New Investor, Direction Wanted

[Thomas Guzzardi]

Real estate has been a dream of mine for as long as I could remember. My 2 problems are: finding people to invest in me and finding homes at a value worth investing in. I am now in my upper 40s with a good job, but being divorced and having to pay alimony, child support and my own rent I am drained of funds each month.

My background includes architecture/ interior design, construction and project management.

I would like any advice I can get as to how to acquire funding and how to find houses. I live in Northern New Jersey (Bergen County).

[Brian Kantor]

Hi, Thomas. Congrats on getting started. I too am a new investor from Northern NJ originally, but am now in Brooklyn. Both expensive markets, for sure. As such, I have never seriously considered investing near me, although, to be sure deals are to be had in any market if you know what to look for and have enough capital to get started. 

In Brooklyn, for example, house-hacking a four-plex can make sense if you run the numbers, but you'd be looking at best at $60k down + $150k+ in renovations on a $1.5MM fixer-upper that you could rent out for ~$7500/month plus live for free. The numbers work, but I dont have that kind of cash to start-out.

As such, as far as markets, I look for small cities and suburbs of bigger cities where I can find some combo diverse businesses with large offices or factories and/or contain or are near to a couple colleges or universities. In OH, MI, FL, IN, etc, you can find houses that arent terrible for $50k asking price.

Once I do that, I Google "safest neighborhoods in City X" and start popping the neighborhoods one at a time into Zillow going down the list to check out available home prices. I'm looking for:

• The Safest neighborhood possible
• With available homes in less-than-deal condition that are far cheaper than nicer homes in the same 'hood
• And decent price-to-rent ratios

From there, I start researching agents and property managers here and on Zillow and start interviewing to see who seems like they might be a good fit. Agents can help you evaluate deals on the MLS and ideally bring you deals not yet posted there.

Once you find a property, you can evaluate it here on the BP calculator under the "Tools" tab.

As far as finding people to invest in you, maybe other people will disagree, but I think you try to get your first home with your own capital outlay, and once you prove success, you'll have an easier time finding those who would invest with you. You'll also make connections to hard money lenders over time who can help out.

Some great places to start:

• David Greene's "Long Distance Real Estate Investing" book
• If BRRRR is something you're interested in as well, I also found his book on that subject great as well.
• If you've got a little bit of cash, Paula Pant's course "Your First Rental Property" is a great intro course that covers all the basics.

With your background, you should have a huge leg-up on most of us when you begin the renovation process.

Good luck!

-Brian