What should I be looking for when viewing real estate to find a "great deal"?

Question

Hello all, I'm currently residing in central Texas and looking for advice when looking to find my first investment property to get started off on the right foot. I'm 21, newly married, and we have a 2-2 house we're residing in as of last July. I put roughly 20% down on a $200k home, and am curious what steps I could take to possibly turn my original investment into a large portfolio within the next 10 years, when we're currently "low on liquid funds" after finishing up a wedding.... We're currently both working a W-2 job with a combined household income of roughly $150k, and searching how to start to our journey to financial freedom. Any advice would be appreciated, as I am again, very new to my journey in finding my way through the "rat race".

Some questions I've been asking myself that you might be able to help me answer.

"What is a realistic goal to have within the next year, in order to build cashflow?"

"In this economy, what should I be physically looking for in a potential investment property that is "promising" or "trendy" that would give me the most ROI?""Since I am strictly W-2, would it be smart to consider getting my LLC in order to protect my future investment properties, and while also reaping the tax benefits of having an LLC?"

"What are the main differences in hard money lenders vs. private money lenders?"

"Is real estate wholesaling a realistic way to start up my real estate journey, and if so, how can I get started in this field?"

"Where can I find owner finance properties?"

"What formula is used when calculating price of property + property taxes + expenses and upkeep - what property will rent for = monthly cashflow?"

I'm hungry to learn, and work. I want to know any and all tips, advice, and of course down sides to this lifestyle.

Thank you,

KV

Aaron Nelson · Answer

@Kannon Vogt that's a whole lot to go over when I think we could cover most of it in a 30 minute phone call. I'm a Realtor, property manager, and investor in San Angelo. Message me and we can cover all that and where I think you'll be best served investing in our market and similar markets in Texas as well as best practices.

Ryan Blake · Answer

Below are my answers to some of your questions that I feel qualified enough to answer and then some of my personal thoughts on where to go from here.

"What is a realistic goal to have within the next year, in order to build cashflow?" With out knowing your actual cash position, it is tough to tell. I would think that you should be able to pick up at least one rental in the next year. The issue you will face is how to make it cashflow. You will need to find a home that has a lot of upside potential and then find a hard money lender that is working in the San Angelo area. Because of the size of the market it may be a little more difficult to find favorable terms from an HML. I am sure some other lenders will respond or reach out after I make this reply.

"In this economy, what should I be physically looking for 
in a potential investment property that is "promising" or "trendy" that 
would give me the most ROI?" Trendy will not get you more ROI. I think you need to find a property that is being sold significantly under retail to build in a lot of equity. You also may need to do some work yourself, again depending on your funds. One thing that may work is doing a Subject to Existing Financing deal where you will buy the property from someone but not payoff their loan. Then you will take over the payments. But they may want a large payout to buy it from them and it may need repairs that could need cash out of your pocket. Look to ask the seller about financing back whatever they want for their equity but make sure the mortgage rate and payment are at a place where you will be able to cash flow effectively. Search up Subject To in order to find more info on this.

"What are the main differences in hard money lenders vs. private money lenders?" Really, any hard money lender is also a private lender. Typically people making the designation a private lender is someone you know and have a relationship with and will privately lend you the money. A hard money lender is the same but they advertise or open it to people they don't know, meaning public. If someone you don't know reached out to you to offer you a loan and you do not know them, they are essentially acting as a hard money lender (lending based on the hard asset and not a prior relationship they had with you).

"Is real estate wholesaling a realistic way to start up my real estate journey, and if so, how can I get started in this field?" Find properties off market is the quick an simple answer. Find a property (truly on or off market) that has enough room in the deal and get a contract on it. Then sell your equitable interest in that contract via an assignment to another investor. You will want to make sure you have enough room for your profit and to still make it enticing to an investor. In Dallas, investors are regularly getting deals around 70% to 74% (that is the purchase + rehab / ARV). This will only be making you quick cash, not long term investments.

"Where can I find owner finance properties?" Zillow, For Sale By Owner posts on facebook, your local newspaper, and craigslist.

Wish you luck in your venture. Make sure to keep your eye on the prize and do not spend too much time chasing after the next hot thing.

Matthew Becker · Answer

You are doing great, man.

Can you cash flow your property now if you move out?

I would do a direct mailer in my area and try to pick up another owner occupied.

Hard money is very dangerous.  You don't need to do that.  You make great money.  You will be able to repeat what you have already done.

You are in Texas, and it will continue to grow, so you are in a great spot.

Listen to all the Bigger Pockets material; it contains so much excellent information. I wish I had had these resources when I started.

Keep it small, and keep it all.  Go slow.

What should I be looking for when viewing real estate to find a "great deal"?

Most Popular Reply