Which REI is right for me?

Question

Hello BiggerPockets community!

So far this site has been very helpful and is packed full of useful information and insight from its members. My question is which type of rei is right for me?

About myself:

-22 years old

-Graduate this May from NCSU with a degree in Mechanical Engineering and a minor in Entrepreneurial Studies

-I have started up and ran my own landscaping company (Divine Landscaping) in NJ in 2006 till 2012 and recently a video production company (Non Stop Productions). I love to work hard and make money.

I have no real estate background. However, I have minor construction experience via diy projects my family would do around the house (finished the basement, backyard patio and fireplace, bball court, stone walls etc.). I also took a financial accounting class last semester which led me learn more about different types of investing (stock market, mutual funds).

The future:

I would love to purchase a duplex, fix up the other side and rent it out. However, I will have no idea where I will be working once I graduate this May. Another major consideration is that I am in a relationship that will govern where I will be living in 2020 (since she will be bringing in the dough as a physicians assistant and starts her 3 year med school in 2017).

Money!

I can comfortably invest a max of $30k by depleting my mutual funds (which earn ~6.5% a year) and possibly more if my parents want to get in on this.

Thank you!

Nick

Joe Villeneuve · Answer

"-I have started up and ran my own landscaping company (Divine Landscaping) in NJ in 2006 till 2012 and recently a video production company (Non Stop Productions). I love to work hard and make money."

Great.  To me this says you can manage people, time and money.  That's what you must do to be successful in REI.

"I have no real estate background. However, I have minor construction experience via diy projects my family would do around the house (finished the basement, backyard patio and fireplace, bball court, stone walls etc.)".

OK.  This will help you manage the rehab.  You lose money doing your own rehab.  There is no valid argument otherwise.

"I also took a financial accounting class last semester which led me learn more about different types of investing (stock market, mutual funds)".

OK.  Here's the thing.  REI is NOTHING AT ALL like other types of investing.  The thought that it is in any way, has hurt many an investor.  You can't use the same measuring tools, systems, or analysis in REI as you do in the stock market or mutual funds.  There is nothing similar about them.  When you do think, and act, as if REI is like "paper" investing, you will miss out on all the great advantages REI has over the other investment vehicles.

There are three things you must know, inside and out, and always expanding that knowledge base(s), to be truly successful in REI:

1 - Understand how money works.  This means you must think like an investor, and not like a homeowner.

2 - Understand how to analyze Markets...as in zip codes...and to find the micro-markets within these markets.  The markets pick you...you don't pick them.  The market picks you based on its ability to deliver properties that match the profile/criteria dictated by your financial goals.  Which leads us to the third item...

3 - Understand the difference between a plan, milestone and goals.  Then, how to build an investment plan of entrance and exit strategies, that are linked together (steps), and form your plan.

Wanting to "buy three holds, and flip 2 properties a year" isn't a plan.  It might be a summary of what you did but should not be what you say when asked about your plan.  The plan is how you go about the buying and holding.

Chris T. · Answer

welcome @Nicholas Sheridan, Jr.

since you're not sure where you're going to be yet, perhaps it's best to keep educating yourself and networking with other RE investors in your area. By talking to other people, you might be able to find a niche that you would like to get involved in. House hacking is definitely a very viable option to start out.

Go through the podcasts if you have not yet.

Steven J. · Answer

You'll have to keep in mind how much time you'll have to devote to REI as well. If you plan to do wholesaling expect to have to spend a lot of time marketing, taking  calls, etc unless you can set up systems.

I recommend that you find some mentors through BP that offer some sort of courses in something that interests you. Vet them out and access how much you're willing to spend on the course and what is offered. I find these are generally cheaper and are much more personal than the big gurus like rich dad and than merrill.

Kuba F. · Answer

@Nicholas Sheridan, Jr. 3 years is a long time, and markets will be completely different then, so I wouldn't worry about planning that far ahead when just starting out.  I like house hacking in your instance because you get a little bit of experience in rehabbing and renting, and one or the other might appeal to you.  Your future location is the least of your worries. If you move in 3 years, either sell it, or put property management in place and rent out both sides.

Michael Quarles · Answer

Nicholas you described assigning.

And I don't teach wholesaling.  I teach wholetailing.  Huge difference.

Rosston Smith · Answer

You really need to determine this yourself. By looking at what your goals are and what you like best.However refer to the bigger pockets podcasts. They will help you decide your vehicle.

Joe Villeneuve · Answer

No. As in understanding the time value of money

Nicholas Sheridan, Jr. · Answer

@Joe Villeneuve Okay as in every time I fix up any part of a house it will be an expense.

Nicholas Sheridan, Jr. · Answer

@Steven J. Yeah I do not have the contacts/network setup yet for wholesaling. I will check them out for sure.

Which REI is right for me?

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