Mentor

[Sudhakar Kasturi]

Hi,

I am a newbee real estate investor in the DFW Area. I have a very small budget (50K) and would like to get started with rental properties. At this point, it would be great if a mentor can guide me and keep me from making beginner mistakes and show me around the process.

Appreciate any help in advance

SK

[Alberto Camacho]

@Sudhakar Kasturi

While learning the business may seems like an insurmountable task, I assure you it can be learned. Some will find their niche quickly and others will go on for some time and never make a single deal. It’s work so those looking for a quick fix get discouraged quickly.

I too started out looking for a mentor only to realize the direction provided seems to be missing specific objectives. I have to say I’m relatively new as well. While I've owned rental property for years my true investment education began 6 months ago. Progress is slow but I can assure you it doesn’t feel that way. I’ve been busy the entire 6 months. This is my advice to anyone starting down the investment path.

Write down your goals. Stephen Covey’s statement “Begin With The End In Mind,” is something I’ve taken to heart. Don’t lose sight of your goals. Revisit your goals on a regular basis and adjust as you learn. What you want to identify is the type of investor you wish to be, how you’re going to finance your goals and the time you are allowing yourself to complete those goals.

Get your Financials in order. If your credit is bad work on fixing it. If it's good, make it great. Set up a budget and stick to it. You should be saving so you can continue to invest once you get started. You will need to have some surplus funds for the unexpected. I often hear you don't need money but that is only true for seasoned investors. No one will give you their money if you have not proved yourself. One of my goals is to have 1 year PITI (Principal, Interest, Taxes & Insurance) for every property in my portfolio. Banks like to see 6 months in your account. I don't co—mingle funds. It just makes taxes harder to complete at year end.

50K is enough to get you a DFW SFR (Single Family Rental) property using hard money today. Today SFR deals from 60s/70s construction needing rehab in DFW area will be ~25K out of pocket with about 500 in monthly cash flow after PITI. If you leave the remainder in the account for surprises you're investing will reach its first plateau. You might be able to find a newer\better deal but those are getting harder to find. Those are being snagged up before we even get a chance. The so-so deals are being bid up by new investors with limited estimation experience. Plano is hot with Toyota, Legacy West and Liberty Mutual. It not a micro market I dabble in but I can't imagine 50K will go far there.

Market yourself, let people know you’re in the business. If you do this properties with find you. People bringing me properties they no longer want and can’t sell through conventional means.

Get business cards and submerse yourself in the business. When I committed to being an investor one of my first short term goals was to meet with 5 investors, 5 agents, 5 bankers, 5 contractors, 5 management companies, 5 inspectors, etc..REAs and meetups are a good way to do this. The real goal here is to build your team. Be careful not to get sucked into the paid programs. You will also make “mistakes” with the team. People change so be prepared to adjust when you need to. I don’t depend on any one individual. I find a business won’t flourish like that.

Start reading aggressively to increase your knowledge. I read self-help, real estate, business and leadership books. The public library is good but for the more technically inclined online you have Open Library. I do tons of driving so I like audiobooks and podcasts.

Start analyzing properties so you get comfortable with the process. Drive to homes for sale, open houses and any other opportunity you can walk a property. Rehab estimates, rental comps, market analysis are all learned skills. Spreadsheets and websites are great for starting out but you will need to be able to look and say that roof needs replacing so for an 1800 sq. ft. house it’s in the 4 to 5K range.

I can go on with other tidbits but that will get you started.

I wish you continued success.