Advice for a first time investor (Where to start)

[Ray Alvarez]

Hello everyone,

I'm seeking advise from anyone who is willing to give it. I'm very new to the real estate investing world, but have been interested for a long time. I've saved up around 80,000 dollars and feel like 2019 I need to make some big investment moves. I live in California and want to know how you have started and some thing I should look into doing. I hear multi family homes, or single family home flips. Then I hear things such as crowdfunding and syndication deals. 

I've talked to one person in the real estate world and they're telling me that I should start off with a primary residence first here in the bay area, and take my time with investing in real estate after a few years of owning the home. I currently have been blessed and live in a 3 bedroom home that my dad owns with a cheap mortgage (nothing is cheap in the bay area), so I was able to save a lot of money over the years. If anyone could offer me some advise on where to start, that would be fantastic. 

Best,

- Ray

[Ashton Levarek]

Alright @Ray Alvarez, you may have just asked the easiest or most difficult question in the forums.  Where does one start?

And I'm going to give you the most basic one size fits all response - it depends on the person. It depends on your goals, both financially and in life. You must know your why. Why do you want to invest? Are you just looking for a safe investment or trying to make money? Are you trying to grow you savings? Create passive income to replace your current 9-5 job? Or are you just trying to create a secure nest egg for retirement?  These are all things you'll have to figure out.

My brother and I both invest in multifamily rental properties using the BRRRR method with the ultimate goal of eventually creating enough passive income from rentals to replace our day jobs. The reason we decided on real estate is due, in part, to something my brother coined (or found, he won't tell me) IDEAL benefits of real estate investing:

I - Income - Income generated from passive income(rents) through cash flow monthly.

D - Depreciation - Owning property allows owner to depreciate property assets thus decreasing tax burden by subtracting those assets from taxes.

E - Equity - Properties incur "loan pay-down" or mortgage pay-off by rental tenants. This steadily grows worth of owner as the equity in the property grows.

A - Appreciation - Due to economy and inflation, properties will rise in value at on average 3% per year, some much faster, thus increasing worth of property and value for owner passively.

L - Leverage - One of the only investment vehicles where you can leverage a percentage of your cash to buy an investment. This allows a much quicker buildup of wealth as you can invest in more investments. ie. 20% cash to buy a property. Stock Market for example does not do this, it is a dollar-per-dollar stock share purchase.

So thats the "why" or at least our reason why, now where should you start? Well I have heard its best to stay away from the coast, to invest in the midwest and southeast as capital goes further there. Hehe. But you're probably asking where in real estate to start.  Well I would start by educating yourself.  Check out all the Bigger Pockets reading recommendations, the podcasts and free webinars, they are a wealth of information.  This will give you insight into what will likely work best for you based off of your financial goals and disposition.  I would start with something like Robert Kyosaki's "Rich Dad Poor Dad", Scott Trench's "Set for Life" or "The ABCs of Real Estate Investing by Ken McElroy. 

Sorry for the long winded response but I actually get this question quite often. Where ever you start, know that someone has gone before you... and they're probably posting about it here in the forums. Ha. And if an old fire fighter and a retired ol war vet can do it... you can too.  Best of Luck Ray.

Ashton

@Ray Alvarez