Whats the best way to get started in real estate?

Question

Hey everyone!

So I’m brand new to the real estate market and need advice. I’m doing everything I can while working my 9-5 job to gain knowledge from bigger pockets and any other trustworthy source but I still don’t know how to get into my first deal. I have low credit and very little money to put down on a home because of past bad decisions. Any advice on where to start from this point?

Thanks in advance.

Eric James · Answer

People who try to take short cuts usually end up with even bigger problems. Take care of your credit and lack of cash. You have these problems for a reason. Take care of those first

Ben Morand · Answer

@Hayden Russell Hey Hayden! It’s awesome to hear that you’d like to escape the 9-5. I have a few points to make about your question.

First off, it is so important that you figure out where exactly you’d like to focus your efforts in real estate. So many people want to do it all, and as a beginner, that’s simply not going to work. A few ideas to look into: starting with a house hack, BRRRR investing on non-commercial properties, mobile home park investing, large multifamily property investing, self storage investing, wholesaling, flipping, becoming an agent part-time, etc. It’s so important to have “crystal clear criteria” as Brandon Turner always says. Maybe do some research on each of those areas of real estate investing and pick one (or another one if you find something else you like) and stick with it.

Next, I think it is soooo important to get educated. The BP blogs and podcasts are a great way to start and also to stay motivated. Along with these, some awesome books to read: The Book on Rental Property Investing, The Book on Investing in Real Estate With No (and Low) Money Down, The Book on Managing Rental Properties, The Book on Flipping Houses, The Book on Estimating Rehab Costs, The Book on Negotiating Real Estate, BRRRR (by David Greene), etc.

While taking direct action is a great way to learn as you go, it is so important to make sure you educate yourself first. For example, you mentioned financing a deal with Hard Money. While this method is an awesome way obtain a hefty loan with very few requirements, it is not perfect for every situation. This sort of loan is primarily used by house flippers and BRRRR investors due to the fact that it carries a very short lending term and has very high interest rates in comparison with conventional mortgages. House flippers and BRRRR investors typically utilize this type of loan because they know that they can either sell the house and pay the lender back or use a cash out refinance to do the same, while still maintaining equity in the property.

Next, while it is probably not the exact answer you are looking for, I think you should probably work on building up some cash reserves as well as a solid credit score before getting into buy & hold investing. However, there are some other types of real estate that you can use to gain experience and build capital such as wholesaling, flipping, and working as an agent.

Also, while you are building your cash reserves and credit score, definitely consider networking... a TON! Go to meetups, post more forums, connect with BP members, schedule calls, etc. The more people you know, the better!

Lastly, take some time to analyze deals. If you can pick a strategy and analyze 10 deals per day, by the time you have your finances in place to go forward on your first deal, you’ll be a deal analyzing expert!

Wow, that was a long answer to your question haha! Hope it helped! If you have any questions or just want to chat about real estate in general, feel free to shoot me a PM!

Good luck man!

Chantel Porter · Answer

@Hayden Russell first things first I would work on my credit and put up reserve money real estate will be there but you need to position yourself so you can stay there

Rami Aweti · Answer

Well said @Chantel Porter Deals will always be there. Sometimes waiting and building a foundation is the best answer. It's amazing what five years of hustling and building your credit would do!

Bill Goodland · Answer

@Hayden Russell I would recommend you listen to the bigger pockets money podcast with @Mindy Jensen and @Scott Trench to get your personal financial position in a way that you do have money and good credit. After you have a good foundation, I recommend a househack or light value add rentals as a way to get started but learn as much as you can first

John Williams · Answer

If you're planning on staying in the real estate game for the long run, I would suggest working towards making yourself a strong borrower. Lenders want to see a good credit score, stable income, and low DTI. This is an ongoing mission and is not going to happen overnight (then again, no one should invest in real estate as a way to "get rich quick").

In the meantime, you could potentially use hard money. You're still going to need a down payment in most cases. Just make sure you have a killer deal before you go this route. Hard Money can be extremely risky for a first time investor.

So where do you start at this point?

Education! "The Millionaire Real Estate Investor" by Gary Keller is a great place to start. This book, and others like it, will lay a great foundation of knowledge to kickstart your real estate investing career. You could also begin to build capital and get your feet wet by wholesaling. This is a relatively low-risk way to get involved and the barrier to entry is minimal.

I hope this perspective helps!

-John Williams

Investor from Clarksville, TN

Moises R Cosme · Answer

1. Hard money = collateral based loan, typically requires 20% down & fees that equal about 4% of the purchase price at time of acquisition.  Credit does NOT typically factor into the equation for a hard money lender, as the lending decision is based on the collateral

2. Seller financing = you make an agreement with the Seller where they agree to transfer the property into your name and create a record able note where you agree to pay them the agreed upon sale price over a specified period (this is an option that is most likely to require no money down)

What are you trying to do?  What is your objective?  Message me - it will be simpler to give you my thoughts via email.

Moises R Cosme · Answer

An an Agent.  Transact as much as possible as an Agent - the more transactions you are involved in, the more experience you will gain without risk.

David Silver · Answer

@Hayden Russell The best first step is having excellent personal finance and a solid education. This is the foundation to invest from.  Set goals that will be inspiring, yet challenging to achieve.

Dave Ramsey is a good starting point for personal finance.  Tony Robbins is a good starting point for goal setting. Robert Kiyosaki is a good starting point for investing mindset. Getting a part time job with a local investor. Anything from property repair/improvement to office help. This could get you a little exposure to the industry and a few more dollars in the investment savings account.

Hayden Russell · Answer

@Chantel Porter thank you for the solid advice! I’m chomping at the bit to get started but I definitely need to keep in mind this is a long term investment!

Whats the best way to get started in real estate?

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