New investor based out of Minneapolis

[Will Diepholz]

Hi everyone!

New investor here.  I'm based out Minneapolis, MN and work a full time job as a systems engineer.  As an avid skier and mountain biker, I'm hoping to realize my dream of owning a vacation property out West funded by capital generated through real estate investing.  Bigger pockets has already been an incredibly valuable resource in building my knowledge around real estate investing, and I look forward to executing on the strategies discussed in this forum.

High level plan - I'm forming an LLC with a partner out of Austin, TX and a partner out of Madison, WI. Looking at investing in the Austin, TX area to start as one of us is located there. Because our capital is limited we want to try and boost this via the BRRR strategy initially, and move into a more long term buy and hold rental strategy. Current focus is to learn and build our network.

There is a lot to learn and I've got the BP podcast rolling on my car stereo daily.  Can't wait to discuss real estate investing with the bright minds all over this forum. 

[Tim Swierczek]

@Will Diepholz congrats on joining the game. I'm sure you will be able to meet your goals through real estate investing. I am however concerned about your plan. You stated you are partnering in an LLC with 2 others, yet you mention your capital is limited. This is a huge red flag. The purpose of an LLC partnership is to bring different pieces of the puzzle together not to just bring 3 friends together that all want to invest in real estate. Usually, a partnership would have someone who would bring the hustle and someone who would bring the money, of course, there are other beneficial aspects partners can bring to an LLC but if you don't have a lot of cash then at least one of your partners should have it. This is especially important in an LLC.

When you form your LLC you immediately disqualify yourself from all low down payment and cheap financing with your partnership, so you must have cash. If I may be blunt, it sounds like your focus is on the wrong aspects of RE investing for a beginner. Go out and house hack first. Preferably a duplex, triplex, or fourplex. Do this on your own with no partners. Have you partners do the same. After you have each acquired 2-3 properties with this method you can come together with both knowledge and capital.

I have left a lot unsaid, but the short version of the rest is you don't need a lot of money to get started in RE investing as an individual but you do need a lot as a partnership.  Don't overthink or complicate your beginning.  Focus on finding one good deal on a cash flowing property and learn how to manage that property.