Best property to get started with?

Question

Hey peeps,

Just had a question. And I can always expect my fellow BP members to give it to me real. I just bought a new house literally about two weeks ago, and I am wanting to break into Landlording to create passive income and more wealth. what would be the best way or strategy for me to get started. My brother-in-law has been wanting to purchase rental property and so have I for awhile and I bring most of the knowledge and numbers while he brings the capital and a little bit more free time because he works a thrid shift schedule.

Would our best entry ways be to purchase a distressed single family home for way below discount (8k-15k) and rent out for say $500/month or purchase something that already has tenants in it since we ar enew to game. I'm just trying to get a feel for what we should do since we are just getting started! Just let me know your thoughts!

ADDED note, duplexes are pretty hot commodity around here, just a few happen to be in war-zone like neighborhoods (alot of turnover)

Brandon Turner · Answer

Hey Junior Salters- I'm a big believer in two things: (well, more than two, but for this post, two things)

1.) Some things are better in some areas - so it's hard to know what your area specifically is good for.

2.) You can make money in ANY niche. You just gotta love it and own it.

If it were me - I'd buy cheap houses that need just a little bit of work, get KILLER deals on them (lots of offers, low prices), fix em up a little, rent em out, and move on.  I call it "Hybrid Investing."  Check out this article for more info on that:

What is Hybrid Real Estate Investing

Hope that helps some :)

James H. · Answer

Well, that is a little better. You are bringing some money, which is really the most important thing. Now, the fact that you are not bringing as much is offest by the other qualities you bring. Since you are bringing capital (which was not discernable when you said "he brings the capital") you have do have some skin in the game. That capital magnifies the value of the other things you bring to the table. But without the capital, those other qualities are not worth much. There are a hundred thousand people who know stuff that don't have any money and never get anything done.  Real estate is not complicated. From my experience, which is limited, what makes a buy and hold deal work is 90 to 95 percent wrapped up in how much money and time you have. The remainder is your knowledge and experience.

Junior Salters · Answer

Brian Hoyt In terms of monetary value he brings, about $15k and I bring about 5K if that's what you're referring to, but he isn't into the real estate researching like I am. I understand what you mean wholeheartedly about working with family though. Essentially he has more money saved up (mainly bc he is older), but I've spent the dollars on the marketing, websites, networking, getting proper paperwork and financials together. I mean all those previous statements you pulled just basically state how new we are which is a fact. Now if you're saying we need to do more research and gain more knowledge on exactly what we want, I see what you mean, but as for as not bringing anything to the table, I disagree. I do appreciate your input and understand where you're coming from though.

James H. · Answer

Junior,

Here are the statements that jump out at me.

"we are new to game"

" I'm just trying to get a feel for what we should do"

"we are just getting started"

"We don't have much heavy repair experience though"

"he brings the capital and a little bit more free time"

I don't see what you are bringing to the table here in terms of real dollars. No offense. I don' know if there is a nice way to say it. Plus I don't think doing business with family is a good idea.

Lets say I am wrong. What specifically do you bring to the table and how much is it worth?

Junior Salters · Answer

Brian Hoyt Thanks for your response brian, but why do you say that?

Al Williamson You're definitely right. time to get out and meet some good handyman/contractors. I do have afew more avenues I haven't worked so you should be right in that aspect!!

James H. · Answer

This sounds like a situation for you to be a great person to give free advice, but not be a partner.

Al Williamson · Answer

Junior Salters congratulations on getting started! That's the main thing - get into the corridor and you'll see all kinds of opportunities.

Take a close look at your network. Who is the handiest person you know? Who's friend's relative is a carpenter that's looking for work?

Start asking around. It's never too soon to build your team -> which will increase the opportunities you might consider -> which would allow you to buy homes with bigger issues -> which would open you up to even better deals.

Best to you. Let us know what's up!

Junior Salters · Answer

Brandon Turner Thanks for your response Brandon and you're right, I like the idea of getting rentals with lower prices and not many repairs needed. Although I think these would be harder to find due to them being wanted, I think that would be the best niche to start off with not having alot fo capital to do heavy duty repairs and not wanting t go hard money or private lending.

Raymond B. Thanks Ray! I will definitely jump in there, and grab as much info as possible. I know there is a lot to be had, but a step at a time should have me in the right place!

Ned Carey I have more time than capital at the time, but my brother in law (who's my partner has capital). We don't have much heavy repair experience though. I like your thoughts on fining property doing small renovations and picking our own tenants.

Raymond B. · Answer

Junior Salters,
If you're going to get involved with rentals, I suggest that you spend some time in this forum, Landlord & Rental Property Questions.
Here is the link: 
https://www.biggerpockets.com/forums/52-rental-property-questions-landlording-issues

At that forum, I suggest that you spend time reading the first 4 "stickies."

Raymond

Ned Carey · Answer

To many variable to give yo a good answer. So I will give you some questions.  Do you have more time or money? Do you want your investing to be more active or passive? Do you have good skills for renovating properties?

Buying fixer uppers is generally a cheaper way to get in the game. But it takes some skill and time. Buying properties with tenants in place can be more passive but what if you inherit a bad tenant. Personally I go for vacant properties, renovate to my standards and choose my tenant.

Good luck - Ned

Best property to get started with?

Most Popular Reply