How did you get started on your first RE deal

Question

Hi Guys,

I know this may be very broad question - I'm interested to hear how folks got into their first RE deal and how much cash they started with....

I live in NYC and getting in RE here can be very expensive here especially if you don't have enough capital. I've saved up $60K that I'm looking to invest in the RE transactions, but I'm at a lost to where to start. I've read numerous books on RE from Flips, Tax-liens, etc so I have basic knowledge of RE but no actual experience in it (I also got my RE Agent license).

I want to understand how folks took their first plunge on RE and how/where did they invested and what advice can they share for someone looking to start their career in RE investing?

Thanks in advance!

Luc Boiron · Answer

$60k is a decent chunk of change. I started with my first deal when I was 18. I bought a house in a rough area of town in 2007 for $302,000, and put 10% down. I also renovated it a little and then rented it out by the room. Actually doing a deal is how you will learn to do more of them.

I made a ton of mistakes on that property renting to lower priced tenants, but learned a ton about being a landlord and making improvements and repairs.

I sold that property in 2012 and I'm currently a full time flipper, on track to do 15-20 deals this year.

My advice? Find something decent priced that will at least cash flow a little. You don't need to find the perfect deal - it's hard to start with a home run when you're just learning to bat.

Good luck.

Joshua Diaz · Answer

@Caleb Heimsoth

That's the beautiful thing about real estate.  There are so many ways to do it.

G. Brian Davis · Answer

I often recommend that people house hack for their first deal, if they're interested in buy and hold. With no housing payment, you can save money a lot faster, and you'll get some easy experience in managing rentals. You can also use owner-occupied financing, which is much cheaper and requires a much smaller down payment.

To answer your question, I started with very little cash, and bought a rowhouse for $50,000. I knew the seller and we rolled closing costs into the purchase price.

Please feel free to shoot me a PM any time, and best of luck!

Mike Abramowitz · Answer

This is a great way to look at it

Karen B. · Answer

look at Grant Cardone's advice. https://www.youtube.com/user/GrantCardone/search?query=real+estate

Munim Jalil · Answer

Thanks so much for the warm advice guys. I'm currently expanding my search out to PA/NJ and still looking into the Bronx and Queens.

I saw couple of properties in Buffalo, NY on the cheap - but I'm unsure of the rental market/the ability for me to manage it personally unless I go through a management company.

How did you guys fair with managing a property that was in a different state then the one you were living in? How did you guys learn about that market? I have a good idea on the NYC rental market but outside of it I'm unsure how to gauge the rental sustainability of different markets.

Alek Liskov · Answer

@Munim Jalil I would recommend what a lot of people said and encourage a house hack. Even if you are not living for free, you are building equity in one of the hottest market in the country and getting experience with tenants. If you can't find anything or you don't want to go that route then I would second what @Naum Raz said and point your direction west. I live in NJ and invest in NJ and PA. My parents live in the Poconos and that's where I bought my first investment but the reality is an hour drive is still an hour drive. For you, property management would be a must. But there are plenty of properties where the numbers would still absolutely make sense. The chances of finding a cash purchase for 60K that's in a good shape are quickly disappearing. My guess is this coming winter might be the last chance to snag a deal like that.

Either way, best of luck! Keep in mind there is no perfect investment. You will make mistakes. It's how you overcome them and the lesson you learn from them that will shape your success as an investor.

Naum Raz · Answer

I am from NYC myself and I started investing in NJ. I don't think investing in NYC makes any financial sense at this point in time. The market is at its high, so you will be paying a premium for almost any property you get.

NJ and PA are within 1 - 2 hours distance and you can easily get a free and clear single family for $60K  or multi family for almost double that then get a tenant and refinance few months later and buy a second property.

But to start off I would say choose few areas in NJ and close by that match your criteria and drive there and talk to locals, get a feel for the area, talk to real estate agents. This way you get a real understanding of what's going on and not just information from internet.

How did you get started on your first RE deal

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