New to investing, what would you do?

Question

Hey everybody, thanks for reading this! I'm 29, married, with a newborn, and planning on having another child by 2015. We're selling our house here in Florida in a few months and moving to Tennessee. I'm familiar with the area we're moving to.

We want to get into rental properties. We'll have about 75k of cash when we move, with absolutely zero debt. I make about 135k a year, and the wife stays at home to care for the baby.

We'll obviously need a place to live in, preferably with 4 bedrooms. We were looking at staying under 175k. We could spend less, but I at least want to be a in good neighborhood. Assuming we put 35k down on our home, we'll have about 40k for investments. Conservatively speaking, we should also be able to save at least 2k a month.

Since we'll be new to this, my question is this: What would you do if you were in my situation? We're in a pretty good spot, and I want to start making some decent money so I can retire when I'm eligible (2033).

Thanks for the input!

Aaron Yates · Answer

James Vermillion, I just finished listening to your podcast this morning. Great story. I am working on networking for private money currently. It's hard. Especially when traveling.

We have that in common. I travel for work a lot sometimes. So it makes it difficult. But I have been managing to build my company over the past two years.

The good thing about my travel is I work more hours. More hours translates to more money... The downfall is that I'm away from my wife and two young children.

But anyone who says that can't do this because they are not home... well in my opinion, it's just an excuse. I would come home every other weekend and have to go to one of my properties to oversee work or fix issues.

It takes dedication, motivation, and passion to be in this industry for sure.

So Troy G., if you truly want to do real estate, you will make it work one way or another. Don't give up. If you get knocked down.. get back up. Don't stay down. Learn from it and move forward with your new knowledge.

If every your in-doubt, read my story. I hope it will keep you motivated. https://www.biggerpockets.com/forums/223/topics/94794-and-they-said-i-would-never-do-it--if-i-can-so-can-you

James Vermillion · Answer

I am not full time...yet.  Check out  BP Podcast Show 23  where I talk about how I got started and what my plans are.

Taylor Shapiro · Answer

James Vermillion are you investing full time now? Is there a thread where you explain how you started? Thanks

James Vermillion · Answer

Good deal, but don't let the handyman thing hold you back...I am not a handyman and we are getting ready to start our 10th flip.

Troy G. · Answer

Thanks Damien Shoemake Aaron Yates Jimmy Hong everybody for the responses.  I will take your advice and do the research.  I will be moving to Memphis, TN.

James Vermillion I'm not sure if we want the SFH or multis for the rental portfolio.  I'm probably going to stay away from the fix and flip because I'm not a handiman, unless a great deal falls into my lap.  I would of course have to do plenty of research.  I just wanted people's opinions on what they would do with 40k

James Vermillion · Answer

Hey Troy.  From the sounds of it you are in a great spot! You have a lot of options, so it really is a matter of linking your goals with a strategy to get you there.  What is it you are really looking to do?  Build a portfolio of rentals for passive income?  If so, are you more interested in single or multi-family properties (each has benefits and downsides)?

There are a lot of ways to get to the same spot, but you need to figure out where that is and which path you believe best suits your situation.

Damien Shoemake · Answer

Hello Troy G. with $40k, it really all depends on what part of TN you are coming to. I know here in Nashville, $40k about 2 years ago could have gotten you something pretty good, maybe it only needed $10k in rehab as well, but now, it's more like $50k-$70k + another $10k-$15k in rehab... MLS inventory is getting pretty dry here and when something new comes out, it's overbid on quickly! Foreclosure auctions are looking a bit promising though.

Jimmy Hong · Answer

Hi Troy G., congrats on your baby and good luck on your move.  I would start by educating myself as much as possible via books, podcasts, etc.  Knowledge help minimize inexperience and risk.

That being said, $40k should be enough to get started on your first buy and hold property in TN.  There are many topics here on BP regarding how to leverage your start up capital into multiple properties.

Aaron Yates · Answer

Troy G. Welcome to BP. First I want to say read "Rich Dad, Poor Dad". This will help you create the path you want to take in Real Estate as well as in life.

Next, research the various ways of REI and decide what you would like to do.

I myself wanted to start out with flipping but didn't have the capital to do so. This led me to buying rentals. I now have 4 occupied and updating a 5th. All 5 are free-and-clear.

My goal is to acquire enough free-and-clear properties to quit my job in 3 1/2 more years.

I am just now finally finding some possible private investors to move forward with my flip plans. The profits from flips will allow me to purchase more buy and hold properties.

Ultimately, once I have enough passive income to quit my JOB I can concentrate 100% on Real Estate and expand faster.

I hope this helps give you some ideas.

Good luck and you are welcome to contact me with any questions you would like. I will try and answer to the best of my ability.

Karen Margrave · Answer

Troy G. Welcome to BP! You've come to the right place to find information. First I'd suggest you fill out the keyword alert listing your new city, the types of properties you are interested in, etc. Also, have you read the "Beginners Guide to Investing"? If not, click on the "Learn" link at top of this page, and it's in there. Then, listen to the Podcasts that are on BP, there are a lot of great ones.

Good luck! Have fun, and post your questions on the forums. From reading your post it looks like you've positioned yourself very well, and have a great plan.