Question on investment options

[Jaime Bisbey]

Hello, I am new to BiggerPockets and the world of real estate investing. I am not even sure if I will receive any responses to this, but I figured why not put a question out there to get some opinions that I may be able to research more and expand my knowledge? I am currently reading a few books, and just started exploring the BiggerPockets forums and tools the site has to offer. 

Let me lay some background for my question. I have just graduated college, bought my first house with my fiance, and work a basic 9-5 during a world wide pandemic. I know I will enter the industry of real estate investing, I just want to gather enough knowledge and the right connections and networking before I do. 

My question is, if you were in my situation, with 25-30k ready to invest in my first property, where would you begin? This is a broad question, and in no way am I looking to just listen to any response I am given, I am just curious of ideas and opinions. Maybe your response will be driven by some experience or knowledge I do not have, that will help me learn! Thank you for reading, and any response or opinion you may have for me. 

[Henry Clark]

@Jaime Bisbey

Short answer, look at RV/Trailer rentals.  Buy ones already in a park.  Lets say you live in the middle of NY, Chi, or LA, doesn't matter.

Long answer; REI is to broad, narrow the field. Supply more background on your personal background/experience and REI model you prefer. Even if you don't have the funds yet, BP will be able to give you options to get involved and learn. For example: If your a dentist, start looking at Medical buildings/storefronts, so you could be a major tenant, even though you don't have the funds to do that now. If your an oil field worker in South Dakota who hasn't been laid off, look at RV/Trailer rentals. There's probably a lot to sale in the oil field states today, with Oil down. Buy a bunch and move to your town.

Revisit the house you just bought; not that you would sale, but this was probably the best REI opportunity you had. Go through the thought process as if you had not bought a house yet.

Fiance- make a decision. This is both from a positive and negative standpoint. Both legal and personal relationship. If you do a BRRR, you will probably spend more time there, than with your Fiance, other than sleeping. Check if she is into this.

Good luck.

Start small and Make your Big Mistakes Early.

[John Joyce]

I am new to this too, but I have a similar financial situation. Here's my current BRRRR plan:

1) Find a 3-6 unit class C or D value-add property.

2) Use a HELOC on my primary residence (SFH) to get about $50-80k

3) Pull about $30k out of savings

4) Pay downpayment and rehab costs

5) Get it rented

6) Cash-Out Refinance once the cashflow and capital improvements increases the value

7) Use cash to purchase next deal and repeat process.

[Mason DeJarnett]

@Jaime Bisbey pick your market and narrow down from there. I started close (and still am) to home with all. Sit down with other investors in your market and learn from their mistakes. I had a good friend who owned a rental or two who was willing to partner with me- having someone else has been my favorite part about the journey. For instance- I’ve been home bound due to recovering from a surgery and he’s covered my tail for a month now. When he goes out of town or has needs- I cover his. Maybe there’s an experienced investor in your community who is willing to do the same for your first one or two- just a thought. I highly recommend you looking at multi family- probably a duplex with the money you have.

In short- pick your market, pick a partner, and start!

[Branden Bestgen]

@Jaime Bisbey

Henry Clark had some great advice with mobile and RVs. You wilI make the most amount of money, with the least amount of capital investment in them. I started 24 years ago with one mobile home and "sold it" on a rent to own on it. Then I bought more and kept going. Pretty soon, I found out that most mobile home park owners wouldn't let you do that in their parks. So I did everything I could, to start buying mobile home parks. I bought three parks within my first year. My motivation for buying parks, at the time, was so I could do rent to own mobile homes; because the cashflow was tremendous. I read a book called Deals on Wheels by Lonnie Scruggs that laid out how to do it. I did everything I could to increase my monthly cashflow, and everything I could to buy as much real estate as I could. I started buying houses, and storage units, and apartment buildings; and eventually commercial and industrial. I searched high and low for motivated sellers of anything real estate related.

It was explained to me, early in my real estate career, to look at building the three legs of the real estate stool. The first is cash. You need cash to live. Maybe that's your job. For me, I was all in on real estate, so my cash for living came from my deals. I wholesaled deals and I rehabbed and flipped deals for cash. The second leg is cashflow. If you can get your cashflow up high enough, it starts paying for everything. The most common is from from rental income and investing in notes. The third leg is assets. The assets are what make you wealthy. Do everything you can, to buy as much real estate as you can. Before you know it, 15-20 years goes by, and your assets are paid off by your cashflow.

[Jaime Bisbey]

Thank you all for the responses, they gave me a lot to think about! I am thoroughly excited to explore each response given to me, and the options you all have presented. I appreciate your time.

Another quick question, have any of you ever invested into real estate in a college town? I am particularly interested in investing in a multifamily home, and renting to college students. I would carefully choose which students to rent to, because being a recent college grad myself I have seen what students can do at house parties. Any advice or experience that can be shared on investing in a college town? I am about 10 min from West Virginia University! 

[Chris Tarpey]

@Jaime

@Jaime Bisbey I would only be concerned renting to students in the current climate. Many schools are offering online class options due to COVID-19, and what would usually be a profitable option, now may be hit or miss depending on where you are looking to set up your student rental.

With the current funds available to you, depending on the market you are investing in, you could use the BRRRR strategy, combined with hard/private money to give you the momentum and cash flow to exponentially grow your portfolio!

At the end of the day, there are many options available to you, don't feel limited by your experience or liquidity, just approach the problem with "How can I get this done"!

[Annie Johnson]

I am no expert... But if I were you I would keep up on the reading, podcasts, and networking like you are doing now. Connect with experienced investors in your area. Figure out your goals and put together the steps to make it happen. The best way to save on your biggest expense is to house hack. Learn to run your numbers on properties and go from there! Are you pre-approved? That is the hardest part. Don't get stuck in analysis paralysis. The first deal is the scariest.