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Updated over 4 years ago, 04/26/2020
![Carl LaPiedra's profile image](https://bpimg.biggerpockets.com/no_overlay/uploads/social_user/user_avatar/1685845/1621514774-avatar-carll73.jpg?twic=v1/output=image/crop=1689x1689@271x82/cover=128x128&v=2)
Advice for starting out
Hi everyone,
I am new here on Bigger Pockets. A friend introduced me to the website/podcasts a couple of months ago and I've been hooked since. I listen to the podcasts almost everyday to and from work. I just completed reading 2 BP books - "How to Invest in Real Estate" and "BRRRR", and am starting "Long-Distance Real Estate Investing" next. My ultimate goal is to own rental properties for cash flow and financial freedom.
I live in NYC and am employed by the city full-time, so I don't have a lot of free time, but I've been making use of what I do have.
My main question is, what are the first steps to get started? So far everything I've seen talks about getting educated. I've been reading the Rich Dad series since I was 17 years old (I'm now 30), and have read articles here and there, watched a few videos, and even attended a Than Merrell 3-day workshop but backed out at the $50,000 price tag on their continued 'education'. I did all this before being introduced to Bigger Pockets. Now that I've added a couple books and webinars, a bunch of podcasts, and have browsed through the forums, I feel that I really am just in analysis paralysis. I want to finally take my first steps and get out of it.
Should my first step be getting pre approved for loans? Do I do this only through banks?
For hard money, do I only apply after I've landed a deal on a house, or do I do the leg work for that ahead of time?
Also, I do not feel that NYC is worth investing in, at least not while starting out. I could be wrong, but to me the prices of most homes here are unreasonably high. So my question there is, if I'm getting pre approved for a loan, is it ok to do so where I live, even if I intend to invest elsewhere, or should I only get my pre approvals in places where I plan to invest?
This is a lot longer than I thought it would be, sorry for that. Any advice/suggestions is much appreciated though.
Thank you!
![Aaron Zimmerman's profile image](https://bpimg.biggerpockets.com/no_overlay/uploads/social_user/user_avatar/1239593/1621510559-avatar-aaronz18.jpg?twic=v1/output=image/crop=960x960@0x177/cover=128x128&v=2)
From what I can tell, you seem to be well on your way. Keep reading and advancing your education. However, in the coming months, you need to take some action. Here are my recommendations:
1. Do some research and select a target market that you would like to invest in. Based off your comments, it does not seem like you'd like to invest in NYC (reasonable). It seems like you want a good cash flow market, so perhaps somewhere in the Midwest or South.
2. Build your core 4 as outlined in David Greene's Long Distance Real Estate Investing book, with first starting with a realtor. Then, build the rest of your team.
3. Save as much money as you possibly can for a down payment and reserves. For the reserves, depending on the unit, I'd recommend anywhere between $5-$15k.
It seems like you have already picked your niche- which is residential rental property investing and are on your way. Focus on the next thing that will advance you on this journey. I hope this helps!
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@Carl LaPiedra Education is always the first step. Then start analyzing deals and building contacts in your desired market. I agree that NYC might be a tough place to start. I don't know the market but I would guess it is pretty expensive.
I live in Fayetteville, NC and this is a great market to start in. You can be all on a property for 70k - 80k. This is a great area for rental properties. I'm sure if you dig around some on the forums there are other markets that are similar.
Once you identify your budget and start building a team you need to get pre-approved. No one is going to take you seriously without a way to close on a deal. A good real estate agent in your target market will be able to point you in the direction of a few good lenders to start talking to.
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@Carl LaPiedra determine exactly what you want to do with REI. Then take action. There is a lot to consider and a lot to know. You will figure it out and will make sense of it all as it comes at you.
- Shawn Mcenteer
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Hey Carl,
You and I are both passengers on the same train! I'm just getting started too. I couldn't agree with Chris, education is the first step, and it sounds like you're taking full advantage of everything you can.
I appreciate the frustration you might be experiencing from "analysis paralysis." I've been there too! Taking the first action step is enormous! I would encourage you to stay firm on your buying standards (e.g., pg. 53 of The Book on Rental Property Investing), but flexible on how you might fund it. Banks and other lenders might be a bit more cautious these days, so keep your eyes open for seller financing deals or partnership opportunities.
Also, stay focused on your long term, specific goals. It sounds like you're knocking on all of the right doors. They'll open soon enough. So stay encouraged!
Best of luck!
Connor
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First step if you know what you want to do already would be getting pre approved with the banks, and getting with hard money lenders if that's something you want to utilize. They qualify primarily based on the deal but you can make that part go much quicker if they already have your information.
If you haven't picked a market yet I would definitely recommend San Antonio, Texas.
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Hi @Carl LaPiedra, kudos to reading books and informing yourself as a future investor. Knowledge is POWER.
Where there is a will, there is a way. @Aaron Zimmerman mentioned long distanced real estate investing, which can be a viable option for you. Another option maybe be seller-financed deals. Especially in our market today, with COV-19 and people losing their jobs, this may be the most opportune time to take time and learn about negotiating seller-financing. You can take over someones mortgage that cannot pay. Biggerpockets has books on this, as well. OR you can wait to see if real estate comes down slightly over the next few months and tap into NY.
Make sure you have reserves or some capital to start with. You can always use hard money lenders, however if its your first attempt, I would partner with someone who is knowledgeable in this area.
Goodluck on your future endevors!
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@Carl LaPiedra
I couldn’t agree more with @Chris Stroup. In addition another couple books you may want to pick up are “The book on estimating rehab cost” by BP and “Building wealth one house at a time” by John Schaub. It talks a lot about financing options and negotiations.
I am just starting out as well and really look forward to hearing about your success!
Doug
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@Carl LaPiedra
Education will get you so far you have to jump the gun at one point.
One of the best lines ive heard is from Grant Cardone
When he talks about commit and figure it out after. When you commit before you know you can make it happen will force your mind to think outside the box to get you out of it. Make offers left and right as many offers as you can. And all your offers add “Contingent to partner’s approval” just in case you cant find the finance for it for what ever reason you can back out of a deal.
You will gain more knowledge doin it then reading about it soo when u think you miiight be ready..... then YOU ARE READY!! Lol keep safe god bless and best of luck
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Hi Carl,
I know the stage you are in well! It can be difficult to feel ready to move from the education phase to the take action phase. There has already been lots of great advice mentioned - I would suggest your next step be begin to research what market(s) will best serve your goals and then start putting together a team in the market(s) you decide to move forward in!
It sounds like you are interested in long term rentals, so areas with continued job and population growth (or at least not declining) and a high rental demand would likely be areas you'd want to look for. The south and mid west are great places to start - I'd suggest looking for mid sized cities in NC, SC, TX, TN if you need a starting point.
There are so many options out there, so don't worry so much about finding the exact right market (there isn't one) but look for areas that make the most sense for you! Think about the following:
- What type of tenants are you hoping to attract (students, lifers, people in transition, etc)?
- How accessible do you want your property to be for you (distance from home, ease of travel to that area)?
- What is your budget and how easy will it be to find deals that meet your criteria?
After you have been able to narrow down your search based on all of the above criteria/information, I would start reaching out to some real estate agents in those areas - look for recommendations on here and have phone calls with many from each area. See who really seems to know their stuff and who wants to work with investors and do the kind of leg work you will need. Experience isn't everything - if you can find an agent who understands investing and is knowledgeable of the area choose that over someone with 20+ years experience who is just going to send you MLS listings.
Make some calls to PM's too - finding a good PM is even more important, as they will be the ones who keep you cash flowing once the deal closes. You want to make sure you can find one you can rely on when determining where to look!
Good luck and keep us posted!
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I read through all the replies and a few touch on my typical comments; I will summarize my thoughts:
1- Decide what your goals are and narrow your options to what helps you achieve a goal. Are you looking for long term cash flow, short term wins, single family, multifamily, turn key, flips, BRRRR, lending, short term rentals, storage units, etc, etc?
2 - Take action. I listened to every BP podcast, became somewhat active on the forums, read dozens of books, too many internet searches to name, and analyzed deals on the MLS and through wholesalers. I talk to others about how much I was doing to begin investing in real estate and told myself all of that was action. But I left out one key component - I had to actually make an offer.
Every deal is scary. But sounds like you have developed enough of a base to be able to ask intelligent questions and narrow down to a deal you like and moves you in the direction you want to go. On every deal there are dozens of things I don't know but have found you can ask this community just about any question and get direction.
Let us know how it is going.
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Thank you so much everyone for your replies! I wasn't sure if anyone would even see this, tbh.
@Beth Mulholland and @Ken Dillard you two kind of helped put a little more focus on the direction I should be thinking. My thoughts feel scattered as I learn more about everything that's involved with real estate all together.
Can I ask where you look for the market evaluation specifically regarding real estate? For example, let's say I wanted to look into investing in properties in NC or TN, do I google everything about all of the cities in each state, like census info and crime stats and school ratings to determine a good area? Is there a specific website/tool I should be using?... Sorry if this is a stupid question. The more I learn about what I need to learn about, the more lost I feel. Which I guess is the cause of analysis paralysis
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@Carl LaPiedra you definitely nailed it and I lived in the analysis paralysis world for quite awhile!
I don’t know if others have more specific tool suggestions but yes I did a lot of googling and reading city statistics/forums. I started with cities I knew something about and then as you start to look for more info on those cities on forums like this you will stumble onto suggestions for other similar areas as well.
You may find yourself leaning towards one area for some reason or another or you may feel like you have too many options and no real way to narrow them down - if that becomes the case just pick one or two and start pursuing opportunities there! If they are duds, oh well you will have learned more about the process and you can move your search elsewhere!
I think the biggest hurdle I had to overcome was being ok with “failure” - not financially
(be conservative starting out unless you are really comfortable with risk) but in terms of “wasting” my time/energy/etc on a market or deal that didn’t pan out. That will inevitably happen and just take what you learn and move on!
You are asking all the right questions so I think you will do well :)
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Thanks, @Beth Mulholland! I guess it'll all take a little more time than I was hoping for, but at least now I feel like I have some sort of direction. I appreciate it
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Neighborhood Scout is OK at some common, general stats (without paying for the full info),
https://www.neighborhoodscout....
Other than that, if you can narrow down areas where you are interested, you can set up key word alerts on BP, and also post a thread Interested in......... (Knoxville, or Gatlinburg, or Charlotte, etc); you will find many people in the area willing to jump in and help guide.
While I have not purchased through them yet, I also look at Roofstock which is a turn key provider just to see what areas appear to be hot for flipping and rentals. You can find properties in NC and TN that they have purchased and rehabbed and selling as turn key.
https://www.roofstock.com/inve...
Good Luck!
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@Carl LaPiedra you've gotten some good advice. If you haven't taken the time I would encourage you to think about what you want to accomplish with real estate before you jump into your first deal. I'd encourage you to create a life plan and think deeply about what you want and how real estate can help you get there. I used to do some coaching with teacher's who wanted to start their own business. I had an exercise I had them go through similar to what I'm suggesting for you. I'd be happy to send it to you if you're interested. Real estate is great and it can change your life. I'd encourage you to plan your life then plan your investing to fit the life you want. In the E-Myth Revisited Michael Gerber talks about successful people actively creating their lives while others just kind of float through life. Be active, create the life you want and use real estate as the vehicle to get you there. Good luck. Let me know if I can help.
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Wow! Thank you @Ken Dillard. You just saved me a whole bunch of time with random googling and census information. I spent a good portion of yesterday trying to figure out how to dwindle down all the broad info on the census website. This is huge, thank you so much!
Thanks @Craig Sloan, I would absolutely be interested. Some of what I'm gathering for/of myself after reading the responses here is that I don't have a specific enough idea of everything yet. Anything to help find some focus would be greatly appreciated
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@Eudith Vacio you mentioned books by BP on negotiating seller financing in your comment to Carl. What specific books would you recommend because I agree with you that this may be where opportunity lays? Thank you.
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@Carl LaPiedra I couldn’t agree with you more about staying clear of NYC and really anywhere in close proximity in the tri-state area. I too live about 45mins from the city in the busy populated part of CT. We really have no price appreciation but prices are ridiculous particularly for a beginner looking for the optimism of a cash flowing property.
The thing I think we should all singe in our brains is one of the things this pandemic and all the people staying home and working (who are able too) has taught us, these shiny metropolises building more and more office space may be on the road towards obsolescence. In my opinion considering bedroom communities at an increasing distance from cities could be where the market takes us. The allure of the big city still nearby but the ability to live further and further away remotely if it’s only rarely you need to be in the city.
Good luck! I wish I had your mindset when I was still only 30!!!
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I think you've gotta start further up the funnel. What I mean by that is it's important for you to figure out ultimatly what you want to achieve (finacial freedom) and by when.
If you want to stay active in your current job, and you make a decent income. My recommendation would be this:
1. Learn everything about ONE specific niche. Go deep into that nitch education wise.
2. Network & connect with experienced investors locally & here on BP
3. Find someone that you can invest in their deal or JV together to "learn from the inside"
4. Open up credit lines & get access to as much capital as you can over time.
5. Repeat the process, learning from wins & losses.
I'm right there with you... read Rich Dad at 17, and took until I was 26 going on 27 before I took the leap. You're in a good place, especially right now.