Starting out, looking to connect; Mentor?

Question

First Post! My name is Garrett Haynes and I live in North West Arkansas. New to real estate investing but excited to get started. Most valuable things/lessons/skills etc. I’ve acquired over the years have been a result of being “thrown to the wolves”, which isn’t a bad thing in my opinion.

However, with real estate and investing, I’d like to be more prepared and have been doing a ton of research. I have one question (as of now) and one request.

Question: If you are a well seasoned and successful investor, what strategy would you use as your entry to investing if you had to start all over, knowing what you know now. Not asking so much as direction for my journey, but would be interesting to see different responses.

Request: Are there any NWA investors that would be open to connecting, whether online or in person. More specifically, some one who has experience and/or currently flipping properties. This is what strategy I’m think about starting with due to my back ground, but not set in stone.

Thanks and Merry Christmas!

Alecia Loveless · Answer

@Garrett Haynes Hi Garrett, Northern New Hampshire here. I kind of ultimate house hacked for about 25 years owning 2 bed and breakfasts and living amongst the guests. When I got ready to sell the second one four years ago I snapped up a rare duplex in my town and moved into one of the sides to be able to empty my stuff out of the B&B to further ready it for sale. Now I rent the other side and it pays my bills. So I’m still house hacking.

For people starting out I recommend buying 1-4 unit buildings with owner occupied low down payment loans of 3.5-5-10% down payment as they can afford and hacking the other rooms or units to help pay costs and build up their down payment for the next building in 12-18 months.

This assumes that you are flexible and don’t mind moving a lot but as you move into new buildings you can keep using low down payment loans and house hacking and rapidly build up your portfolio of buildings.

This in no way means you also couldn’t do flips on the side simultaneously if you wanted to as the actual management of a few buildings shouldn’t take up too much time each month. Likely not more than a few hours total.

Jake Baker · Answer

Hi @Garrett Haynes

The best thing you can do is get your personal finances in order and start earning and saving as much money as you can.

Next, I would find a house hack. There is good financing right now for primary residence on 2-4 units. Buy a triplex or quad and rent out the other units to help with the mortgages. House Hacking is the best way to jump into real estate.

Repeat this every 2-3 years. Do this 4 times and you will be set for life. You can always go into wholesaling, flipping, or whatever the next shiney object is, but House Hacking will always build wealth.

Becca F. · Answer

Hi Garrett! Welcome to the BP! What type of RE investing are you doing? Single family, 2 to 4 units, buying move in ready, BRRRR strategy, flipping, etc? Are you looking in Class A, B, or C areas? Do you plan to self-manage or use a property manager? Are you buying off the MLS or off market?

I invest in the San Francisco Bay Area and Indianapolis metro area. I don't know anything about the Arkansas market but I think some of my suggestions hopefully will be of help. I'm going to post some of this and other insights after the New Year in a general post.

*If you're investing locally it'll be easier since you can drive to the neighborhood and look at properties if you're using a real estate agent. I did Google map searches to see where my prospective properties were in Indianapolis - I ruled out properties near bad locations (near railroad tracks, busy streets, although this doesn't bother some investors).

*I got local Indy investors and property management companies' feedback: what do you think of this neighborhood, property, the kind of work that needs to be done on it? Rental comps? Would this home work as mid-term rental or short-term rental to generate more cash flow with this higher interest rates (I've only done long-term rentals). I met two of the local investors on the BP forum.

*If you're using a realtor, are they an investor themselves?

*Interview at least 3 contractors. Get line item bids. I paid my local contractor for a major renovation here, after I did a walk through and paid as each task got done. He always asked if I was happy as each job got done and if there were any problems. Don't ever pay any large deposits or 50% down. This has been more difficult with Indy since I'm 2000 miles away.

*If you're doing a BRRRR or flip, get really familiar with how much things cost: roof, HVAC, water heater, siding replacement, foundation issues, interior and exterior paint ($ per sq/ft in your area), how much little things add up (faucet and light fixtures) etc.

*The offer price needs to buy low enough to BRRRR or flip and the ARV needs to be high enough. I walked away and moved on. I've learned that I don't have the risk tolerance to flip, but some people do really well with flipping.

*Whatever your estimated renovation costs are, add a contingency. Some people add an extra 10% or 15%.

*Get a full inspection and sewer line scope. On a newer house you maybe able to get away with a 4 or 5 Point Inspection. It's worth the extra $150 (in Indy) for the sewer line scope, definitely on older homes. If you have to replace a sewer line it's $12,000 to $19,000 (quotes I got in indy), sometimes it can be hydrojetted for much less.

***I knew nothing about construction 18 months ago until I had walked my own renovation. I learned more from that contractor and electrician than months of watching RE gurus videos all over social media trying to sell their programs - very cringey but that's a whole other topic. If you can tag along with some local investors or talk to local contractors to see their projects, that would be helpful.***

I'll stop here. If you have any questions feel free to DM me :)

Merry Christmas and here's to a successful New Year in investing!

Becca F. · Answer

I agree on the house hack strategy if you don't have a primary residence already. Buy a 2 to 4 unit with and live in one unit - tenants are helping you pay the mortgage. The only negative is living next door to your tenants (some people are fine with that and with others, it would drive them crazy).

If you already have a primary home, you could rent that property out if the numbers work for you with renting it out and buy another property with 5 to 10% down (conventional loan) as a primary (as opposed to 20 to 25% down needed on investment property). The only downside is moving frequently can be a pain if there are other factors (spouse/live in partner, kids attending school in local district, etc). Need to have plenty in reserves with vacancies, capital expenses, repairs etc so getting finances in order is crucial first step as Jake mentioned with the personal finance part.

Ryan Blackstone · Answer

@Garrett Haynes I am a seasoned investor and have hit my FIRE goal, and I have a new FIRE goal that I am working to achieve. My biggest advice is learn fast and do whatever you can to learn/take action. My biggest strategy advice is to actually not focus on one strategy. The focus should be to find people with problems and finding solutions that meet their needs and meets a strategy that helps you make money. For the longest time I wouldn't do any flips because I didn't need any capital because I was making good money through real estate sales. I passed on a lot of deals that didn't pencil as a long term rental. If you are looking for a local mentor, I would come to one of our meetups in NWA to meet some of the great seasoned investors here.

Cameron Ward · Answer

Sure no problem! We can follow each other and I'll be able to provide you with more information in a bit.

Matthew Raby · Answer

Not meaning to hijack the thread. But Cameron, I live in Florida. And I am looking for a mentor. Can you DM the information?

Cameron Ward · Answer

Hey Garrett, if you're looking for a mentor who can guide you on your journey I can connect you with someone who does that for a living and he's quite outstanding at it. Let me know if you're interested.

Starting out, looking to connect; Mentor?

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