Real estate investing fear

[Jordan Bush]

Hi all, 

My name is Jordan and I am very interested in real estate investing but have a small amount of money/knowledge. I recently started my career as a FireFighter/Paramedic--and unfortunately, I don't make much money. Real estate investing has always been appealing to me but fear and the lack of knowledge (in this field) has always stopped me from pursuing it. What advice would you give me? And how would you get started if in my position? 

[JD Martin]

1. Read everything you can get your hands on. 

2. Make sure you have a good basic understanding of math and can do simple equations related to real estate (rate of return, expenditure factors, etc). 

3. Decide what you want to do in real estate. Do you want to rent property? Fix and flip? Land -speculate? Become a real estate agent? ETC. There are a lot of angles to buying & selling property and a lot of ancillary jobs around the field.

4. Make sure you have enough money to sustain yourself (your own personal mortgage, food bills, etc) and pay for your project at the same time. Without anything but a gut feeling and my own experience, 95% of real estate projects "fail" (from a profit point of view) because of under-capitalization. If you are going to flip a house, do you have enough to cover your mortgage and all of your rehab costs over a length of time - I suggest a year at least - so that you won't be forced to liquidate or take on costly/risky loans to stay afloat? Almost every house I own came available at a price I was willing to pay because someone ran out of money. I have former foreclosures, court-ordered sales, unfinished rehabs, estate sales, etc. all in the stable. Those are all cases where someone ran out of money such that the asset had to be liquidated. 

5. Know, know, know your investment area. If it's local (my absolute recommendation), know your neighborhoods until you can drive the blindfolded. Drive around on the weekend and weekdays, at noon, 7 pm, and midnight. What do you see? Clean houses? Unsavory people hanging out in the streets? Able-bodied men (and women, I'm EEO ;) ) sitting around midday, smoking cigarettes and drinking Mt. Dew? Everyone gone Sunday morning at church? Kids playing in yards? Chained up dogs? Trash in the gutters? Location is something you cannot change. You can buy mansions in Detroit in some places for little more than the back taxes. Once you know your area intimately, you'll start to recognize when something is priced well.

6. Know, know, know your houses. Get an agent and look at houses - lots of them. Houses too cheap for you and too expensive. Houses in neighborhoods you perceive as bad, and ones you think are rich. Challenge all of your preconceptions about houses - what they look like, what's inside, what the people are like in the neighborhoods. 

If you follow these tips, you are almost guaranteed to succeed. Remember that your competition is usually yourself, rather than other people, as most people are far too lazy to REALLY work at this profession. Working is not spending 12 hours a day on Bigger Pockets, or convincing yourself you are productive because you get up at 5AM and go to bed at midnight, plotting your strategy. An ounce of hard work - converting knowledge and theory to productive action in pursuit of a defined strategy & goal - is worth a pound of theory. Just look at how many people hang around BP for years, never doing anything except dreaming.