Ready to jump in, but where to start?

Question

My wife and I are READY to join the world or real estate investing. We have a decent amount of capital, are leaning towards investing in several properties to start. Ideally, we want to purchase several that are somewhat "turnkey", and want to buy one project property to rehab.

Now we're trying to decide whether we should focus our energy in a single state or several. I've read a lot in support of both approaches but would love to hear the BP community chime in as we are just starting out...

One other thing that makes our situation unique is that we have spent the past year living in our trailer, traveling around the country. So we are not tied to any physical location. It's quite easy for us to "move" to a new market and set shop for several months.

Thanks in advance for your responses!

- Matt

Aaron K. · Answer

@Matt Pine I'd start with one property in one location, you have the ability to do more and that is great.  However if you go all in all at once, you don't have the opportunity to see if being a landlord is even something you enjoy long term.  Perhaps the bigger reason why you should probably start with one property is that it will give you the opportunity to learn from your mistakes on the first one and apply what you learn to the next.  The alternative is making the same mistakes on every property you buy.

Matt Pine · Answer

Ah got it, thanks! Haven't looked into that yet :)

Jonathan Greene · Answer

@Matt Pine Your mobility is the key here because you can go anywhere and learn about the market. I would pick a place where you guys are interested in sticking around for a while and go there, learn the town dynamics, go to some local REI groups and meet some other investors, and then slowly find one property to work on and learn from. Too many new investors who have the capital go in too big to start on multiple properties or a big flip, but it doesn't usually go well because there are so many things that go wrong. Turnkey is an option, but it's low profit and no learning, soft passive income. If you want to learn to do REI, you are in a great spot to do it because you have a capital and mobility.

Charlotte Dunford · Answer

@Matt Pine I buy mobile home parks, not the homes. I only buy used homes to fill lots in my parks.

Matt Pine · Answer

Thanks! I've been considering that as an option, but I don't know enough about it to determine if it's the right path for us yet.

Do you typically buy mobile homes that are already placed on a lot or do you usually move them?

Chad Daniel · Answer

@Matt Pine - You have an asset that many people do not - your mobility. Hmmm, now what to do with such a thing... :-) It does provide you the opportunity to visit and even camp out in different markets. One idea is to partner with a local expert in the city of choice (based on where you want to be - lifestyle investing, and also the underlying market drivers) and to pop in on a place that they have purchased, are renovating, and planning to rent. This can teach you a lot about the market, and the company.

I find a lot of value in Jim Collins - Fire Bullets then Cannonballs strategy/story. Check it out on youtube. Run a lot of small tests and keep enough gun powder to GO BIG when you find a successful recipe. This is somewhat difficult in RE, because owning 1 place for even 2, 3, 5 years does not provide you a lot of data and takes a damn long time. Piggybacking on Jim's story, the RE "bullets" are affected by wind, chance, etc. differently each time. Some friends and I pooled our brainpower and capitol so that we were able to fire a lot of bullets, enough to get useful information about markets, contractors, property types, contractors, banks, ... That was not fast, but has created success.

If we were starting over, I'd invest more time in finding someone that's already fired the bullets and maybe even some cannonballs in your area of interest. Figure out how to find those people (BP could be a great start :-), then how to provide some value to them in order to leverage their experiences.

I'm looking forward to seeing your story unfold, and am also curious how you have created this mobile lifestyle.

Charlotte Dunford · Answer

@Matt Pine I would start investing in mobile home parks. That's where I started and still doing. It is not as saturated as the other asset classes, which is why I've been able to scale quickly.

Matt Pine · Answer

Really appreciate the responses for far! I'm seeing a common thread of starting small, staying focused, and learning as much as we can.

Theresa Harris · Answer

@Matt Pine  You've narrowed it down to what you want to do, so that is the first step.  And you've saved money-bonus.  Find out how much you can borrow as your next step, then narrow it down to an area.  This time of year houses are slower to sell, so it might be a good time to pick up one that needs a bit of rehab.  You can live in it (or park your trailer there) while working on it and get renos done by the summer-if your plan is to flip it or rent it.

If you plan on managing the rentals yourself, best to keep them in one area.

Matt Pine · Answer

Very solid point!

Ready to jump in, but where to start?

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