What Would You Tell Your Beginner Investor Self to do First

Question

Hello from Southern California! I am currently a business owner of a sales and marketing company looking to earn supplemental income via a buy and hold portfolio of residential homes. My knowledge on real estate is limited, but I am an avid reader, a huge planner, and a risk taker - all traits that I find could give me an unfair advantage in being a successful investor. With that said, I would like to hear from those who have "been there and done that." For those experienced investors, if you could begin your career/hobby/passion of purchasing residential properties with what you know now, what would you do 1st, 2nd, and 3rd?

Scott Hollister · Answer

Hello @Nick Portillo,You're already doing it! Asking for guidance and seeking counsel when you need help. So keep up the good work! Next check out this awesome post by @Joshua Dorkin: What Decisions do investors need to make their first deal?There is so much great advice to go along with Podcast 200! Knowledge: Read the best books on Real Estate Investing. I have been reading the Millionaire Real Estate Investor and so far its a great read. Its great to think big! (Let me know if you want to start a reading group, accountability partners are part of the success path)I can only speak on my experience. Started with a house hack. Two houses on a single deed. I rent one out and live in the other with a roommate. The goal is to live for "free". I believe this is a great way to start because everyone needs shelter right? And whats better then getting paid to live there?:)Next I did an REO BRRRR strategy with $0 out of pocket. Teamed up with RCN Capital and used a HELOC for a down payment. I forced about 60k of appreciation and will be able to get my money back out, including all closing costs. Started a flip a month ago. I like it for building up cash reserves. I was wanted to get away from asset rich, cash poor. My best advice is to find your strengths, do what you're good at, and make a wise investment that will lead you to your ultimate goal in life. Find your purpose and plan backwards to get there!

Cary T. · Answer

As mentioned to an earlier poster,the best thing I ever did was read " Real Estate Investing for Dummies" by Eric Tyson. The 2015 version is on Amazon for about $ 15. Very easy read and extremely thorough for beginners. After reading that, move on to the Bigger Pockets library.

JD Martin · Answer

What I would do different: aside from starting younger, I would have bought a wreck, lived in it while I rehabbed it, moved into my van and sold the rehab, did it again until I had enough cash basis to ramp up my rental property buy & hold purchases. One of the hardest parts of REI is amassing the capital to get started, and is the reason why you see so many "10 posts and gone" posters around here. REI isn't like tossing 100 bucks into your mutual fund. There's a significant barrier to entry, and the sooner you can overcome the first hurdle you'll be far more likely to succeed long-term. Most people buy their "live-in" home first, then as they start saving a little money start thinking about investing in real estate (usually when they see that their $100k home is now worth $120k). You should do it backwards.

Danny Rogers · Answer

@Scott Hollister, Solid advice! I want my first investment to be an owner occupied property. I don't know anything about house hacking, but I'll definitely look into it.

Nick Portillo · Answer

Greg S. Thank you for the insight! Love the emphasis on just getting out there and winning big.

Thomas S. · Answer

Start younger, take greater risks. The key to successful real estate investing is your negotiating skills. Forget the policy of win/win you are no longer in pre school, this is not a friendly game. The only thing that matters is that you win. If you have a advantage or see a weakness take it. The other guy is on his own.

Kris Seelbach · Answer

Nick, I am also in the same exact boat as you. Same mentality, same position at the starting line. One specific question I have for more seasoned investors is this: 1. Do these projections in general work to calculate the numbers on a property? (Excluding insurance and taxes) +10% property management +10% management costs +10% capital expenditures So that in general, I need to add an additional 30% to the note + insurance + taxes in order to be very safe in a cash flow cushion... Is this too conservative, 30% extra on top sounds like a lot. (And, yes, I know of the bigger pockets calculator, so please don't reply with a link to this. I plan to use it. But, when I am meeting with my realtor, I want to be able to do a quick numbers analysis to see if it's worth going to see the property or not. )

Nick Portillo · Answer

Scott Hollister Thank you so much for the reply! This is very helpful to hear from your experiences and you offered different approaches to getting started that I have not heard of before. I feel like it would be very beneficial to stay in communication. As for reading a book at the same time, I'm up for that as well. What do you think would be a good real estate book to read?