Researched all this information...now what?

[Nye Eddings]

When I  became a member on this site, I was looking for that key ingredient that allowed many of the investors to become landlords overnight.I researched every strategy, every problem that could possibly come up and created the ideal business case to start investing.The reality is….I LEARNED FAR MORE BY DOING. This post is for the newbies on here that can’t seem to find that key ingredient to actually transition everything they learned from BiggerPockers (and external sources) to actually buying their first house.

My Profile: (prior to first house)

• 1.About a year out of undergrad
• 2.NO MONEY
• 3.Fulltime Job
• 4.NO prior real estate experience besides my handy dandy biggerpockets!
• 5.Move every six months because of job(..crazy I know)

Step#1 Chose MY STRATEGY and FOCUSED on it independently.

There will be a tone of information on this site and the internet in general that will be so overwhelming that you will get lost.So lost that you wouldn’t understand how investors are capable of juggling everything.Well, that’s just it… beginning investors DON’T juggle everything.They find their lane, master it, and then pick a new one.Your strategy can simply be dependent on how much money you want to make a month/deal in a certain time-frame. *I picked buy and hold for single family houses because I like long- term money hitting my bank account on a monthly basis....opposed to someone who maybe wants 20..50k from a single deal* Also, strategy could be based on risk tolerance/preference.The idea is just pick your direction and GO WITH IT.

Step #2 Found BEST LOCATION for my COMFORT LEVEL and STRATEGY.

Now…this may be one of the trickier steps because of its complexity.All cities and neighborhoods are not the best fit for all strategies and price ranges. As I began to talk to several people, those who were successful and unsuccessful at real-estate, the difference seemed to be centered upon how compatible the location was with their strategy/price. Specifically for me, I needed a location that had high rents and low property values because I wanted the margin to take home. Cities/neighborhoods that haven’t appreciated yet or just started to appreciate were ideal for me. Another topic that gets touchy with investors is the idea of “distant investing”. For me to get started in real estate right away, I had no other option but to invest at a distance because I moved every 6 months for my job.So…no state/city was really off of my radar because I wouldn’t be by the property regardless. Another thing I took into account are the variables that come with the location; such as, crime, tenant/owner ratio, schools, development…etc.

Step#3 Built my team specifically for my location PRIOR to buying/closing

For those who thought about investing at a distance for their first property, find your “team” PRIOR TO BUYING/CLOSING on house. My team consisted of: real estate agent(1), property managers (1), contractors (3), inspectors (2), mortgage lenders (2), lawyer (1), CPA(1), insurance rep (1) and mentor (2). This was one of the most important tactics that I did to get my first house-especially because I was out-of-state. (I bought in Baltimore and lived in Atlanta at the time). Outside of the obvious efficiency of running your “mini business”, meeting these specialists are important because they will know the area better than you. What you don’t know, you outsource.Whether it’s simply buying a house with a mortgage in your name or choosing a home with a flat versus an inclined roof, your team should be your main resource.They are the people you can ask specific pricing, legal, repair, and financing questions. Once the buying process starts, having them at an arm’s length is the best-especially if you are a newbie like myself.

STEP #4 Found the house 

I was given my agents contact through one of my coworkers/mentors of the area.Fortunately, my coworker/mentor put in a good word and the agent worked with me right away.However, I have found that agents tend to not work with people who have not verified capital or been "pre-approved" by bank. If you are a newbie, step #5 might have to happen before step #4.As I mentioned, I decided to buy and hold in Baltimore.I was able to find a couple of places that was in my price range that needed minimal work.My criterion was pretty specific after looking at a couple of houses and talking to my team.The MLS has a large variety of houses, so going in without criteria will leave you miserable. I ended up looking at about 10 houses.The first contract I put down, I found termite damage during the inspection.While doing my prior research, I learned that putting a contingency in the contract for inspection would allow me to pull out if I found something I did not like. Needless to say, I was able to get my deposit back. My second contract is the actual contract I closed on.Crazy thing is, I didn't see the house before I put contract in.I trusted that my agent knew exactly what I wanted by that time and I flew in to see the house during inspection-before close.

STEP #5 Found the money 

Now some would probably argue that this step should have been higher up on the food chain…BUT I am simply telling you my process.Being fresh out of college, I did not have the capital to pretty much buy ANYTHING cash-no matter how “cheap” the property was.What I did have was good credit and a job.(I built my credit in college because I knew I wanted to buy a house as soon as possible…just didn’t know it would be for my tenant lol). Many of you are aware that mortgage rates are low.I did everything I could to set myself up to get a mortgage. The only thing I was technically worried about was the infamous “two years of verified work history”. There are so many scare stories about what banks look at and don’t look at for mortgages..etc.The simplest way to figure out whether or not they will give you money is to simply APPLY! I was lucky enough to find a mortgage lender that did sub 50k mortgages and told me EVERYTHING I needed to know.

STEP#6-CLOSE

I had no major hiccups during the close because my mortgage lender was pretty much transparent with the process. Besides coming up with the 20% down payment for the investor loan and closing cost, I didn’t provide anything else for the close. I play in the 35-50k market, so my down payment was probably similar to some people’s car down payment (lol). I wasn’t even in town for the close and was able to do everything electronically.My agent picked up my keys and did the final walk-through

STEP 7-Got property rent ready

About 15-20 days after close, I started to work on the house to get it ready for my prospective tenant. I already got an estimate of all the work that needed to be done to the house prior to close.I only had to do cosmetic adjustments to house-my criteria at the time. My contractor threw on a new layer of paint throughout entire house, replaced carpet with hardwood laminate, restored the wood on the staircase, and refinished tub/vanity in bathroom, new blinds and fixtures. As the work was being done to the house, I had my property manager look for tenants.About 2 to 3 weeks after house was complete, my tenant was found. Again, all this was being done while I was living/working in a different state.

*Ps. I had to replace the fridge because it was old. I anticipate having to replace the stove soon as well.

STEP 8-I went from biggerpockets student to an investor

After the mortgage, taxes, insurance, estimated repairs, vacancy rate and property manager cut, I was able to manage at least $500 a month in additional income for one single family house. I am moving on to the next.

The main takeaway I want newbies to understand is that sometimes we just have to simplify the process and outsource what we don’t know.I didn’t get into the details because I literally built my team to be my resource.Every single question I had about getting my first house was answered by a professional or an experienced investor.I can’t speak to specific market analysis, how much it cost to repair every object in a house or even what the best tax advantage for owning your property in your name versus an entity.However, my team can. I just knew how much money I wanted to make a month and went from there. EVERYTHING is individualized in this game based on YOUR strategy.Once you figure it out, build your team and GO FOR IT.I literally spent more time “handpicking” my team than I did buying the house. My main goal is to create a real estate business, that can run on its own…… one house at a time.

HOPEFULLY THIS HELPED!