How do you decide what's best to get started?

[Abigail J Steinert]

My husband and I are excited about investing in real estate. We have been talking about it but don't know what the best plan of action is. We are in our early 20's and have a friend as a partner. We each have an initial investment of $13k each, so $26k total. We are looking in the Wichita, KS area so the houses aren't outrageous prices.

I was just wondering how you decide what plan of action is best. So far we have talked about buying low, living in it while we fix it up a year or two (paying rent to our business obviously) and then renting it out. We've talked about simply flipping houses and not renting them but selling them. I have a concern about this: if we did this, would all of the profit go to the contractor? We all have day jobs so we can't make flipping houses our main job, but can still help out. If we did do the work ourselves it would take so long not to mention we have no tools or experience.

I just want to know how to make a decision on which direction to go in this business.

[Kelly Smith]

Best bang for the buck is living in it as you've described and paying your business the rent.  Renovate/fix-up nights & weekends doing as much work yourself as your able and capable (some things are just best left to professionals).  In addition to the labor you're paying to have the contractor perform, there's another 10-25% on top for OH, insurance, management, and margin.  

Caution on the partner: is it absolutely necessary?  Getting into your first R/E venture with a partner is easy because you're both excited about the future opportunity.  The challenge will be your exit strategy.  Getting both partners on the same page when it's time to exit the asset can be tricky.  Marriages, divorces, changes; changes in life will happen and that can impede you and your husband's flexibility on moving quickly for the next opportunity.

Start small and simple to learn (i.e. loan processes, insurance, sales transactions, closings, permitting, contracting).  Call it a practice run, cause you're going to make some mistakes, but you're going to learn a ton.  

Good Luck