How Did You Do It!? - Steps you took on your first deal

Question

Hey All,

Just wanted to get some ideas going and see if anyone wanted to share how they got started in RE.

-What steps did you first take to make the jump?

-What type of property was it?

-Did you flip it? wholesale? buy and hold?

-Were you able to do it using someone else's money, or did you have to save for years to jump into that first property?

-Were you feeling discouraged at all during the process? If so, how did you overcome it?

-In the end, how did the first one turn out, and where did you go from there?

I think sharing these stories can be beneficial to those who are new, or those who are simply still debating whether REI is right for them or not. I know for me, I am not someone who comes from wealth. my parents didn't go to college, don't have spectacular jobs and don't have a lot set aside to live their lives. I didn't get lessons on financial planning growing up. I can certainly say I have made a lot of mistakes along the way and have wasted a lot of valuable time that I will never get back. I am not someone who has an expert in REI to lean on and so I know personally, I try to utilize everyone on this site for their expertise. I can say for sure that in the 4 months that I have been absorbing information, reading the books, and looking at the big picture, I have certainly been guilty of analysis paralysis. For me, my biggest hang ups are (like most) from money and trying to understand the market. What if I don't have the savings someone else might have to buy a property for cash? what is the best strategy to take for starting out? Should I buy a property and try to flip it, or hold onto it and rent? Especially in my local area, (Aurora/Denver, Colorado area) it seems impossible to find something that you can make a profit on. Everything is already so expensive, I just don't know how I can even start. Any advice for me personally would be great, and I know I am not the only one feeling discouraged about trying to get my feet on the ground and build myself up from square one. So I thought it would be good to hear from actual people who have been through it and can remember what that feeling was like. Maybe get some of that confidence back and start a road map on how to finally begin. Thanks in advance everyone and I look forward to your responses.

Chris

Larry Turowski · Answer

STEPS: Save, save, save.  If you can't save you'll never get far investing in real estate.  Then talked with lots of investors.  Paid for a 'course'.  Put out bandit signs (don't do that anymore).  Did driving for dollars.  Took calls and learned how to handle them as I went.

1st PROPERTY: Small 2 bedroom, for CHEAP.  I figured worst case scenario I would rent it out and learn.  I wasn't risking my future with this purchase.

EXIT: This was at the end of 2008.  Flipping dried up.  I rented it out.  It helps to have multiple exit strategies.

FUNDING: My own.

EMOTIONS: Worry, stress.  Just kept going.

IN THE END: I sold it--at a loss.  Very happy I did.  It got me started and I learned a lot.  Moved onto better things.

Creighton Bertrand · Answer

-What steps did you first take to make the jump?

Books,books, all the bp podcasts and reviewing spreadsheets and deals.

I have to say I bought a sfh and did the brrr strategy, minus rent. I bought cheap, did a ton of rehab then refinanced house and pulled out cash to buy another investment property.

-What type of property was it?

Original house was a 3dbr/1.5bath rambler that was last updated in the 70's.

2nd house and first real investment property was a 2bd/1bath duplex.

-Did you flip it? wholesale? buy and hold?

Bought with the intention of flipping and renting but loved the area so much and remodeling it's now our primary residence.

-Were you able to do it using someone else's money, or did you have to save for years to jump into that first property?

I was fortunate enough to save up for the minimum downpayment.

-Were you feeling discouraged at all during the process? If so, how did you overcome it?

I definitely had analysis paralysis not only with my first house but my 2nd duplex. Everyone says trust the numbers so after reviewing the numbers and realizing how great the interest rates were/are I pulled the trigger. I'm an engineer so I'm very analytical and need to see it to believe it. Luckily hearing the same thing over and over on the podcast help assure me I was making the right decision.

-In the end, how did the first one turn out, and where did you go from there?

I guess I kind of already answered that. Refinanced the 1st house and used the cash to buy a duplex.

Thanks to everyone on BP for all the help and encouragement through the years. Couldn't have done it without everyones' help and eagerness to pay it forward!

April Crossley · Answer

Find deals.  Analysis paralysis is because there is such an overwhelming amount of info out there and people trying to make it WAY more complicated then what it is.  Just start finding deals.

1st Property: Single family home on a whole bunch of acreage

Found by connecting with a wholesaler at a REI meeting

I had ZERO money or experience. I took the deal to an investor in my area that was successfully flipping. Asked him if he had interest in doing the deal together (if he said no I would have just taken it to every cash buyer in my area until I got a yes).  He said yes. He brought the funds. We brought the deal.  We split the profit.

Emotions- Overwhelming. TONS to learn and stay on top of but worth it. I was exhausted by the time it was done.

Outcome: Profit split - we each made 25k.

EVERYONE is so hungry for deals right now bc the market it just insane. If you can find deals and you can find the people that buy deals. Anyone in their right mind will help you get a deal done to make some money splitting it then make no money at all.   And if they won't- you don't want to be doing business with them anyway.

Just my two cents :)

Ethan Summers · Answer

Chris H.

-What steps did you first take to make the jump?

Deciding that i was going be successful and just need to send out marketing! I sent out 1000 yellow letters and even did door knocking/cold calling to get my first few deals.

-What type of property was it?

It was an investment property that an out of state owner no longer wanted and had to get rid of.

-Did you flip it? wholesale? buy and hold?

attempted to fix it up due to lack of experience and know how I just wholesaled the deal to an associate of mine.

-Were you able to do it using someone else's money, or did you have to save for years to jump into that first property?

I used a little bit of my own cash to put the deal in escrow then assigned the contract and got my initial deposit back when the deal closed!

-Were you feeling discouraged at all during the process? If so, how did you overcome it?

When i found out that i didnt have the tools in my tool belt to make the flip happen i felt discouraged and cornered but i then talk with my seller and told him the situation he understood how bad off the home was and was completely fine with me assigning it to my buddy who could get the job done! All in all a great experience!

-In the end, how did the first one turn out, and where did you go from there?

Made all the money I invested back along with $3,000 bucks profit, which encouraged me to quit my job and chase deals full time!

Bill S. · Answer

Chris H. really all it takes to start is money. I started with a SFR that I held for 7 years. I had a small down payment to buy that. After that, I did a cashout refi and bought the second property that we moved into and turned the first into a rental. I would say that the place to start is with a roof over your own head. For that you need a down payment. You have to save for that. If you don't make enough to save then get a 2nd job. Real Estate is not a good 2nd job, it is very capital intensive. People that tell you wholesaling "is a good way to start" are selling you something. Figure out what you need to do to get some money in the bank and then you can start thinking real estate.

Pratik P. · Answer

-What steps did you first take to make the jump?

Started building mailing lists and mailed every month from home to save money.

-What type of property was it?

SFR fixer

-Did you flip it? wholesale? buy and hold?

Wholesale!

-Were you able to do it using someone else's money, or did you have to save for years to jump into that first property?

Used my money for the EMD(few thousand), used someone else's to double close.

-Were you feeling discouraged at all during the process? If so, how did you overcome it?

Yes, when you work full time, taking classes and hand-address hundreds of letters each month with no results, it can get discouraging. But I knew feelings won't make me money, action does!

-In the end, how did the first one turn out, and where did you go from there?

Made 32k on it. Reinvested a chunk of it into a DM campaign to get my next deals. Currently scaling.

Trista Fenner · Answer

-What steps did you first take to make the jump?

Lots of reading.  I originally wanted to get into rentals first but my husband was scared of the terrible tenants so we changed to looking for flips.  I started reading J Scott's material which was great and worked with a realtor we knew who has been involved with flips.

-What type of property was it?

3 bed, 1 ba which we converted to 3 bed, 2 ba to increase our profit margin.

-Were you able to do it using someone else's money, or did you have to save for years to jump into that first property?

Luckily I've been able to get our funds from my family.  We developed contracts and kept it professional, and in the end everyone in our family gets money.  It was a win!  We also made it so they were guaranteed their money back.  We put the pressure on ourselves and made sure the numbers worked.

-Were you feeling discouraged at all during the process? If so, how did you overcome it?

We did most of the work ourselves.  We had a primary residence that we were also fixing up to sell so we had to move into this halfway thru as our next primary residence was also a complete gut job and not ready to move in.  It put a lot things on the plate but everything came out great.

-In the end, how did the first one turn out, and where did you go from there?

Made $24,000 which we were pleased with since we had no idea what to expect.  We sold that back in February so we have been patiently playing the waiting game until the next one arises.  Don't feel discouraged if you can't find much.  It's competitive.  Just keep going.

Jessie Nunley · Answer

Sir,

I am in a similar boat as you. I decided that I wanted to make real estate investing a hobby/second career recently (within the last 2-3 months). I am a full time medical professional/military member and i go to school part time. Make sure all of your debt is paid off before you start saving so you are able to save more. Then (if possible) find a place where you can get a few roommates to make rent super low and just start saving. I took this path and am able to put 1800-2000 per month into my savings for my first property. I plan to buy it within the next 5-6 months.

Steven D. · Answer

For me the first investment I made was in my primary residence and then turned that into a rental. I bought my first house in Aurora and lived there for about 3 years, then the decision came to get a new place while being able to keep the old house as a rental. This is where saving became essential as we had to buy anew house that was about twice as much while not having the cash from the sale of our first house.

Turning your first primary into a rental is a great way to get great rates and ease into land lording. Now that we have a bit more cash flow we can invest in a new investment property or have the option of repeating the old process of renting out our current house and finding a new primary residence. This process is obviously pretty slow compared to flipping or BRRRR but I believe is easier for a newer investor looking to get their feet wet.

Last note on this strategy is that we were able to get a lease signed and deposit money before we closed on the new place so were able to use that in the qualification process of a new place. A lender could speak more to the value of this but it helped us easily qualify for an upgrade. Good luck!

How Did You Do It!? - Steps you took on your first deal

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