How to Specialize in Real Estate Investments

Question

I'm curious what others would do if they were in my shoes just starting their career in real estate. I'm 24 and I just graduated college and got my real estate license. I work for my parent's company doing brokerage and property management for both residential and commercial properties in Ventura County. I've been interested in investments probably since my Dad had me read rich dad poor dad sometime in middle school or high school. It was simple enough to get the main concepts in my head and I just started reading a lot of non-fiction after then. Since I have my license now I think I will start analyzing deals on the mls to get familiar with my local market and I will be shadowing my Mom on residential sales. I work around 40 hours doing property management and we mainly do single-family homes in Camarillo where our office is located and commercial around Ventura County. I'm going to sign up for my first CCIM course sometime in January. If you are an investor I want to know what you would do if you started in my shoes? I would like to consider all options that I may not even realize exists.  Since my local market is high I was thinking about starting to invest out of state for better cash flowing properties and maybe even eventually starting some syndication deals. My goal is to live off of my property management income and put any of my commissions for future sales towards investments in a separate fund. I do have a newborn baby and live with my future wife''s mom and her. We are very fortunate because we pay $800.00 for two bedrooms at the house and it is a win-win because we cover half of the mortgage which helps her out. Also I factor in some repairs that I do around the house just to help out so maybe an extra. Hopefully this wasn't to long but I did want some interesting dialogue, so I wanted to provide enough background information.

Trevor Ewen · Answer

@Oneil Guntner

The big tradeoff in this business is money and time. It's a generalization, but people starting out tend to have more time than money. Experienced people have very little time, but hopefully some money on hand.

As you go through life as investor, you want to understand where you are on that spectrum, and then do the matching work.

If I were to take the guess that you have more time than money, then I think your goal should be to find investors willing to work with you on a vision. The numbers have to work, the deals have to be real (and available). If we assume that, then the only thing standing between them and a good return is someone to do the work.

That's the general stuff. On a specific note: I would stay out of the California market. Political and price risk in coastal markets is very real at the moment. My (limited) investments in the Northeast have vastly underperformed my investments in Tennessee & Kentucky. NYC & California are not 1-1, but there are similarities: Inflated prices, high taxes, demand for more inventory, and (often misguided) demand for rent regulation. I absolutely support efforts to get more inventory into these markets, but all those indicators point in the wrong direction for investors. When you factor in disaster risk, it seems like a good decade to sit out on the CA market. I still recommend doing your work there as a realtor, but I would take your money and get it into another state as fast as you can.

Storm S. · Answer

@Oneil Guntner Equity REIT’s have out preformed the S&P 500 over most timeframes I would invest in a good reit index like VNQ

Oneil Guntner · Answer

@Storm S. I think I would rather just invest in the S&P 500 index fund with a vanguard account than a REIT. But right now I think I’m going to just build it in my savings account. The only thing I have in the market right now is my 401k.

Oneil Guntner · Answer

@Trevor Ewen Thank you for commenting

Oneil Guntner · Answer

@John Corey Hi John,

That pretty much sounds like the plan. I’m going to take the first class of CCIM starting January. For now I’m working on saving my income as much as possible for future investments while learning as much as I can in my 20s since that’s the time I’ll need to be building capital. I’m pretty used to being busy I went to school full-time and worked full-time before so that I didn’t have to take out any student loans.

John Corey · Answer

You need to chill a bit. You have done a lot already and are about to become a dad. Your time will get soaked up.

The CCIM is a winner. Serious commercial agents are CCIM.

Ignore the investing remotely for the short term. Build your network of wealthy investors. Focus on figuring out who has a portfolio locally. You want a large network when it comes time to funding your own deals. Figure out what you can offer the investors in terms of services. You can learn more about the business while stabilising on the family front.

The CCIM educational sequence could be a really good path initially. And it will plug you into more serious commercial agents and investors.

Alina Trigub · Answer

@Oneil Guntner

Welcome to BP and congrats on starting early in life!

I think you're at a point where it makes sense to look at the overall picture and see how you can best utilize your time without sacrificing too much family time. So decide what you do or can do best and concentrate on such strategy to make money. If it doesn't involve active real estate iv nesting, then consider investing passively in real estate. Here's a post to give you further guidance on the topic:

https://www.biggerpockets.com/member-blogs/10850/84064-what-type-of-investor-to-be-when-i-grow-up-active-or-passiv

Storm S. · Answer

@Oneil Guntner I meant to say Interest rates

Storm S. · Answer

@Oneil Guntner start investing in REIT’s, buy a home and house hack to take advantage of low income rates.

How to Specialize in Real Estate Investments

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