First-timer and Need help! A whole LOT of it!

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First-timer and Need help! A whole LOT of it!

Todd Dale
Hoboken, NJ · Member since 2012 · 9 posts · 0 votes

I’m a brand new to the world of real-estate investing and would really appreciate any advice from anyone. A little background; I’m 30-years old living in NJ with a well paying job (over six figures). I have decided to form a partnership with my father and together we want to begin building our portfolio. My father is retired, living in North Carolina. We have a combined $80K to invest comfortably at the minimum, or $100K if needed if we find the absolute perfect scenario.

My real-estate investing objectives are not to make a quick buck but to make money in the relatively near future. I would like to have enough cash flow to live off of my investments in the next 5-years. Not to retire, but I would sleep a lot better at night knowing I’m not dependent on one income stream.

I’m not interested in only seeing the benefits of these investments in 30 years or so after decades of building home equity. My 401k is for my retirement, this is for now (or near future). If everything stays consistent with my job and current lifestyle I’ll have approximately $50K a year to invest from my day job.

Now for the questions….

How? Where? When? How much? How long?

There is SOOO much information out there! It’s impossible to even know where to begin. Should we look into doing wholesaling? Or buying and holding multiple properties over the next few years for a steady cash flow? Should we look to buy foreclosures listed at discount rates? Does the flipping method still work after the housing bubble? If so, should we buy an $80K house or should we use that money for a down payment of something bigger? What state should we invest in that offers the best returns? I live pretty close to NYC where your money doesn’t go very far and taxes are high. Should we look to invest in North Carolina where real-estate is cheaper and my father lives, or should go invest in another state completely that neither of us reside?

I know I have so much to learn and just need someone who is knowledgeable to point me in the right direction. I’m anxious to get started. As I said, any and all advise is appreciated. Who would’ve known that raising the money wouldn’t be the hardest part of investing…

Thanks,

T

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  • Brandon TurnerPro Member
    Investor · Maui, HI · Member since 2009 · 13k+ posts · 3k+ votes
    14y

    Hey Todd,

    Obviously -this is a huge question. But maybe I can point you at least in a good direction. I started in a similar manner with my Dad also, so I know where you are at!

    First, there are tons of different ways you can invest. So, you need to find one you like.

    Second, since your goal is long-term (which is GREAT!), cashflow is obviously important. Stay away from Flipping until you have some more experience.

    Wholesaling can be a great way to learn the business without losing much money, but it is a job, so if you are looking for a little more "passive" it might not be a great option.

    I love apartment complexes, duplexes, triplexes, etc. They do require quite a bit of management, however, unless you can hire a property manager (not a bad idea).

    Also, I recommend that you read - a lot. There are a lot of real estate books out there -and most are pretty similar. PM me for a list of my favorite!

    Good luck and keep in touch!

    Podcast Guest on Show #92
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  • Todd Dale
    OP
    Hoboken, NJ · Member since 2012 · 9 posts · 0 votes
    14y

    Hi Brandon,

    Thank-you so much for your reply and feedback! I will send you a PM.

    Todd

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  • John T
    Member since 2010 · 17 posts · 0 votes
    14y

    Todd... Sounds like we're in the same boat, I'm 29, living in North Jersey, making great money working for someone and at the same time I'm buying as much upscale rental property as I can get my hands on.

    Our goals sound very similar... Something I've learned is the more income streams you can create for yourself, the more money you will generate. So think of every property you buy as another stream of income.

    I only deal with property in north Jersey, yes it's expensive, but it's what I know. I'm familiar with the area and know where people want to live and where they're willing to pay a premium to live.

    If you've got any questions let me know.. Good luck!

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  • Michael Pilarski
    Investor · Murfreesboro, TN · Member since 2011 · 113 posts · 16 votes
    14y

    Todd T You are in an awesome position. I wish I was in your position when I was 30. Like Brandon Turner said read all you can and John T makes a great point of learning your market and having multiple income streams. I would suggest getting involved in your local real estate investor club and get to know people. This may help you narrow done your focus as to where you'd like to start investing. You may also want to look into becoming a Hard Money lender since you already have the reserves and will be able to loan out more money each year. Having a goal of 5 years is great and you may want to look up "7 Years to & Figure Wealth" I can't remember who wrote it, but they are on this forum and contribute articles on here as well.

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  • Ramon Jenkins
    Real Estate Agent · Milwaukee County, WI · Member since 2009 · 3k+ posts · 525 votes
    14y

    per @Michael Pilarski
    "7 Years to & Figure Wealth"

    Author Michael Masterson

    Title - Seven years to seven figures :
    the fast-track plan to becoming a millionaire

    Check your local library for material

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  • Michael Pilarski
    Investor · Murfreesboro, TN · Member since 2011 · 113 posts · 16 votes
    14y

    Jenkins Ramon Thanks for the info! Sorry about the typo.

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  • Michael Pilarski
    Investor · Murfreesboro, TN · Member since 2011 · 113 posts · 16 votes
    14y

    Jenkins Ramon Thanks again, but after researching it. That is not the one I was suggesting (it is a good book though and highly recomended) but I was referring to Brandon Turner e-book 7 Years to 7 Figure Wealth. Its a very good strategy.

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  • Todd Dale
    OP
    Hoboken, NJ · Member since 2012 · 9 posts · 0 votes
    14y

    Thank-you all for your feedback! I really appreciate the advice and well wishes!

    John T, what type of property did you pursue for your first investment? Did you find that the high taxes of North Jersey cut into your profit margins?

    Thanks Michael Pilarski! I'll definitely check out any real-estate investor clubs in my area. I've never heard of such a thing. Hopefully my current income will stay consistent over the next few years. Unless of course, I accidently knock some chick up or something. Then I may need you guys to help me find another forum for faking your own death.

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  • John T
    Member since 2010 · 17 posts · 0 votes
    14y

    Todd, the first property I bought was a duplex... In the area, I'm able to charge a premium for location, off-street parking, and a washer/dryer. The first 2, I can't change, the 3rd is pretty easily added if they don't already exist.

    You'll find that the rents are much higher in the NJ/NY area as compared to the majority of the country. Which directly reflects the higher taxes and housing prices.

    The trick is finding the right deal... My suggestion to you is putting a small spreadsheet together that makes a few simple calculations and in a matter of a minute or 2 you will know if that property is worth pursuing.

    But like other people have mentioned, you have to read, read some more, and do your due diligence. Everyone was a newbie at one time.

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  • Sierrah Fanth
    Real Estate Investor · Apple Valley, MN · Member since 2009 · 35 posts · 2 votes
    14y

    Hi Todd,

    One thing I wish somebody would have told me in the beginning is take advice from only people who are actually successful at what they claim to be successful at. I have found that there are so many people in this business who claim to be very successful, and to have done a certain number of transactions, only to find out a year or two later that they are not nearly as successful as they say they are.

    How do you find out if they are or not? Ask around, don't be afraid to ask questions about an investor's, or business' reputation, or if an investor would do business with a certain investor. Or, you could even ask the investor himself, "How often they buy or complete transactions?" (I'm not sure I would say how many deals have you done). Also- you will be surprised at the things you hear. There is a lot of bad business out there. The more information you gain, the more you should be able to put 2 and 2 together.

    There are two main types of "talkers" out there, ones with big egos who like to tell stories and give bad advice, and ones who want to take your money disguising as Real Estate group leaders and "mentors." Many of these people are much more interested in your money than actually investing. But don't let this discourage you, I've found bad information is still information, and it's called a "people" business for a reason...

    Cheers!

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  • Todd Dale
    OP
    Hoboken, NJ · Member since 2012 · 9 posts · 0 votes
    14y

    John T, thank-you for the insight. The beginning is always the hardest…I’ve been reading everything I could get my hands on over the past couple of weeks. Hopefully I’ll find a great investment over the next few months to get started.

    Sierrah, that’s really, really good advice. Thank-you. I’ve already encountered a few people that have given off that vibe. I’m always hesitant whenever anything seems too good to be true. Any other advice you can provide is greatly appreciated.

    p.s. Sierrah is an awesome name!

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  • John Stevenson
    Foreclosure Specialist · Miami Beach, FL · Member since 2012 · 131 posts · 123 votes
    14y

    I personally would recommend investing in discounted single family residences. Here is why I think it works in this economy.

    1. Distressed properties (Foreclosures, short sales, REO etc) are readily available and are being sold for cheap.

    2. Because of the restrictive lending requirements, loans are hard to get forcing many people into renting. If given the choice, people like renting homes more than apartments.

    3. As the economy improves and lending requirements relax a little, these renters are going to want to buy.

    4. As demand increases and the economy improves, so will real estate prices.

    My research indicates that if done properly, the yields will be between 15 - 20%. I estimate the holding period to be no longer than 5 years.

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