What to do while saving

Question

Jerry W. · Answer

Welcome to BP, my suggestion is to start learning your market.  You can also try looking for a possible low or no money down deal, but they can be pretty rare.  You won't really know if what you find is a deal or not unless you learn the market.  Real estate is local.  Knowing the prices and income capabilities can help you know how much to save.  Since I don't know exactly your situation, here are some thoughts.  Maybe take a real estate licensing course or two, pick up a part time job with a realty office or a local landlord.  look on Craigslist and other spots for possible owner financing.  Maybe check to see if one of your parents or other relatives would be willing to loan you some money to buy a property, etc.  Just some thoughts, way to hustle.

John Hickey · Answer

@Matthew H. Depends on your risk tolerance.  Also depends on your goals you need to figure that out.

This is what I do.

I made an offer on a house over ten years ago.   The day I saw it I made an offer.  I had looked at other houses. I had 1500  In the bank.  The house was listed at 699k.

Ask a reasonable person what would have been sensible in that case? 1500 in the bank I couldn't even rent an apt in that house.  Look up the address if your interested.

508 Lafayette Ave Brooklyn NY 11205.  In bought it for 714 all in and am in contract to sell now about 1m higher.  Plus I collected a bit of rent.

Deals can be made out of thin air.  That is my experience.

if I listen to the collective wisdom what should I do?put my nose to the grindstone read, learn and save.  Yes do that.  But also look at houses.

If I hadn't looked at houses when I had 1500 I would Miss out on a million dollars.

If your me..... I look at deals. If I told you not to look at houses it would be like me saying " great that you want to become a butcher? let's go make veggie burgers so you can start your training"

This is what I would do.  Ask anyone that gives you advice for the top three and and last few deals they have done. You like the deals they do follow the lead.

You want to buy houses? Start looking at the ones for sale in the market you want to know.  Make guess' in the sale price. Also guess on the DOM.  keep track of what happens. Do they go into contract in a week or six months.  90 percent of asking or 50.   This is the important stuff.  Market knowledge is more important than anything else.  Even more important than estimating rehab costs.

Listen to @Anthony Gayden

I love to read.   I learn alot from reading.

But nothing teaches me more than making a deal.  When i see 50 or 100 houses eventually I see a deal.  When I see a deal, I come up with ways to eke(not a typo) it happen no matter what.  Not always make it happen but sometimes it's just by the skin of my teeth. Last month two weeks in a row  I'm at the closing table with a smile because I ran the numbers five times with my lawyer trying to figure out if I can pay all the checks.  I can't even buy sneakers till I get the rents from my new tenants.....then i rush to the apt and hand deliver my notice of change of ownership and ask for the rent if I didn't collect it at the closing table.

I bought a house last month  and my wife was asking me if I had money to pay off our credit cards.  I had $10k in the account. Owed  6k on a cc cash advance.  10k in bills total.  I paid the cc.  Bought the house

After all was said and done and the deal was closed I have 5 bucks In my checking account.  I brought in two partners

When I put the offer in I was saying there is no way they will accept this low price.  They came back a bit higher but still a smoking hot deal.

Don't wait to make deals, of course if you can't make it happen then don't commit.

As far as real estate agents explain what your doing an then make the deals happen.  There are a ton of folks out ther with money that aren't buying so they shouldn't mind you.

Yashar E. · Answer

As @Jerry W. mentioned, learn the market.  I am a newb as well, and there was a length of time I took the market for granted and compared prices from all over the spectrum, and analyzed them based on little that I knew.  The issue is a  1 mile difference between location could cost you thousands of dollars if not analyzed /compared correctly.   I am in the same sort of predicament as yourself (my finances are also tied up).  I thought I had nothing to do; but I soon realized this is the perfect time for me go network and talk to people.  I came to this realization a week ago so I am going to head over to some REI groups when I am able to and also speak to local investors.

- Look for estate sales as I found out there could be interesting stories in why the current homeowners are leaving.  May learn a thing or two.

- Take a walk in your prospective neighborhood and say "hi" to people outside, possibly strike up a conversation.  Neighbors will know a lot about the area.  Sometimes these conversations enable a light bulb to flicker in your head.

There are a lot of experienced member on this site with a boat load of wisdom.  Read their posts.

I, on the other hand, like to give the perspective of a fellow newbie, that is trying to break in as well.  IMO One big thing I quickly came to understand is that the individual is only but a spec of dirt on a golf ball.  Everyone plays together as a whole, even the non-investors.  For example, neighbors love to hear that new people are going to move in because they can only hope that they maintain upkeep on the property better than the last.  They would love people like yourself to move in to all of the vacant houses, renovate, and bring in new tenants around their area.  Use that your advantage.  Good Luck!

Peter Hollyfield · Answer

Congrats!  I think getting prepared is the key here.  I agree with Jerry - getting knowledge and understanding of the local market are key.

What I do is

1. drive around the area I am interested in at least once a week - just to get a feel of the market, and to see/understand the opportunity.  You get to see which house is built and what type of houses are there and the type of people (and quality of renters)

2. get my math skill up, at least up to a proficient math 8 level.  I personally get into debates with my friends on this - but I think to be good at RE, you gotta be able to do the math super quickly in your head and like the back of your hand.  some people say good RE investors have good instincts - i say they have good math skills. if you look at an opportunity, you gotta instantly do all the P&L analysis and act on it.  Warren Buffet was known to recite all the numbers of the annual reports that he studies for fun.

3. brush up on your handyman-ness!  take a course, or just get your hand dirty!  knowing how to tinker and fix around the house *saves you money!*

I think being successful as an RE investor is a mindset challenge - willing to get your hand dirty, and tackle some hard brain training, and you will do well!   But if you can get through that - you will do well in life too!

Good luck!

Matthew H. · Answer

Thank you for the responses everyone. Some good information here.

@Jerry W., I completely overlooked the importance of learning my market. I have to look into this more as I am still unsure of exactly where I want to purchase. I guess that means that I should learn all of the markets in the general area that I am interested in (~30 min driving radius).

@Peter Hollyfield, driving around the areas of interest is a good idea that I have heard plenty of people talking about. I should definitely start doing this to get some first-hand experience with the area.

I have a degree in Mathematics and work with numbers daily so I definitely understand the importance of being comfortable with the quantitative side of things. That being said, I still have to work on my RE knowledge so that I can apply my background in Mathematics proficiently.

I'm all about fixing things myself and of course saving money!

@John Hickey, I have been analyzing some data (more for entertainment than anything else) but the data only went back to 2012. I'll check out city-data.com and see what they have.

Moises Mari · Answer

@Matthew H. welcome to Bigger Pockets!

A lot of the tips on this site, including the ones on this blog are great!

I must add, work with a realtor that is familiar with investors, that can help you filter out some of the non-investor friendly properties. You will save a lot of time that way.

Full disclosure, I'm a real estate agent/investor with experience here in NJ.

In case you want to talk a bit further and/or connect, PM me.

I love to chat about real estate, it's my favorite topic...haha

Whatever you decide, best of luck!!!

Rich Vogel · Answer

@Matthew H. I would do a couple of things while still saving for my first property.  One keep learning. Read books, listen to podcast etc.  Also I would start attending real estate meetings.  This will help you network with other investors and learn.  Then I would start looking at propertys.  Even though you wont be buying yet you will get to know what is out in the market and what the average deal looks like.  This will help you realize when the good deals come up you can attack them.

What to do while saving

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