New to Biggerpockets itching to get started.

[Dustin Murray]

New to bigger pockets itching to get started but no clue what to do. I have looked at a few properties already this week and going to look at another one today. First question from the new guy, I am all over the place, I want everything, but where should I start?

Dustin

[Randall Alan]

Quote from @Dustin Murray:

New to bigger pockets itching to get started but no clue what to do. I have looked at a few properties already this week and going to look at another one today. First question from the new guy, I am all over the place, I want everything, but where should I start?

Dustin

Study, Make a plan, execute the plan.  My guess is that you probably don’t need to be looking at properties yet.  

Start with the basics:  do you have the resources to play the ‘real estate game’?

it takes about 20-25% down payment to buy a typical investment property.  Do you have that?
if not, consider house hacking - where you might buy a property you could live in, with maybe 3-5% down, then rent out the other side of the property … like a duplex or tri-  plex.

it also takes descent credit to qualify for a loan.  It also takes income for the bank to know how you are going to repay the loan - so a descent paying job is the typical path there.   They may or may not let you count rental income up front to offset your payment… it just depends on their policies.  They are going to look at all sorts of stuff… your debt to income is a big one… but most of it boils down to whether you are credit worthy to lend to.

I would recommend picking up a copy of Rich Dad poor Dad for some inspiration. It’s at every bookstore.  It will get you excited, and you’ll learn a few things along the way - even though it is a 20+ year old book if I recall right.  

Be careful and don’t fall for every program you hear about.  You can learn a ton on bigger pockets. It isn’t necessary to pay thousands of dollars to learn the basics… or even the advanced stuff… but people will gladly take your money to tell you how they would ‘do it’.  

learn how to evaluate a property on paper.  The REALLY SHORT version is this:
principal plus interest plus taxes plus property insurance expense (PITI for short) makes up the bulk of what it costs to pay for a property each month (though some of those ecpenses are paid yearly). You then have to add in repair expenses, plus capital expenses like a fund to replace big items like the roof, etc)  For us we use  $100 a month for repairs, plus $25 for capital expenses. But it depends of what size and condition a property is in.  You may also have to do repairs just to rent the unit… so those are additional start up costs you may run into.   plus, you will want to have some cash reserves just in case something breaks early on… like say the AC has to be replaced for $5,000.

Next it’s about what can you rent the property for.  Look at comparable rentals that match the size and condition and location of your prospective purchase.  You will likely see that it boils down to a certain dollars per square foot.

Subtract your expenses from the monthly rent and you get the most you will make on the unit in a month.  

Don’t forget to factor in some loss of income for turn over , when the unit is empty, and for tenants you might have to  evict because they didn’t pay (it will happen).

For us, we want to make at least $300-500/month on a rental after all those expenses… but it will vary by region, and other factors.  We have great buys where we make $800/month on a financed single family home… but if you come up with numbers in the $100/month range, or worse yet, upside down, that property isn’t for you!  Why waste your time and money when you could probably do better in the stock market.

there is a lot for you to learn, but maybe that is a start. 

 all the best!  
Randy