Going big on your first investment?

Going big on your first investment?

Realtor · Kansas City, MO · Member since 2018 · 8 posts · 4 votes
Hey there everyone! I have been on my REI education journey for a little over year and have recently began working in the RE industry as an agent. Long before becoming interested in RE investing, I have saved up funds with the intent to do something with it one day. Like many, I was already putting money into IRAs, 401k, and 18 months ago I overcame my fear of losing money & lacking knowledge and put money into the stock market (still doing surprisingly well despite COVID-19).

I am still learning and forever will be, but I have begun wondering if the capital I have amassed over the years puts me in a position to be able to obtain a much larger investment portfolio sooner instead of having to wait to save up. Of course my major concern would be making newbie mistakes and losing a ton of money (I have been reading BP forums, books, podcasts, and local networking for 1.5+ years) but I still always have the fear of not knowing enough.

My primary question is, did anyone purchase something big early as their first ever RE investment (or very soon after the first) such as an apartment building, a multi-family package deal, SFH package (or quick subsequent purchases) with a total combined PP of $750k+? If so, how did it work out and what were the pros/cons? Thank you for any feedback, advice, and wisdom!


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Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes
6y

@Chris Wilkerson you are correct that cost is relative, although 750k is just a funny spot in most markets. Here in Chicago that is just a pinch more than most 3 units would go for in A neighborhoods. In the burbs where I work, that is a bit more than most 6 units (they go for 100k per door if they are in good shape).  I prefer looking at each property and trying to see if it makes sense as an individual deal. 

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  • Rental Property Investor · Greenwich, CT · Member since 2015 · 4k+ posts · 2k+ votes
    6y

    No reason you can't start bigger, @Chris Wilkerson. I think the prudent thing to do is partner with someone that's already been investing. 

  • Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes
    6y

    @Chris Wilkerson I wouldn't focus so much on the size of the investment with what is going on. I would personally focus more on the quality of the asset. Are you in a good neighborhood (A or B class preferably). Is the building sound mechanically? Does it cash flow well? The 750k price point is also an awkward one in a lot of ways. I personally picked up a four unit for my first property and then jumped to a 9 unit and a 20 unit. All of my deals were 500k or under for the first few years until I picked up a 19 unit in Berwyn four years into my journey for 1.1 million. 

    Don't be afraid to get started as it sounds like you have a lot going for you, but also make sure to align yourself with a great team in the market you want to invest in. 

  • Realtor · Kansas City, MO · Member since 2018 · 8 posts · 4 votes
    6y
    Originally posted by @John Warren:

    @Chris Wilkerson I wouldn't focus so much on the size of the investment with what is going on. I would personally focus more on the quality of the asset. Are you in a good neighborhood (A or B class preferably). Is the building sound mechanically? Does it cash flow well? The 750k price point is also an awkward one in a lot of ways. I personally picked up a four unit for my first property and then jumped to a 9 unit and a 20 unit. All of my deals were 500k or under for the first few years until I picked up a 19 unit in Berwyn four years into my journey for 1.1 million. 

    Don't be afraid to get started as it sounds like you have a lot going for you, but also make sure to align yourself with a great team in the market you want to invest in. 

    Thanks for the insight! The rental property calculator has been extremely helpful and I feel like I'm getting very familiar with analyzing deals while staying firm on my cash flow and CoC ROI parameters. I know RE cost is relative based on where someone lives, but I figured most people would consider 750k+ to be big anywhere in the country. My idea of getting started is very similar to how you started as well.

  • Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes
    6y

    @Chris Wilkerson you are correct that cost is relative, although 750k is just a funny spot in most markets. Here in Chicago that is just a pinch more than most 3 units would go for in A neighborhoods. In the burbs where I work, that is a bit more than most 6 units (they go for 100k per door if they are in good shape).  I prefer looking at each property and trying to see if it makes sense as an individual deal. 

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