Can I hire an advisor?

[Alejandro Petrov]

Hello, I am looking to purchase my first investment property. I'm agnostic of location. I'm looking for a buy and hold property with balance of cash flow and appreciation potential. I'd prefer a newer home that I will pay to have managed. I have a budget of ~$300k.

It seems like an impossible task to find the right city and home. Is there a service that can do the due diligence and recommend potential properties?

[Account Closed]

Usually I say, "The Blind Leading The Blind", but for this thread I will say, "Looking For The Blind Leading The Blind".

Don't pay any attention to what I say because my doctor prescribed narcotics that are far too potent.

Don't ever pay someone for advice. Never ever take action on a broker's, friend's or any person's advice.

Never invest your money until you are so positive about what you are doing that you can tell everyone the answers vs. asking questions.

Always remember that NOBODY REPRESENT YOU. Neither the seller's broker nor your own broker represents you. Your broker has his own agenda and it does not align with your agenda when you want to maximize your profits and your broker tells you that everything he has to sell you is perfect for you as long as you are dumb enough to take the bait.

Never trust someone when it comes to your money. Never ever (I have to put in the 'ever') allow someone else to control your money. That means; you never give one penny of your money to some garbage bag who tells you he (never happened with a she) will make you a profit WITH YOUR MONEY.

Now, that was some great advice in regards to how to invest in real estate.

The first think every child should learn when they start school is how to eliminate risks. It is painful to move one step forward and two steps back, or something like that.

People, investors and you don't need mentors. It is sad to say that most books are pathetic and virtually carbon copies of every book that contains knowledge about two grades below high school.

What you need to do is tuck your money away so it stops burning your leg through the hole in your pocket. 

Never look for properties through a broker or on the internet that is listed for sale on an MLS service, zillow, or any other website. Loopnet.com has some interesting properties and I love to see what is for sale in my area, but I think I've been looking at loopnet for about 20 years and never ever found a property that was price so I (not my broker) could make a profit.

The best way to find a property where you can make the best profit is by putting on some comfortable shoes and literally walk like a real man, unannounced, directly into real estate offices, make it very clear that you are INVESTING FOR DOLLARS, ask what they have for sale and they almost always have what is called 'Pocket Listings' that are properties their good clients want to sell, but they don't want to put the property on an MLS service for some reasons, or they want to see if they can sell the property, first, and then list it on MLS.

Most often, the brokers pull something out and then comes the really hard part. First, I will be respectful. I am not down on real estate agents or brokers and I admire and respect them for the knowledge they have in regards to how to do the many legal issues they need to take care of. There are many brokers who are geniuses and blow me away.

The problem you have is; you have to read to re-read all the above to cover what I need to say.

Your biggest hurdle is whether or not you can do some simple math, but the math is not simple in the sense that it takes a few minutes. The following I am going to say is not an exaggeration and not a joke. I've been investing in real estate for more than 50 years, own several fairly large apartment building and own homes up 10 to almost 30 homes in 4 states. 

I am starting a new paragraph because this is so important. Even I look at maybe 500 to 1,000 properties before I purchase one. To explain how serious this new issue is; I currently have $1 million in cash sitting in my checking accounts (not such a smart place) and I have a $2 million line of credit making the total I have to invest #3 million.

The $1 million has been sitting in my account for the last 5 months and I would love to be exactly like you and put my money to work, but I don't BECAUSE I INVEST IN ONLY SURE THINGS. I think those were also called women when I was young.

This is now the very hardest part. You need to look at hundreds and thousands of properties and then you have to do the math thousands of times to see how much profit you can make on each property and then compare each one. I developed my own fairly sophisticated software with MS Access to help me do this because Access does everything people wish Excel could do, but there are some geniuses who have mastered Excel.

The last and the very hardest part and you will be able to do what almost no broker can do and even if you find a broker who can do what I am going to tell you, then you are going to find that he is not going to burn his candle every night doing your work for you.

The math is simple, but extensive. You need to create a spreadsheet either on the old-fashioned spreadsheet paper, with Excel.

You need to calculate the profits for hundreds or thousands of properties to determine what your profits will be based on many things I am not going to list because I am on prescribed narcotic, but some of them start with purchase price, rental income profits after all expenses, profits earned from your tenant's help paying down your mortgage, the amount you will earn from expected appreciation (but you can't believe one word anyone tells you about how a property will appreciate, the other 10 or 20 things my brain can't think of and my next most-important thing you (nobody else can or will do this for you).

You never estimate how much you earn on a property by listening to anyone because the numbers almost never look pleasant during the period the property is for sale. To know how successful you can be you have to make your spreadsheet stretch out your numbers 1, 5, 10, 20 and 30 years. The end of year 1 helps to affirm that you are on the right train track. Unless you are a house flipper I don't think you would expect to get rich in 2 or 3 years after purchasing a house, but you should have some sweet numbers by the 5th and 10th years.

But... even there are some geniuses on this forum, I am personally against buying single family properties. I would rather stick my money in Maxwell coffee cans until I have enough money to purchase no less than a 4-plex because the profits earned on a 4-plex are almost exponential when you increase the rents every year because unlike single family homes the value for a 4-plex increases almost exponentially and when you increase the rents for a single family home the value of the home does not increase.

Compared to owning a single family home a 4-plex is like owning a golden goose on steroids.