Where should my education focus be?

Question

Hey all,

So I have a few months before I have a pretty major move across the country. This year I've been educating myself through the forums, through books, and through the podcasts. I'm just itching to start my investment journey right now but I'm waiting until I'm back in my own neighborhood in 2 months.

My plan is to buy a 3-4 unit multifamily in need of some light rehab work using the VA loan. I want to combine the BRRRR strategy and house hacking and force some equity and appreciation in right away. After that I'm looking to partner with a business friend of mine on a flip to make some extra cash to continue to BRRRR multifamily properties in the future. The area I will be in will be Northeastern Connecticut.

Another thing that I have just recently started doing is analyzing deals, but since I'm not in the area presently, all of the properties I've been looking into have been off the MLS. Basically, I'm looking for ideas on what I should be studying up on or doing before I get there so that I'm as prepared as I can be to jump into my first deal. Should I be focusing on networking from afar? Should I continue analyzing deals? And if so where should I look for these deals? Zillow? Realtor.com? Should I be looking at what my capex/repair/vacancy budget will be for the area? Or should the focus be somewhere else?

Cara Kennedy · Answer

Hey @Jeremy Bourgeois - congrats on picking a focus. That's a crucial first step, so you're making progress by having done that alone. Next I'd recommend starting to grow your network. Look for the local REIA groups that will be in the area you'll move to and see if you can find some wholesalers to get on their buyers' list. It would be nice for you to tell them that you're starting out and won't purchase until (insert time frame) so that they know you're working on connections and market knowledge. Off-market properties are the preferred way to buy, so getting a deal funnel with wholesalers and/or a realtor will really help you learn about the local market you'll move to.

If you haven't yet, practice with the rental property analyzer tools on BP. You should definitely have an idea of your budget that takes into account all aspects of a property. Also, one thing a lot of new investors leave out is understanding how to stretch their capital and how many deals are actually attainable. I'd spend some time planning out a financial strategy for investing, HELOCing, BRRRing, re-financing, and rehabbing so that you know how much money you'll realistically have to play with once you have one property on the go. Having cash tied up and not knowing what to do next is a surefire way to bring your investing to a complete halt.

Good luck and safe travels with your move!

Jason H. · Answer

@Cara Kennedy Very, very well said...especially on the second paragraph of your response.

@Jeremy Bourgeois This may be just a step or two ahead of where you currently are, but also make sure to keep all your cash flow in the reserves allocated to this property...you're not going to be tapping into it or living off of it for at least the first few years.  You need it solely to pay for vacancies (to cover your debt service payments), PM fee, leasing fee, deferred maintenance and the inevitable repairs that your tenants will call in for...Good luck!

Jeremy Bourgeois · Answer

@Nathan Killebrew good point. I’m just not sure how feasible that would be when I have no way of being in the area for the next few months as it’s on the other side of the country

Jeremy Bourgeois · Answer

@Cara Kennedy one part that I did leave out is that I do have a plan for my financing. I have about 25k saved up debt free that I can use to BRRRR my house hack. If I find a property that looks good that is more of a move in ready place then those finances will be saved for my next BRRRR.

For my financing on the house flips I wanted to use a partnerships and private money with good safeguards in place for the private money lender. And continue to build that business model based on a 50-50 split. I do the work they supply the cash and we split the profits halfway. Until I have some more experience and savvy to be able to do a more profitable flip on my end.

Of course this is only going to be possible through networking and going to local REIAs to meet with other investors and private money lenders in the area. I think that will be a big focus for me! I already have a pretty solid realtor, lender, lawyer and potential contractor for when I arrive. That still leaves quite a few gaps and I’m looking forward to meeting other investors in the area and network locally. Thanks so much for the insight. I appreciate you taking the time to give some much needed advice.

Nathan Killebrew · Answer

Hey Jeremy, I am in a very similar situation. I am moving to my area of focus upon my graduation. I was dying to get in and buy some deals, but I really couldn't due to my situation.  I sat down and decided I needed to grow my network and meet people in the game. I explored some options and decided to wholesale some deals. I could do that virtually. I now have been able to meet people working and learn the various regions. I know it may not be what you want to do longterm, but It is a great way to dive into the area and learn some things.

You will learn who the top flippers are, what are the areas that are growing, and how to speak to sellers. It is a win win. Plus, you can make some nice side cash.

Where should my education focus be?

Most Popular Reply