Feeling Overwhelmed/Struggling to Pick Niche/Strategy

Starting Out
10yFollow

Feeling Overwhelmed/Struggling to Pick Niche/Strategy

Jake ThompsonPro Member
Rental Property Investor · Albany, OR · Member since 2015 · 312 posts · 136 votes

Hey friends,

I'm a new investor, just bought my first property (a duplex) that I intend on holding for rental income (currently living in one unit). My problem is now, I want to really narrow down and focus on a niche/strategy to start building my portfolio. but I can't seem to pick one thing. Everything seems great. My ultimate goal is to have enough rental income coming in that I don't have to work and can live comfortably ($10,000/mo), however I don't know what to choose to get there. Buy and Hold SFRs, small multi's, apartments, mortgage notes? Or should I flip to build up some cash first? Then of course there's the problem of where to actually invest. I hear a lot of people say to stay local at first, but I'm also in San Diego where the competition is fierce and (as far as I can tell) few to no cash flow properties are out there.

A little about myself I'm transitioning out of the military and will be going to school using my G.I. Bill (Military pays for for tuition and housing costs), but other than that I won't have a job so I will have the time to work on my RE business. 

I appreciate any advice on how to choose a niche/strategy and actually stick to it without getting sidetracked by the many others that are out there!

0Reply
20 views

Most Popular Reply

David Thompson
Investor · Austin, TX · Member since 2013 · 933 posts · 1k+ votes
10y

Jacob,

Couple thoughts.  One, you are normal.  Two, its cool that you are starting young and thinking about a plan and how to get there already.  I've struggled w/that in the past and talking to a lot of RE investors, seems like a common theme.  Real estate is a great vehicle and there are a lot of ways to be successful in it which is even more fascinating and probably enhances this "too many choices" problem. 

May I suggest a couple things to help sort out. 1) Read some books on various niches (BP has several) and pros/cons to each. Does anything seem more like you personality wise and also what time, energy, money reqrs are needed ? Go to several different local REI meetups (non sales kind) in your area and check out different niches. Meet a few interesting / experienced people at each one of these events and setup 1x1 coffee chats w/them. Talk to them about their niche and what they are doing...also discuss your goals and objectives. Determine in advance of these meetings if you can / willing to give something of value in time, money, expertise, connections to them to help them grow their business in exchange for learning from them, profiting w/them (JV), etc. Once you find a niche / partner / mentor...then study to become an expert on that niche. Don't stress about marrying this niche for life, but do stay w/one thing to get really good before adding another niche to your arsenal.

2Reply
See this reply in the discussion

10 Replies

Jump to latestLatest
  • Darren Eady
    Rental Property Investor · Lindon, UT · Member since 2015 · 862 posts · 438 votes
    10y

    I just hit that same goal myself Jacob and can go over strategies with you.  It depends what level of risk you are comfortable with and the return you hope to see.  Property can produce around a 20% return, and additional appreciation, but there are downsides.  Mortgage notes are split up into performing and non-performing.  I only deal with performing myself, but there is opportunity with both types if you are willing to work at the NPNs.  Let's connect and we'll create a strategy for you.

    1Reply
  • David Thompson
    Investor · Austin, TX · Member since 2013 · 933 posts · 1k+ votes
    10y

    Jacob,

    Couple thoughts.  One, you are normal.  Two, its cool that you are starting young and thinking about a plan and how to get there already.  I've struggled w/that in the past and talking to a lot of RE investors, seems like a common theme.  Real estate is a great vehicle and there are a lot of ways to be successful in it which is even more fascinating and probably enhances this "too many choices" problem. 

    May I suggest a couple things to help sort out. 1) Read some books on various niches (BP has several) and pros/cons to each. Does anything seem more like you personality wise and also what time, energy, money reqrs are needed ? Go to several different local REI meetups (non sales kind) in your area and check out different niches. Meet a few interesting / experienced people at each one of these events and setup 1x1 coffee chats w/them. Talk to them about their niche and what they are doing...also discuss your goals and objectives. Determine in advance of these meetings if you can / willing to give something of value in time, money, expertise, connections to them to help them grow their business in exchange for learning from them, profiting w/them (JV), etc. Once you find a niche / partner / mentor...then study to become an expert on that niche. Don't stress about marrying this niche for life, but do stay w/one thing to get really good before adding another niche to your arsenal.

    2Reply
  • Brian Fouts
    Investor · Fall City, WA · Member since 2013 · 200 posts · 63 votes
    10y

    One thing to keep in mind... the best strategy now might not be the best strategy in a few years.  The real estate market is cyclical.  

    A good idea would be to find a long time real estate investor, someone that has been doing it for more that 10 years successfully, and ask them what their strategies have been, how they've changed through the economic cycles, and what they learned.  

    We purchased upwards of 30-50 rental properties over the last 6 years, but haven't purchased any in three years.  We did a lot of owner financing and subject to deals, but mainly did those two years ago.  We did rehabs, mainly in 2010 and a handful in the last year.  And recently have been doing lease options.  

    You could say our focus is broad, but never narrow.  And real estate investing is about 20% of the overall investments we do.  

    1Reply
  • Account Closed
    Memphis, TN · Member since 2015 · 43 posts · 27 votes
    10y
    Great question and good you are thinking about it now. I would say choose a niche in which you find some enjoyment. I know that I don't have the appetite or desire to flip houses and that I love single family homes in historic districts because of the architecture. I also personally meet with prospective tenants and like having the means to help someone else make a home, albeit temporary. So my niche is buy and hold SFRs built in the pre-1940s. This means that I have to wait a little longer to find those opportunities but that also gives me more time to build my social and financial capital. Don't stress out about it. Figure out what you love and where you want to be in 5 years...the rest will come together.
    0Reply
  • Charles Moore
    Investor · Lake Forest Park, WA · Member since 2015 · 108 posts · 35 votes
    10y

    did I read correctly that the military is paying your housing costs, and that you can rent out one side of the duplex while living in the other? Awesome setup! Great extra cashflow! You've got a great foundation to build your empire on. Echoing what's already been said, I think expanding your network by attending local investor groups there is important. At the same time, since you don't have a w-2 income right now, it might be hard to start financing anything, but with the spare time you can start accumulating funds for downpayments on more rentals for when you do get a job. Reselling stuff on Craigslist/eBay/Amazon works great, as would renting out a spare bedroom in your duplex unit on AirBnB, and doing freelance work on Elance or Taskrabbit.

    0Reply
  • Jake ThompsonPro Member
    OP
    Rental Property Investor · Albany, OR · Member since 2015 · 312 posts · 136 votes
    10y

    thank you everyone, I really appreciate the responses. Charles, I actually already sell on amazon and plan on doing that while I build my portfolio haha. 

    0Reply
  • Elizabeth Colegrove
    Hanford, CA · Member since 2013 · 5k+ posts · 1k+ votes
    10y

    My husband is active duty. He and I got started investing in single family homes. We are currently working on number #9, and are goal is a multi family or mix use. The goal is to live in one unit and rent the other out. I am also looking into vacation rentals. Honestly, our end goal has alway been the same (early retirement when my husband can retire from the navy (god/navy willing of course) ). From there we have just wondered the path given to us. From self management to single family home etc. 

    0Reply
  • Dan H.Pro Member
    Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
    10y

    I agree with @Asiyah Kurtz that if you can be successful where you have great passion that is ideal.

    In your original post you indicate "have enough rental income coming in that I don't have to work and can live comfortably ...".  I want to indicate long term rentals are not passive; they take work.  My family mostly self manages but has had 3 managed units.  Managed units are less work (and less profit), but still are work.  In fact one managed unit was so much work it is the only unit that we have ever sold just to sell (versus selling one to reinvest).

    You also indicated "... I'm also in San Diego where the competition is fierce and (as far as I can tell) few to no cash flow properties are out there...".  In my niche most of the properties I see close would cash flow for me.  For self managed I use 5% vacancy, 5% maintenance (I use 10% each if using a PM), and $250/$300 unit per month cap expense.  I get good loan terms (good credit, good assets, documented good income, etc.) so they may not cash flow with less favorable terms.  My point is that there are niches in San Diego county were cash flow is not hard to find.  It may not be the cash flow of many other locales but having purchased out of state I now stay local.  I know there are some investors who have been successful investing out of state but we have been more successful investing local than we have been at investing out of state (my family has one out of state property left (Alabama lake front) that will likely be sold in the next couple of years - and we virtually never sell).

    I am a big fan of investing in So Cal (if you search my posts you will see my list of advantages of investing in So Cal).

    Good luck

    0Reply
  • Jake ThompsonPro Member
    OP
    Rental Property Investor · Albany, OR · Member since 2015 · 312 posts · 136 votes
    10y

    Awesome, thanks for the advice Dan

    0Reply
  • Kevin FoxPro Member
    Real Estate Agent · San Diego, CA · Member since 2014 · 1k+ posts · 635 votes
    10y

    Hey @Jake Thompson

    First, thank you so much for your service.  None of us on here would be doing what we do if it wasn't for the sacrifices you, and others like you, make every single day.  Please feel free to reach out if you want someone to bounce your ideas off of.  I'm happy to provide whatever insight I can.

    The thing that I think most people struggle with when picking a niche is the fact that there isn't a RIGHT answer.  All of them have their benefits as well as their shortcomings, so finding one that suits your skill set/interests and getting after it is really the best thing anyone can do.

    Don't hesitate to contact me if you want to chat.  Best of luck!

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free