Brand New Investor

[Caleb Donaldson]

Hello Bigger Pockets Community,

My name is Caleb, I'm 33, and I'll be as blunt and honest as possible. I don't like to sugar coat things and I would appreciate any and all blunt and honest advice/criticism. I'm a brand new, as green as you can get, have no idea what I'm doing or where to start investor. Actually, I'm not even an investor yet. A little bit about myself, I have a full time W-2 job that pays pretty well on the blue collar side. A primary residence on a 15yr mortgage with a 3.1% int rate... a comfortable payment. I do have some personal debt that I'm working to get rid of. I'm not looking to get rich quick but I would like to start building a portfolio to eventually get out of the "9-5 rat race".

If anyone is in the Birmingham area, I would love to meet up and let me pick your brain on things. 

[Nathan Gesner]

Quote from @Caleb Donaldson:

Pay off the debt first.

Keep your W-2 (or work your way up to a better one). Increase earnings. Decrease expenses. Save up like your future depends on it. At the same time, educate yourself on how to locate and purchase investment property. At the same time, educate yourself on how to manage the property well (most investors miss this critical step). Buy property and hold onto it forever.

If you listen to YouTube gurus that tell you to borrow money from other people, max out credit cards, or that you can buy 50 houses in one year, then you get what you deserve. Slow and steady has won the race for thousands of years, and that didn't change with the advent of social media.

1. Start with BiggerPockets Ultimate Beginners Guide (free). It will familiarize you with the basic terminology and benefits. Then you can read a more in-depth book like The Book On Rental Property Investing by Brandon Turner or The Unofficial Guide to Real Estate Investing by Spencer Strauss.

2. Get your finances in order. Get rid of debt, build a budget, and save. The idea that you can build wealth without putting any money into it is a recipe for disaster and the sales pitch of gurus trying to steal your money. A wise investor will not try to get rich quick with shortcuts. If you can't keep control of your personal finances, you are highly unlikely to succeed in real estate investing. Check out my personal favorite, Set For Life by Scott Trench , or The Total Money Makeover by Dave Ramsey.

3. As you read these books, watch the BiggerPockets podcasts. This will clarify and reinforce what you are reading. You can hear real-world examples of how others have built their investment portfolio and (hopefully) learn to avoid their mistakes.

4. NETWORK!!! Get out of your comfort zone. Stop hanging out with your deadbeat buddies that spend all day drinking, talking sports, and otherwise wasting away. Go to BUILD YOUR TEAM at the top of the screen and look for local investors or meetups in your area. You can also find real estate investing groups through meetup.com, facebook, or a Google search. Birds of a feather flock together!

5. Now you need to figure out how to find deals and pay for them. Again, the BiggerPockets store has some books for this or you can learn by watching podcasts, reading blogs, and interacting on the forum. A handy search bar in the upper right makes it easy to find previous discussions, blogs, podcasts, and other resources. BiggerPockets also has a calculator you can use to analyze deals and I highly recommend you start this as soon as possible, even if you are not ready to buy. If you consistently analyze properties, recognizing a good deal will be much easier when it shows up. Find Brandon's videos on YouTube for the "four square" method of analyzing homes and practice. It doesn't take long to learn how to spot a good deal.

6. Study the market. You can learn to do this independently or get a rockstar REALTOR to lead the way. I highly recommend a well-qualified REALTOR who works with investors and knows how to help you best.

7. Jump in! Far too many get stuck in the "paralysis by analysis" stage, thinking they just don't know enough to get started. You could read 100 books and still not know enough because certain things must be learned through trial and error. You don't need to know everything to get started; you need a foundation to build on and the rest will come through experience and then refining your education.

You can build a basic understanding of investing in 3-6 months. How long it takes to be financially ready is different for everyone. Once you're ready, create a goal (e.g. "I will buy at least one single-family home, duplex, triplex, or fourplex before the end of 2019") and then do it. Real estate investing is a forgiving world; the average person can still make money even with some big mistakes.