Brand new to real estate investing.
Member since 2023 · 19 posts · 3 votes
Brand new to real estate investing.
Most Popular Reply
Entrepreneur & Real Estate Investor · ID · Member since 2016 · 82 posts · 84 votes
3yPro-Tip: Don't listen to realtors or brokers. They have an agenda.
You don't need to buy properties on the MLS. The key to your journey in real estate will be NETWORKING and RELATIONSHIPS with OTHER INVESTORS, not service providers. They have their place and utility.
You don't need to get your first deal off the MLS. There are a lot of places to find great deals, off market, preforeclosure, probate, estate attorneys, wholesalers, auctions, etc.
Rule #1 Don't pay retail.
You need to pick your niche and market and then focus on that, don't get shiny object syndrome and start networking to make connections and find deals.
I'm in Boise and our market went to clown town. You can't get anything less than 400k here. And I had a probate deal brought to me through a connection that I put an offer in at 275k. I'll be able to plow 25k to bring it up to date and then list it at 475k.
Those don't come from agents, they come from relationships.
So I want to re-enforce this point, because it's not told to new investors. Relationships are the key to doing real estate.
You can be in business FOR yourself, but don't be in business BY yourself.
10 Replies
- Real Estate Broker · Seattle, WA · Member since 2017 · 139 posts · 82 votes3y
Welcome and good luck @William Fields. You'll figure out the best way to start in your market (or perhaps a nearby one). Prices are all relative. For a 2-3 bedroom starter house like you mentioned in my area, you'd pay more like 550-600k.
- Member since 2023 · 19 posts · 3 votes3y
Quote from @Jared Boundy:
Welcome and good luck @William Fields. You'll figure out the best way to start in your market (or perhaps a nearby one). Prices are all relative. For a 2-3 bedroom starter house like you mentioned in my area, you'd pay more like 550-600k.
In that kind of market, what exactly would be your initial investment strategy. Buy and hold, wholesale, etc…
- Real Estate Broker · Seattle, WA · Member since 2017 · 139 posts · 82 votes3y
It depends on the person, but I think the best opportunities are in house hacking (that's how I got started, with a 6-bedroom house) or value add. There are increasing opportunities to add additional units to single family homes around here (as the laws are changing to allow more development). Some of us have delved into the short-term market, which can work out well with the right properties, but that seems to not be as easy as it once was. Personally, I'm looking at building additional units to rent on my existing properties.
- Investor · Hopedale, MA · Member since 2021 · 321 posts · 212 votes3y
it's all relative. a 3/1 in my market (central MA) would never ever ever be that cheap hahah. but don't get stuck on price. look at if the price WORKS with the current rates and projected rents. if it cashflows, you plan to hold it long term, and you have the required cash to get into the deal, then who cares about the price. multifamily is usually going to be more stable (especially 3+ units), because if one unit is vacant, you can prob still pay all your expenses. keep in mind the option of going out of state, too. not sure you'll find many hot investing areas cheaper than yours, but going OOS opens up a lot more opportunities!
- Investor · CO · Member since 2016 · 757 posts · 1k+ votes3y
$180k... I can't even find decent land at that price in my area.
Welcome. I'd start talking to a lender and see what you can afford and house hack a duplex. REI is a long term game, take into account YOY rent and appreciation.
- Realtor · Michigan and Alabama · Member since 2023 · 1 post · 1 vote3y
Quote from @William Fields:
Hey my name is William out of Washington county Alabama. I’m looking into getting into real estate. I like the thought of single family homes,but in todays market I feel like I wanna go multi-family dwellings. Prices in my surrounding areas are relatively high. I was looking on the mls. 180K for a 3 bed 1 bath house.1050 sqft. It’s insane.
Hello there,
I am a Realtor from Michigan, recently licensed in Alabama. I hear you on the pricing, as I often look for deals myself. I have done a few, (feel free to check out my profile) but I suggest looking for off market deals in the area you want to invest. Where i'm from in the north, folks do not just let properties sit, but here in the south, abandoned properties seem to be abundant. I went out driving Tuesday for about 3 hours and filled up 3 pages in my notebook of abandoned property addresses. Get creative and think out of the box. Good luck to you :o)
- 3yMichael SmytheBusiness MemberReal Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes
Beginning investors need to STOP believing all the fluff about rental investing, especially with the overheated real estate market trending to historic norms. Many believe unrealistic assumptions and often apply those assumptions to the wrong property classes.
In our OPINION (always verify your area for yourself!):
Class A Properties:
Cashflow vs Appreciation: Typically, 3-5 years for positive cashflow, but you get highest relative rent & value appreciation.
Vacancy Est: Historically 10%, 5% the more recent norm.
Tenants: Majority will have FICO scores of 680+.Class B Properties:
Cashflow vs Appreciation: Typically, decent amount of relative rent & value appreciation.
Vacancy Est: Historically 10%, 5% should be applied only if proper research done to support.
Tenants: Majority will have FICO scores of 620+, some blemishes, but should have no evictions in last 5 yearsClass C Properties:
Cashflow vs Appreciation: Typically, high cashflow and at the lower end of relative rent & value appreciation. Can try to reposition to Class B, but neighborhood may impede these efforts.
Vacancy Est: Historically 10%, but 15-20% should often be used to also cover nonpayment & evictions.
Tenants: majority will have FICO scores of 560-600, many blemishes, but should have no evictions in last 2 years. Verifying previous 2-years of rental history very important!
Class D Properties:
Cashflow vs Appreciation: Typically, all cashflow with zero or negative relative rent & value appreciation
Vacancy Est: 20%+ should be used to cover nonpayment, evictions & damages.
Tenants: majority will have FICO scores under 560, little to no good tradelines, lots of collections & chargeoffs, recent evictions.Make sure you understand the Class of properties you are looking at and the corresponding results to expect.
Logical Property Management4.9453 Reviews - Member since 2023 · 19 posts · 3 votes3yThis is very informative I definitely appreciate the layout
Quote from @Michael Smythe:
Beginning investors need to STOP believing all the fluff about rental investing, especially with the overheated real estate market trending to historic norms. Many believe unrealistic assumptions and often apply those assumptions to the wrong property classes.
In our OPINION (always verify your area for yourself!):
Class A Properties:
Cashflow vs Appreciation: Typically, 3-5 years for positive cashflow, but you get highest relative rent & value appreciation.
Vacancy Est: Historically 10%, 5% the more recent norm.
Tenants: Majority will have FICO scores of 680+.Class B Properties:
Cashflow vs Appreciation: Typically, decent amount of relative rent & value appreciation.
Vacancy Est: Historically 10%, 5% should be applied only if proper research done to support.
Tenants: Majority will have FICO scores of 620+, some blemishes, but should have no evictions in last 5 yearsClass C Properties:
Cashflow vs Appreciation: Typically, high cashflow and at the lower end of relative rent & value appreciation. Can try to reposition to Class B, but neighborhood may impede these efforts.
Vacancy Est: Historically 10%, but 15-20% should often be used to also cover nonpayment & evictions.
Tenants: majority will have FICO scores of 560-600, many blemishes, but should have no evictions in last 2 years. Verifying previous 2-years of rental history very important!
Class D Properties:
Cashflow vs Appreciation: Typically, all cashflow with zero or negative relative rent & value appreciation
Vacancy Est: 20%+ should be used to cover nonpayment, evictions & damages.
Tenants: majority will have FICO scores under 560, little to no good tradelines, lots of collections & chargeoffs, recent evictions.Make sure you understand the Class of properties you are looking at and the corresponding results to expect.
- Entrepreneur & Real Estate Investor · ID · Member since 2016 · 82 posts · 84 votes3y
Pro-Tip: Don't listen to realtors or brokers. They have an agenda.
You don't need to buy properties on the MLS. The key to your journey in real estate will be NETWORKING and RELATIONSHIPS with OTHER INVESTORS, not service providers. They have their place and utility.
You don't need to get your first deal off the MLS. There are a lot of places to find great deals, off market, preforeclosure, probate, estate attorneys, wholesalers, auctions, etc.
Rule #1 Don't pay retail.
You need to pick your niche and market and then focus on that, don't get shiny object syndrome and start networking to make connections and find deals.
I'm in Boise and our market went to clown town. You can't get anything less than 400k here. And I had a probate deal brought to me through a connection that I put an offer in at 275k. I'll be able to plow 25k to bring it up to date and then list it at 475k.
Those don't come from agents, they come from relationships.
So I want to re-enforce this point, because it's not told to new investors. Relationships are the key to doing real estate.
You can be in business FOR yourself, but don't be in business BY yourself. - 3yTylere WeaverPro MemberRental Property Investor · upstate new york · Member since 2023 · 54 posts · 10 votes
quick note from my own investing the fewer you have the more of a pain they are. As you accumulate more systems get out into place it becomes easier. Invest wisely and have multiple exit strategies. Bo has their calculators that are great to help run numbers and give you a close idea.
good luck let us know what you end up doing!
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