Newbie to real estate investing. Best way to get started?

Question

My husband and I have been wanting to get into real estate investing for a few years now and don’t know where to start. I am a newer real estate agent and he has a w2 job. We have been able to save 20k this past year for our first deal. We can’t decide if we want to get into rentals or flips. If you were a new investor in our situation where would you begin?

Gary Nestler · Answer

Hey Alley.  My wife and I were in a similar situation over 25 years ago.  I have 31 units now.  She’s a teacher with the w2 job and I owned a delivery business that I sold in 2019.  My wife has the stable w2 job which is important to get loans.

If were you now I would find a single family home in the city if Rochester and see if you like being a landlord. People talk about the 1% rule. In Rochester I try to get 1.5 to 2% rule because the property taxes are too high compared to most of the country. Just make sure it’s something you can sell and in a decent neighborhood so get your money back if you find out it’s not for you. I think to start flipping in this sellers market would be extremely difficult right now for someone with no experience. There are people that flip houses full time in Rochester that will most likely scoop up those potential flip houses before you or I would ever see them.

Also I would consider joining a meetup here in town to find out what other investors are doing.  You be able to find someone to partner with if you really want to flip a house.

Well good luck to you.  Hope this helps.

Jason Shackleton · Answer

@Allie Foland Starting is always the hardest part. You have a 5 month old and a job. That being said a time intensive strategy like flipping may be a challenge. That leads me to think a more passive buy and hold purchase might be a good fit. However we don't want to deplete your entire savings amount to fund the deal hmmmmm.

I might consider a blend of the two above strategies. Buy a small multi family such as a duplex. Look for one that is in OK condition with poor management. You are looking for a below market deal with the ability to add value through renovations. Again a simple job that will not take too much time. Then refinance the property to get most of your investment capital back. Now you have added a rental property to your portfolio and you have cash in your bank account so you sleep well at night.

I hope this helps,

Jason

Chris Davidson · Answer

I would focus on what you want long term. Flips can be a good way to make money especially since you won't have to pay a commission out. However rentals can provide good cashflow and build wealth with more flexibility.

If it was me I would do rentals as I like the monthly cash flow. However a flip could get you in the position to buy a better rental if 20k isn't enough for the market you want to be in. Spend sometime researching both kinds of deals see which one gets you all more excited and maybe that is the way you go.

Hope that helps.

Tina Tsysh · Answer

I would say a lot of it depends on your personal goals. Are you trying to replace your husband's W-2 income and quit being a real estate agent or are you trying to build your net worth therefore you don't care about getting cash flow right this second?

If you decide to start flipping, understand that it's going to be a full-time commitment. You will need to constantly be on the look out for deals, you will be competing with cash offers, you have to find contractors and manage the renovation process.

If you decide to buy hold, understand that you most likely won't quit your job after the first year. This will require patience and it's definitely not a get rich quick way but this way of investing has been proven to make you wealthy after certain number of years.

At the end of the day, either method has its pros and cons. You have to consider what you want your lifestyle to be and expect to make sacrifices in the short run.

Matt Honeyford · Answer

@Allie Foland

It depends if you’d like to manage projects or tenants.

Marc Rice · Answer

@Allie Foland

Could you find a deal off market via cold calling and pay yourself a 6% commission and have seller pay closing costs and use your husbands W2? That would only be 14% down if it’s a 20% down loan

Allie Foland · Answer

@Marc Rice we have a four month old and bought our current home about 5 months ago so we can’t do house hacking unfortunately

Martin Grizzanti · Answer

I flip and have rentals in Rochester.  Feel free to reach out with any specific questions.

Marc Rice · Answer

@Allie Foland

Buy an owner occupied house hack 3-5% down on a 2-4 unit to start

Newbie to real estate investing. Best way to get started?

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