Newbie from Gadsden, AL

[Chad Gray]

Hey guys, my name is Chad Gray. I'm from Gadsden, Alabama (RTR!). My wife and I are new to investing in general and new to real estate specifically! We have purchased 2 homes for personal residence and are currently living in the second. We would like to begin investing in our future, and working toward financial freedom. We have come to see real estate as the best return on our long-term investment. We are interested in learning about fix-and-flips to help generate capital for buy-and-hold rentals. I envision having a company with two branches (flips & rentals).

The only debt we currently have is our home, but are still living paycheck-to-paycheck. I manage the family business owned by my father-in-law. It's a great job which affords me the flexibility I need for my family, it's just not growing. 

We have a little equity built up in this home which I believe could go into a HELOC for an initial investment. Any advice on what would be a good start is greatly appreciated.

I stumbled upon BP via a series of connected podcasts (long, cool story for later). I've learned a ton already (way more to come!) and don't want to get stuck in analysis paralysis!

Thanks so much in advance!

Chad Gray & Crew (wife & 3 awesome kiddos)

[Clayton Mobley]

Hey @Chad Gray, welcome to BP! I actually laughed out loud at your analysis paralysis comment, that really is such a major problem for investors of all experience levels. But better too much research than none!

Since you don't currently have the capital on hand to pull the trigger on anything anyway, I would suggest narrowing your focus in your research to a few key questions. Try to narrow down specifically what investment strategies appeal to you. You mentioned both flipping and buy-and hold, which will require different things of you. Do you want to flip props yourself or invest with an outfit that handles the buying, refurbing, marketing themselves? For your buy-and-hold investments, do you want to be a landlord or do you want to go the turnkey route (fair warning, I'll be a little biased on that one since I'm the CEO of a turnkey outfit). 

Whether you self-manage or invest in turnkey, what is your risk tolerance with regard to the type of property you invest in? Are you comfortable taking on greater risk by investing in lower-tier properties that may cash flow very well but provide no appreciation and potentially bring a lot of headache? Or do you want the blue chip dividend stock properties that may provide some long term appreciation, but primarily provide solid passive income while preserving your capital over time? Since you don't have a lot of capital on hand, you may be tempted to buy into distressed properties because it will allow you to 'get in the game' faster and at a lower price. Be sure to examine all the potential risks and benefits of this strategy before you pull the trigger. If you have a low risk tolerance or don't want to deal with housing authorities and tenancy issues, jumping into those investments can be a nightmare.

Since you mentioned someday starting a business, ask yourself if the day-to-day grind of managing properties - from buying, to rehabbing, marketing, tenant selection, rent collection, maintenance, or selling - appeals to you or if you simply like the idea of having multiple types of cash flow (lump sum in a flip as well as long term monthly rental income). If you like the idea of being super hands on, make sure that flies with the wife and kids ;) But in all seriousness, one of the major roadblocks new investors hit is that their enthusiasm takes them out of their reality and they end up getting stuck in investments that either don't return the way they want because they didn't do enough due diligence or they are too much of a headache and negatively impact the work/life balance.

Once you have a handle on what options are available to you and you and the wife have decided what will work for you right now, the amount of information you need to absorb will be greatly diminished, as will your chances of being paralyzed by info overload ;) And remember, there's no reason you can't begin your investing journey with one strategy and then change tacks later once you have the financial flexibility to stretch your wings a bit. We have clients that started out with turnkey because it took the guesswork out and provided reliable income with little effort and then started building their own portfolios of rentals later once they gained knowledge and experience. Their investments with us continue to provide solid value which allows them the freedom to see if more involved versions of RE investment will work for them as well.

Anyway, sorry for the monster post, I just always like to welcome newbies and I think it helps to have a bit of a research checklist to provide some semblance of order to the informational whirlwind. If you have any questions about RE or turnkey in particular, or about what we do at Spartan Invest, feel free to shoot me a message any time.

All the best in your new adventure and Roll Tide!

Clayton