Real Estate Newbie- Any starting advice?

Question

I have been doing a ton of research online for the past few weeks, trying to learn everything I need to know about real estate and how to get into the market. I think my biggest initial hurdles will be knowing what property to look for (always find the deal first!) and then raising the money to buy said property.

I guess I signed up for bigger pockets to network with people interested/knowledgeable in the same field as me. I would love some advice and or direction, I live in Tampa, Florida.

I guess I signed up for bigger pockets to network with people interested/knowledgeable in the same field as me. I would love some advice and or direction, I live in Tampa, Florida.

Michael Guzik · Answer

@Jalisha Oracius Welcome to BP and congrats on looking into Real estate investing! I would suggest starting to develop daily habits that will help you to become successful. Here are some examples that I do. Read a business/real estate/mindset book every day, evaluate one deal every day, log onto BP and read articles and post for 20 minutes a day. They may seem small but trust me they all add up and I am so much smarter and more informed than I was. When I go to meet ups I can actually have intelligent conversations and sound like I know what I'm talking about and because of it I can ask more intelligent questions and more people listen and answer me. I would definitely start by figuring out where you want to buy and what you want to buy. There are so many different sides or REI you can easily get overwhelmed if you don't narrow your scope of interest. Go out and network and meet others at real estate meet ups and stay away from REIA's and larger groups in which you have to pay to attend or groups that are trying to sell you some real estate course or mentoring program. You didn't mention your age, occupation or financial situation, but I would suggest house hacking. This way you can get into a property for around 3.5% through an FHA loan and rent out the other rooms or side of the duplex/triplex/fourplex, which I'm sure will be most appealing to you especially since you live in such an expensive market. I see lots of "newbies" come on here and expect everyone to just hand them all this information and hold there hand and they stop coming on and give up after a week. You need to provide value and help others, talk to others and ask lots of questions as well as answer lots of questions. Good luck!

Jalisha Oracius · Answer

I appreciate all of the positive feedback and warm welcomes. I have spent the last few days reading the UBG to Real Estate on BP and knowing my personality, I think  buying and holding might be my niche and a practical starting point for me. I've downloaded some real estate apps (Trulia, Realtor, Loopnet, Zillow) and have been looking at some single family homes and some 2 bedroom apts in my area (they are what I'm used to and what I'm surrounded by, average price $120k to 250k in the area). I evaluated a few deals and I get excited seeing the potential that I have in this business. I know a couple of you mentioned networking and how important it is to interact with other people in the field, I take that advice to heart and want to put it to action. I have meet ups scheduled in my area and am looking forward to making connections. I also love how supportive everyone is on these BP forums and I want to make sure I give back some of the knowledge I've started to learn about REI. I realized it won't be an easy journey but I'm focused on the end goal.

@Michael Guzik I wanted to give a special shout out to you! You really took the time out and gave me some beneficial advice and I appreciate it. I have been reading/listening to REI books daily, evaluating deals, and been obsessed with BP since I discovered it. The more I learn, the more energized I feel about my decision to get into this in the first place.

Since I read your post, I think I narrowed things down (Buying and Holding; single family or small units) and my buying market is mostly in the Tampa, maybe Saint Petersburg, area. It's not a cheap market, unfortunately. The FHA loan might be my best option but I have yet to find any decent duplex units in my area worth buying. Bank loans don't sound too promising at the moment either; to answer your question, I am 23 and not in the best financial situation. I am working on getting my credit up and saving whenever I can. I want this to work, so I will work hard at it.

Thanks again everyone!

Megan Phillips · Answer

I haven't had to use creative financing yet. Fortunately, the 25% down was dropped to 20% by switching to a 7/1 ARM (rate is fixed for 7 years and can then go up or down) loan instead of a straight 30-year loan with a fixed rate. I'll likely be refinancing much earlier than 7 years so I'm not worried about the rate changing. My original closing costs/down payments were going to total around 27.5k, and now they are going to be closer to 32.5k. Luckily the underwriter for the loan will allow for a gift to help with the down payment that I was not planning on (the extra 3% that I can't get back at close from the seller was going to cover $3900 of closing costs)... I say luckily, but if I was just able to use the 5% that was already agreed upon, it wouldn't even be necessary. If they refused to allow for a gift to help the payment, I'd be sunk. It's looking like my closing will likely be delayed (not my fault) anyway, so I potentially have more time to save a couple grand and reduce the gift amount, but it's still frustrating. Should be easier next time already knowing the potential restrictions, but when you've saved what you think you need and then they go, "nope, you actually need 5k more... in 3 weeks... and you can't use unsecured lines of credit" it can be quite the mental scramble!

Jalisha Oracius · Answer

@Megan Phillips Thank you for the post! But wow, that 20% to 25% makes a big difference and I'll take your advice to be sure to clarify everything and make sure everyone is on the same page. How much did you have to put down (if you don't mind me asking)? I most likely will have to turn to creative financing, any advice on that?

Megan Phillips · Answer

@Jalisha Oracius Welcome to BP! Reading the UBG is a good place to start as well as these forums.

This insight might be a bit ahead of where you are, but I'm in the process of closing my first duplex, and the most frustrations for me have come on the financing side. I've never purchased a house or other real estate, so I didn't know what I didn't know.

If using conventional loans from a bank, make sure you very clearly understand your loan requirements/restrictions and try to work with someone that is willing to answer a lot of questions and understands what your goals are. For a couple examples, I was discussing what my final closing costs were when my lender for some reason finally realized this was a property I would not be living in, and informed me that the down payment needed to be 25%, instead of 20% as I was planning (I was previously told by it was 20% by them as it was an investment property, but they thought I meant that I would be living there... why would I pay 20% AND live there?). Then just last week, they informed me that the maximum cash back at close from the seller was 2%, when our contract already had us both agreeing they would provide 5% for weeks. The difference in what I needed to have saved and prepared for the purchased changed by several thousand dollars, and a lot don't allow "gifts" or unsecured LOCs to help --- so like I said... be very clear and ask a lot of questions, and be prepared for hurdles along the way. Good luck!

As a side note, I used to work in the Clearwater/Largo area for a couple of years - Dunedin was my favorite town down there!

Real Estate Newbie- Any starting advice?

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