New to Real Estate in Birmingham, AL

[Trace Sexton]

My name is Trace and I'm new to real estate investing. I'm 26 years old and recently relocated back to the Birmingham area. Although I don't have any practical real estate investment experience, I have dabbled pretty extensively into other investment avenues such as stocks and mutual funds primarily trading in the tech sector. While my experience trading stocks falls somewhere between a hobby and an obsession, I've always found myself drawn to the thought that I'd enjoy investing in real property to an even greater degree. 

As suggested, I recently moved back to Birmingham after living elsewhere over the last ten years. In fact, from undergrad to law school to now my list of cities-lived-in includes, in order, Tuscaloosa to Cleveland to New Orleans to Amsterdam to Atlanta and then back to Birmingham. In each of these places I was and continue to be a renter. Now that I'm back in Birmingham and plan on being here for at least a few years, I'm planning on taking my first step in real estate investment by house hacking my first property. I'll delve further into this shortly, but first a little (more) about me. 

I graduated from undergrad in 2011 and law school in 2014. I was initially planning on living in Atlanta, so I took the Georgia bar this past February and am still waiting on the results to be released at the end of May. However, now that I'm considering spending some time in Birmingham, I really wish I would have taken the Alabama bar exam instead. And to make matters worse, the deadline to sign up for the Alabama bar exam this July passed a few months ago. So unfortunately I'll have to wait until February 2016 to do so.  Nevertheless, I'm still actively seeking legal-esque employment because I want to make money. But in between filling out applications and tweaking my resume, I've spent a considerable amount of time learning the basics of real estate investing. In fact, I actually stumbled across the Bigger Pocket's podcast while I was taking a break from bar prep a few months ago. I bet I listened to six consecutive episodes that day and, over the days following, sort of neglected my bar prep because I was wholly consumed by the topic of real estate investing. At some point I actually had to force the topic out of my head entirely and get back to studying for the bar. I kept telling myself "It'll still be there after the exam." Luckily this was true.

Like I said, I'm still waiting on my bar exam results in Georgia and am currently seeking legal employment. Ideally, I'd like to merge my interest in practicing law with my passion for investing but I'm completely aware that this might prove to be more difficult of a task than it's worth. For better or worse, there will be no ultimatum. I'm not going to choose a career practicing law in lieu of a career investing in real estate or vice versa. Whether that means working full time as a lawyer and owning a few units on the side or that means managing my property full time and servicing the legal needs of a select few clients on the weekends, I'm going to pursue both. At least for the foreseeable future. However, due to the inherent inability to practice law without a license, I've recently been spending most of my spare time learning about real estate, playing with the BP calculators, browsing listings, and listening to the podcasts. Most of you are at least somewhat familiar with the BP podcasts I imagine and, like me, have noticed a pattern in one of the answers to a question at the end of the shows. I don't mean Rich Dad Poor Dad. There's another common theme. That being, the advice many guests would give to new real estate investors or those interested in real estate investing is to just jump right in feet first. I'm not sure this post constitutes jumping in feet first, but--like taking your shoes off before jumping in a lake--it seems like a prudent step that should first be taken. So here I am. My shoes are off. But I digress.

Now if we could take a step back, you'll remember that I suggested an interest in house hacking. House hacking my first property is my immediate real estate goal and at this time I'm just browsing listings (mostly for duplexes, as I figure it's probably best to start with one tenant rather than two or three in the case of larger multiplexes). However, I'm not ruling them out entirely and might even welcome the idea of more units if the pros outweigh the obvious con of managing more than one unit with little to no experience doing so. In fact, yesterday I looked at both a duplex and a triplex. Unfortunately both need some serious work and, while I think I could definitely learn to fix up and renovate below-average property, again, I don't think that type of work would make for a good first investment. I'm still fairly new to the process of searching for realty, and thus tend to spend more time than I'd prefer just looking for potentially good property. This is definitely an area where I'd like to work on streamlining efficiency. Thus far I've had the most luck just looking for places online, writing the addresses down or plugging them into my phone, and then spending a few hours driving around town to look at them on my own. Still, this process seems to take a bunch of time and I guess it's just something you get better with as you develop your investment practices. Fortunately I don't have a whole lot of obligations right now and have plenty of time to do this sort of thing. 

Additionally, I keep going back to the thought of asset protection and can't determine whether it'd be worth the time and money to incorporate or form a company and purchase the asset through that corporation or company versus simple personal ownership of the property. I've taken quite a few classes on corporations and business law, so I have a pretty solid foundation on the subject, but I wouldn't dare write and file my own articles of incorporation prior to, at the very least, running it by an experienced business lawyer who specializes in that sort of thing. I know that I can transfer ownership at any time and recognize that its probably not absolutely necessary to create a corporation or company prior to purchasing the property even if I do decide to go that route rather than opting for personal ownership. But I'm also aware that tax issues can and do arise when transferring property and, as you've probably recognized, I'm a big fan of preempting issues that immediately jump out to me, a complete beginner, as reasonably foreseeable. Since most of my experience in this area is theoretical in, I'd really appreciate it if someone could address the practical aspects of company/corporate ownership vs. personal ownership even if just done briefly and not tailored specifically to Alabama law. I think a point in the right direction is all I need for now in regards to this issue.

Lastly, at least for this ridiculous, much-longer-than-anticipated-introduction, I could use some pointers in regards to initial financing. I've read the articles on BP as well as some articles on other (albeit lesser quality) websites and blogs that focus on real estate investment, but I'm still pretty lost when it comes to finance. I've taken a few courses in personal and corporate finance, I've read plenty of books on the subject, but I don't have a single bit of practical experience in getting financing. I know loan types vary in down payment requirements, interest rates, term, eligibility criteria, etc. and that any given loan can be subject to rules and regulations that vary wildly from every other loan. This presents a problem for me, because I have no idea where to actually start for my particular purpose. My instincts suggest that I should just go to a bank and sit down with a bank representative. But part of me thinks that that can't be the right way to secure financing. If my instincts are wrong, I'd appreciate a heads up and what steps I should actually follow. And if I'm right, I'd appreciate any information on what to expect, what types of things I should bring with me, and any other information that you find or found to be useful in getting that first property financed. 

I suppose that's about it. I'm sure this post isn't quite as brief as the average introduction post but I like talking about myself and I like talking about real estate. So to me its no surprise that I have a lot to say when a topic covers both. I recognize the flaws in verbosity and understand that its a quality that tends scare or bore people away. Hopefully that's not the case here. Either way, I definitely have enjoyed my time spent using BP's resources and figured it was about time I joined the discussion despite the fact that my experience pales in comparison to most others in this forum. However, even with my limited experience and knowledge I'll be keeping an eye out for opportunities in which I may be able to contribute some level of value to BP and its members. I've got a feeling that this marks the spot as the beginning of some big, big things.