut out the percentage of paying someone to find and close the deal. What else should I explore/do before getting my head in the game? I still feel like I don't know exactly what I am doing but I am hoping being a licensed agent will help this matter. However, a lot of people say that the only way to learn real estate is to jump in head first and learn by making mistakes. What should I do?

Nathan Gesner · Answer

I'll share my beginner advice below. The basic idea is to buy a house that rents for more than the expenses (Here's a guide that describes what good cash flow looks like and how to analyze a property: https://www.biggerpockets.com/...) If it makes sense the day you buy it, then it will make even more sense five years later. Buy and hold. Rinse and repeat. It's not complex, but it does require some patience, which most investor wanna-bes do not have.

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.

Ryan Thomson · Answer

I would house hack to start. Always a great way to get started if you can qualify.

Second, I have some free advice and responses to your comments:

1. Getting your license does not "help you know what to do". If you are going to buy a property it is worth doing it with an experienced agent for the first one at least.

2. You are doing a lot of educating which is awesome. It sounds like it is probably time to jump in and learn by doing so you don't get stuck thinking and reading forever.

If you like the idea of house hacking (the best way to get started in my opinion) I would check out these resources:

1. For podcasts I really like the Huse Hacking episodes on Bigger Pockets Podcast and other channels. 2. Great beginners guide: https://www.biggerpockets.com/...3. The Book on House Hacking Strategies by Bigger Pockets is also a fantastic book4. Happy to talk if you want more advice5. Connect with a realtor who understands house hacking and has invested themselves 6. Connect with a lender to see what you qualify for and how you can improve that situation7. Go to local Real Estate meetups and learn from people there

Casey Valbuena · Answer

Checkout the MeetUp app and you will most likely see REI groups there. I'm just starting as well and that's where I found my local investors group.

Henry Clark · Answer

Do about 5 deal analysis.  Bring them here and ask people to review.

On each one do a failure calc. Most people do t do things because of the risk of failure, not the reward.

Size your deal beforehand to narrow your focus.  How much money do you have or collateral at 65%?   Then determine your financing mechanism and LTV% they will allow.   The combination of these two plus any Capex issues will determine the size of your deal.   Example:   You have $10,000.  At 10% down you could do $100,000 deal.   Or you could do a seller fiancé deal.  Or if your income is below Xxxx you can do a USDA deal.

Walter Bowser · Answer

Either on Facebook or Google. I would just search REI Group *City Name* and then you should be able to find a group and how to join from there!

Jackson Halverson · Answer

I have heard a lot of advice on joining these groups, where is the best place to find your local REI group?

Marcus Auerbach · Answer

Interesting that there is the notion that getting licensed will somehow help becoming a better investor. Ironically a lot of investors find that agents don't add a lot of value. A bit of a conundrum.

I've been an investor without a license for about 7 years and for the last 8 years I have been licensed and run a team, so I have seen in from both sides. What I can tell you is that the first few years of me being licensed were the lowest I had in acquisitions. Being a new agent was just very distracting from my investing. It is also true that most agents know very little about investing. That was my observation before I got licensed and now I am on the "inside" it's even more obvious, but also puzzling that those with the inside track with very few exception don't take advantage.

When you study to get licensed you learn very little that actually useful. So you still have to go out and do lot's of deals as an agent to learn from first hand experience. Once you have closed let's say 100 deals you start to become a bit more knowledgeable. And that is also my advice for picking an agent - what is valuable to an investor is the experience an agent can bring. That comes with 10.000 hours on the job. And preferably find an agent who is also an investor and can mentor you a bit along the way.

Ryan Garrison · Answer

Howdy Jackson,

As a multi-tool real estate investor, landlord, and agent, I'm glad to hear you're interested in the world of real estate investing. It's a rewarding journey, but it's essential to be well-informed and prepared before diving in. Here are some steps to help you learn the ropes before making your first deal:

Start by reading books, articles, and blogs on real estate investing, focusing on various strategies like rental properties, house flipping, wholesaling, and commercial real estate. Some of the more popular books to consider include "Rich Dad Poor Dad" by Robert Kiyosaki, "The Millionaire Real Estate Investor" by Gary Keller, and "The Book on Rental Property Investing" by Brandon Turner. Education is paramount. Learn creative finance - because you don't have credit - and you will love creative finance even more when you do have credit.

Attend REIAs and MeetUps to gain firsthand knowledge and insights from experienced pros, and network. Websites like Meetup, Eventbrite, or BiggerPockets can help you find relevant events near you. We have one in WA on FB and Meetup.

Keep engaging in forums like BiggerPockets or Reddit's r/realestateinvesting, where you can ask questions, share your experiences, and learn from others.

Stay up-to-date on market trends, legislation, and tax laws that may affect your investments by subscribing to industry newsletters, podcasts, or YouTube channels.

Building a network of knowledgeable professionals, including real estate agents, lenders, contractors, and property managers, can provide you with invaluable guidance and resources. This leads me to...

Find an experienced real estate investor to mentor you. Shadowing a mentor can give you a better understanding of the day-to-day operations, challenges, and decision-making processes in the business. Offer to help them for free, just to be in the room. If you bring investors deals/opportunities, we will usually show you a lot.

Familiarize yourself with various financing methods, including traditional mortgages, private lending, hard money loans, partnerships, and especially SUB2 & SELLER FINANCING.

Research neighborhoods and areas you're interested in investing in, paying close attention to factors like property values, rental rates, vacancy rates, and local economic indicators.

Set clear goals and create a roadmap that outlines your investment strategy, financial projections, target properties, and exit strategies.

Consider starting with a smaller, lower-risk investment like wholesaling, or getting your RE Agent License to build your experience and learn from any potential mistakes. Having lots of conversations with sellers will speed up your learning curve in acquisitions.

Remember, real estate investing is a journey that requires patience, persistence, and continuous learning. Stay focused. The grind is worth it.

Walter Bowser · Answer

Hi Jackson,

One thing that I found very helpful when I started was joining the local REI group. It helped me learn first hand investment strategies that local investors are using. I was also able to develop a relationship with one of the investors in the group who let me shadow him and learn from his moves. I think it is important to have a mentor as you jump in to the Real Estate sector.

Jerryll Noorden · Answer

Honestly, the biggest reason people suffer from analysis paralysis is because of what you see happening here. A ton of advise a ton of opinionated "this is first, that is second", and ultimately you will feel even more lost than ever.

It doesn;t matter what book you read, and how amazing the explanation on how to calculate an ARV, is when no one actually gives you a step-by-step recipe that doesn't just build you knowledge but also the confidence and determination so that you feel ready to take that concrete first step.

You need to get your mindset straight first.  understanding the core principles, the phsycology behind the main pieces of investing, you will know what to do and how to do it. You will feel confident enough to know what is right and wrong.

And that is 99% of people's issues here.

People always blindly listen and do what other "more popular or succesful people" tell them to do. Them being succesful doesn't make their strategies succesful, believe it or not.

You need to understand the logic behind all of this and not just simply :accept it" what will build you that confidence so you actually can do with 100% confidence.

It all starts with mindset like I said.

I have started writing free lessons on Biggerpockats.

https://www.biggerpockets.com/...

Give this a read and let me know how you begin to feel and see this space after you read it. I designed these lessons exactly so that you get that confidence that will help you stop feeling the need to ask others for help but to construct your own best obvious way of how things are done and are supposed to be done. THAT my friend is the key to success in this space.. NOT asking others for their advice and you simply accept it on faith!