Getting started (my story) - LONG - Barely Updated 12/12/07

[Steven Noreika]

I mentioned in my introductory post that I would attempt to chronicle my experiences as a first-time real estate investor here, in the hopes that some other new investors may relate to them and maybe even find them helpful (or at least interesting to read).

I will update this thread as my situation progresses, answer any questions, and hopefully generate some interesting conversation in the process. If this becomes too “bloggish” or fails to provide an interesting read, PLEASE let me know as I would hate to clog the forum with stuff like that when there is so much other valuable information around to be shared.

First, a couple quick notes about my current situation. I am a 33 year old CPA from Putnam County, NY (about 50 miles north of NYC) with a young family. My wife is generally very supportive and trusts me fully in terms of our finances, etc (and I presume in other areas as well :). Her two hangups with this venture are that she is very financially risk-averse and has become very happy with our steady biweekly paychecks (she works fulltime as well, for the time being). Second, she worries that what little free time I have at home now will dwindle to nothing. I can do nothing at this point but try my best to assure her that I am embarking on this venture with the family’s future and well-being as my #1 concern, and I will do my very best at all times to not make the family take a backseat to the business.

I currently work a 9-to-5 corporate job in Manhattan, but am actively seeking a similar position closer to home. The reason for this change is twofold – first, the commute is tiring; but more importantly, working closer to home will allow me to be more active in viewing and visiting properties in the area during the day and before or after work. I consider this job change to be the first major step toward starting my real estate investing career. My long-term plan is for the 9-to-5 to fade away into oblivion, but that’s obviously very far down the line at this point.

I have partnered with a friend who I have been close to for almost 20 years now. We are similar in age, income level and family structure and our families are good friends as well. We have had many monetary dealings with each other in the past, and although we have never officially “gone into business” together, I have every confidence that this partnership will be a successful one.

In terms of our investment objectives, we would like to purchase rental properties (anywhere from SFHs to fourplexes) and hold long-term to reap the benefits of monthly rental income and appreciation. Unfortunately, in our area/market, property values are still so high that we are finding it difficult to locate rental properties that will cash flow, even when purchased at a FMV discount. So it looks like our first project will likely be a SFH rehab, which in our view is a solid alternative because it will allow us to:

- Develop our team (agent, attorney, mortgage broker/lender, accountant, contractors)
- Gain some real-life experience in terms of rehab costs, scheduling, etc.
- Give us the emotional satisfaction of having one deal under our belts (while at the same time reassuring our wives that this will be a sustainable business)
- Hopefully make a profit (however small it may be), which will give us additional equity to either put back into a second project or our first rental property

We feel there is significant value in the first three benefits, so much so that we view the fourth benefit almost as an afterthought (anything greater than zero post-tax will do just fine by us).

So, there is the background. I will follow up in a few days with our initial steps and our progress. In the meantime, if anyone has any questions or comments (positive or negative), please do not hold back. I’ll do my best to address them all to the best of my knowledge and ability (which, at this point, is quite limited but hopefully trending upward). And again, if this thread is not beneficial/entertaining to the forum and its readers, please let me know and I’ll put an end to it (I should probably be spending more time finding deals and less time writing anyway!)