New investors ready,but need guidance!

[Nicole Parry]

My husband and I are ready to invest, researched everything to death, but still need guidance from someone with experience who doesn’t want us to ‘join a program’ or ‘pay for a course.’  We are looking for alternatives to the ‘normal’ ways of investing. 
Is that possible and if so, where do we find someone like this? 

[Randall Alan]

@Nicole

Real estate is a great alternative to paper asset investing... usually.  However, when the Fed decides to try and slow down the economy with massive interest rate hikes the situation changes.  Right now, my advice would be to put your real estate plans on simmer.  My wife and I have a saying - which is "Do what the market tells you to do."   From at least 2016 to the beginning of 2022 Real Estate was 'the bomb!"  Your cash on cash return on rentals was at least 24%, if not more (ie. Invest 25,000, net $6,000 in yearly rent on a 2/1 rental).  We also sold properties for 3 times what we paid for them 3 years earlier multiple times!  Phenomenal Returns!

 Since the Fed stepped to the plate to combat out of control inflation though, that situation has really changed.  Most numbers I run today putting 25% down put most rentals upside down (losing money) on a monthly basis at the (ridiculous) rates sellers think their properties are still worth.  Prices have not dropped yet, because sellers haven't gotten the message yet.  They will as their properties sit idle on the market and their only real option is to either reduce their price or to sell their property later.  

As to programs and courses - My wife and I got a lot of good information from a group called "Fortune Builders".  They are one of the outfits that travels around and does seminars at hotels.  You have to realize how these types of companies work though.  It's a bit like a funnel.  First, a free seminar which is there to whet your appetite, then the big paid seminar, which is where they go in for the 'big pitch' which is 'Join our 'mentor group' by paying thousands of dollars and you'll really succeed."  My personal take was, and is - there is a lot of great information provided by these companies, but taking that last step (the paying thousands of dollars part) isn't necessary.  I'm sure that's not what they would want you to hear - but I would tell you can get just as much good education off of this forum, as you can spending the big bucks at the end of those types of seminars.  Here's the caveat though - We don't regret going to the seminar at all.  It was a 3 day seminar for about $200 for 2 seats- and we definitely felt like we learned a lot - a really good exposure to all sides of the real estate investing market.  You just have to be able to resist the constant barrage of sales pitches for the $xx,xxx "join our mentor group" and take the other knowledge they are offering and run.  

My 2 cents at the end of the day would be to ask questions in the forum - and more importantly just search these forums for answers to specific questions.  Every question you could probably ever think to ask has already been asked here, and the answer has already been provided.  That's not to say don't ask again - but just saying, "there is gold in them their archives!"

Back to today though - I can't recommend someone try to jump into real estate right now. Prices are high, money is expensive. It's just the wrong time. There just really isn't a great play like there has been in the past few years. I'm sure there are pockets where it can be pulled off... but broadly speaking - it's just the wrong time if you are looking to borrow money, or find a cheap property. Again, I say - "Do what the markets tell you to do". Right now you can make more money in a US Treasury IBond than you probably can buying a rental property. (Just under a 7% ROI) with zero risk. High interest savings accounts are paying over 4% and will continue to go up as the Fed raises their interest rates. The Fed will not lower rates until inflation comes down, and when that does happen, housing prices should have come back down some - or at least enough - that when money gets cheap again investors will have something to buy in real estate that will turn a descent profit.

I would consider this whole forum your mentor.  In addition - look around your local area for your local real estate investor group.  Every big city has one or more.  Circulating in those groups you will learn through osmosis.

The problem with anyone offering a specific direction is that many are predisposed to that direction.  Syndicators think syndication is awesome and the way to go.  Those who flip, preach flipping; those that are long term or short term rental people go those ways.  Property managers will preach property management, and self managing landlords will say that property management is over-rated.  So I would say to figure out the benefits and disadvantages of each avenue and at the end of the day, make your own decisions.  But with all of us interested in real estate -  most I think would agree that trying to buy in today's market is a challenge, at best.  

For now, I'm keeping my eyes and ears open, but not seeing any great buying opportunities in the near future in real estate.  It's a cycle though, so it will come back around.  Till then - circulate, ask questions, learn, and watch for the occasional diamonds in the rough - that are out there - but everyone is looking for.

Ask away - and All the best!

Randy

@Nicole Parryundefined