How to start in real estate investing while working full time

Question

Hi everyone!

I've been trying to get started as a real estate investor so I can create financial freedom for my both my wife and me.

I work full time in sales that mostly takes place in Houston, Texas which I've heard it's a great place to be for real estate.

I'm looking for any tips and advice on which route will be easiest to get started with about $15k of money to invest while still working full time (at a new job I'm still learning).

Any tips on getting over the "analysis paralysis" would be great as well since I've struggled with that part as well (though I feel like I'm finally getting over it!)

Thanks in advance and I hope everyone has a great day!

Adam D Rinehart · Answer

@Dan Linger honestly it won’t get you far outside of an FHA or RD mortgage house hack or lending, here’s why. Hard money lenders want to see 2 things, how good is the deal they would be lending on and who is person they’d be lending to? Most will only contribute to 80% of the purchase price and 100% of the rehab costs up to a max loan amount of 75% ARV.  They want to see liquid assets that are enough to pay the holding costs during the rehab and if you have any experience or prior successes rehabbing homes. Additionally, the rehab funding is reimbursed to you after proof of the  work has been submitted. Essentially do you have the resources for the rehab?

If your ambition is greater than your experience and available financial resources I would recommend partnering up with an experienced investor. I don’t mean that to be flippant or mean but as a glimpse into the realities of BRRRRing houses and to not put yourself in a position you’re more likely to fail than succeed.

Craig Curelop · Answer

@Dan Linger - First off, you are in a great position. Being in a sales role means you have almost complete control of your income and thereby how much and how quickly you can save. If you are harder working than the average individual, you are compensated directly for that.

As for getting over the analysis paralysis, there are a few things that you can do:

1. Surround yourself with people who are doing exactly what you want to do. You'll see that they are successful and so can you be.

2. Educate yourself. Education breeds confidence. Confidence breeds action. Action is the cure to analysis paralysis.

3. Build a team of people that know what you want to do. Whether that be a house hack or invest traditionally.

Tom S. · Answer

@Dan Linger  Personally I wouldn't do any BRRRR stuff in the beginning if you're working full time. You'll probably stress yourself out with the rehab, and all the details and decisions that need to be made (even if you have a project manager).  There's a lot going on there.

I'm a W2 guy, and buying rental properties and using conventional lenders has worked very well.  It's much easier to get qualified for the lowest rates and longest terms with W2 income.  Then as you get the hang of it, expand into rehabs.

You didn't post if you already own, but as mentioned above, an FHA loan and owner occupying is a good way to start if you don't have a ton saved yet.

Good luck!

- Tom

Don Scott · Answer

@Dan Linger

I started investing when I was in corporate America and it didn’t stop me. I looked at each rental I purchased as buying back my freedom one house at a time.

When buying and refinancing into traditional financing with a W2 is easier than you think.  I personally tell most new investors (mostly anyone for that matter) not to buy turnkey properties. Yes, you’re buying what should be a cash flowing asset.  But what did you learn?

To get over the analysis paralysis, you have to jump in! Start buy analysis deals like you probably already are, then putting in an offer. I may not get accepted, but you’ve started to take action! Before you know it you will have your first deal!

Kelly Rastatter · Answer

$15k is plenty to get you started if you do what I did. I started with a hard money loan that covers 100% of purchase plus rehab for my BRRR. You will need to use the $15k to front some materials, contractor payments, and interest payments on the loan. You will then get draws of your rehab reimbursed by the lender as you complete work. Just set aside those interest payments for the full 6 months and don't touch that part except to make payments. That will keep you out of trouble with the lender.

As for the job, sales usually means you have some flexibility but you want to be careful not to get too wrapped up in the rehab and jeapordize that job. Ask around and use a good GC for the first one at least. It will save you a ton of headache with unprofessional, unorganized, cheaper labor.

Make sure you have at least 2 other local investors check your numbers before you get a hard money loan. The penalty is steep if you mess the numbers up. Don't go for a giant rehab on the first one. You are looking for a base hit you can learn from.

The lender I use is actually based in Texas even though my properties are all in Chattanooga. Do some searching here on BP and talk to some of those lenders to get requirements and terms. Before you know it, you'll have private money coming at you for the buy and rehab part and your margins will get better as you learn and become more accurate and efficient.

Good luck!

Calvin Ozanick · Answer

I would say a house hack is definitely the way to go. If you move into a house, rent out the other unit, it will cover most of your expenses while also letting you build some equity. 15k is a low budget, but a house hack allows you to get in for low and sometimes no money down.

Bob Prisco · Answer

@Dan Linger find a market with double digit net caps, find a team and let them handle.  BTW, you do not have enough funds yet.. need to double that at a min.

Good Luck

Pete Barrow · Answer

You need to keep saving money. Buying a place and not having adequate reserves is dangerous.

The "analysis paralysis" is your brain telling you that you aren't quite ready, and it might be right.

Keep saving and learning...from successful local investors, not just books and podcasts.

Tom Ott · Answer

Investing in a Turnkey is a great way to earn passive income. Ideally, the Turnkey Provider will own the property, renovate in in-house, place a tenant, and then sell it to you. They would also stay on as manager. This way everything is ready for you when you purchase the property and most items should be taken care of.

Mark Sewell · Answer

I think those W2 earners would probably gravitate to BRRR method investing.  Find some mortgage lenders and start getting your file filled in.

How to start in real estate investing while working full time

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