How to start? How to finish strong?

Question

Hello BP. Looking for any info on how to get started with something small, doing some of the work myself and going from there.

Any advice for a first timer would be much appreciated.

Goal to have 10 good rentals in 10 years or less with flips along the way. Some questions I have.

How much $$ to start? Generally speaking, I am sure the variables are plenty.

Is best to flip to build profit then do rentals or do both?

How do you know what area to start? What area rents well? What type of property rents best long term?

As you see I have a few questions. Any directions would be fantastic.

I am in the north Cincinnati area.

Thank you in advance for any guidance.

Mark

Aaron K. · Answer

In your area I would estimate that if you were willing to house hack you could probably start with as little as $10k. In my opinion the best properties are good quality places where you would be willing to live. Assuming you have not flipped before and do not have contractor relationships flipping is hard and it is not uncommon for someone to lose money on a first flip. Flipping is not get rich quick as it is portrayed it is much more work and much more stressful.

Mark Docter · Answer

Gentlemen, Thank you for the initial advice. I have a lot to learn and definitely ton to consider. I appreciate the response. I have had others mention the rentals are the way to go and develop more relationships with contractors. Austin, I will look into the Hard money and keep plugging away it.Thanks again and Have a Happy Holiday!!Mark

Austin Pool · Answer

Hey Mark! You have some great goals.! Typically, as a rule of thumb, I encourage people to have at minimum $25,000 in the bank. This money would be there for closing costs, money to front your contractors, monthly payments on your loan, etc. You never want to put yourself into a bad financial situation. I am glad you mentioned doing flips along the way. I encourage you to start flipping if you have the capital, to build up money to get into a rental and then alternate, so you do not deplete your cash you have. Build up your wealth with a flip, dump those earnings in a rental and repeat. Now depending on your financial situation, you may want to look into wholesaling, that way you can make some quick money with minimal risk and no money out of pocket. I recommend looking into Hard Money lenders in your area. You can look towards private money lenders as well, and it tends to be a bit cheaper; however, the guidance and help you can get from a Hard Money lender is beneficial in itself. Your question regarding the what type of property rents well: I suggest looking at deals with an ARV no more than $180k. Once you get into deals much more than this, the margins for cash flow decrease, to where it may not make sense. You do not have to know everything, but surround yourself with people who do. I suggest reaching out to some lenders to find out their criteria for qualifying for a hard money loan, percentage they lend at, the success rates of their borrowers etc. You can also buy a service that you can run your own comps to determine accurate ARV's, or get with an agent that you can work with in helping you. I also suggest connecting with different wholesalers in your area, to get on their list, so you can start seeing and analyzing deals. As far as "Areas" go, i suggest you not limit yourself to a particular area in the city, but keep your mind open to deals that may be a little further. This will increase the number of deals you can look at, giving you a higher probability of finding a deal at the numbers that work for you. I would also reach out and vet a few contracting companies and choose someone reputable and you can trust (Call references). This is a big part in the game! My biggest advice is to just get into a deal. Do your own due diligence and start out with a project with a small rehab, so there are less things that can go wrong. There will be unexpected things pop-up, but take it with stride and keep moving forward. Do not get discouraged. Learn from your mistakes. There is only so much you can do to prepare, but the experience will teach you more than all of the education and learning can!

Theodore Arzt · Answer

@Mack Bailey I have heard that many times on the Podcasts. You have to remember that when these guys talk about their time being a very valuable that they have many projects going on. I just finished my first project. I scraped enough to get it started and had to get it finished with a minimal amount of money spent. I don’t have anything bringing in cash flow but I do have time. I went as far as making my own molding with a table saw and router bit because the stuff at Home Depot it was too expensive. Down the road when I have cash flow coming in I would certainly consider doing some things differently like having someone else paint and stuff like that. But I had to have the humility to understand that at this point in the game my time is not all that valuable. Maybe someday

Jaron Walling · Answer

That's what she said.

Mack Bailey · Answer

@Mark Docter I'm also new in the game and saw that you said doing some work yourself. I just wanted to remind you to find what your time is worth it may be smarter to pay a GC etc.