What questions should I be able to answer before starting out?

Question

As the title asks, what questions should I be able to answer on my own before starting out.

I'm new to the mindset of RE investing (although I've owned my home for about 7 years now) and have been trying to learn as much as I can.

I get that there might not be any way to really 'know' when I'm ready, but the more I read/listen/learn, there does seem to be a pattern of fairly common problems people run across, or steps that they have to take.

My current goal is to try to buy my first rental property before my next birthday in May. (Whether or not I reach the goal isn't as important as having something to aim towards).

I understand that sometimes you just have to take the leap, but I don't want to jump in too quickly. I don't want to be in a position where, if I would have asked, people could have said "Yea, you're obviously not quite ready, you should have done A,B,C, or learned X,Y,Z".

Deep Johal · Answer

questions you need to know the answer to:

- what is the amount you want to be earning passively from your investments

- what is the desired net yield you want from investments

- what areas are you buying in & why (what does the data show on area stats & demographics)

- what is your strategy (BRRRR, flip, wholesale etc)

- who are the people who will help you get the deals on and close them

- what are the risks in your strategy and marketplace and how have you minimised/factored them in? **** SUPER IMPORTANT

- how much cash do you need to keep retained as a buffer / failsafe to service your debt (if you are getting loans) in a worst case scenario

Josiah Kay · Answer

Personally, I believe the most important question to be able to answer is "Why are you choosing real estate investing?" The answer to this question serves as a foundation to everything else.

Once that question is answered, you will be able to answer the next question of "What avenue of real estate investing is most conducive to my 'Why'?" This answer should continue to drive your choices as you invest. Personally, my "Why" is so that I no longer have to trade time for money. I am choosing real estate because it offers me an opportunity to spend my time on things that I want to spend them on. For this reason, I chose a real estate investing strategy that will require less of a time commitment to manage and is suitable to allowing me to "retire" early. Knowing the answer to this question will help keep your focus and your actions aligned with your 'Why'.

Since your strategy is rental property investing, I would highly recommend reading "The Book on Managing Rental Properties" by Brandon Turner. That book is a treasure trove of great information. I would also recommend "HOLD" by Gary Keller. This goes more into the analysis of deals and is a good starter book. Lastly, I would recommend "E-Myth Revisited" by Michael Gerber. This book will help keep you working on your business instead of in your business. Combined, I think these three books combined are a great Starter Kit to rental property investing. They should position you with the necessary knowledge to jump-in.

David McClain · Answer

Thank you for your reply! A lot of great suggestions there. I'll be picking up those books.

As for the "Why"? I think you said it a lot better than I would have. But I was just talking about this yesterday and I want to have the extra time and resources to do the things I want to do. My long term goal would be a heavily passive source of cashflow. My shorter-term goals aren't quite as lofty, because I know there is a lot of work involved to get there. And so in the meantime, my goal right now is just to become as knowledgeable as I can so that when I take the plunge, I'm prepared and hopefully not in over my head.

What questions should I be able to answer before starting out?

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