Analysis Paralysis Newbie Introduction

[Mike Zoellner]

Hi BP friends!

I'm new to the community, but have been "stalking" it for some time through articles, YouTube, etc. A little about me; I live in the Salt Lake City, Utah area and I'm really excited about beginning my journey (thinking small multifamily) and would love to introduce myself and see if there are any suggestions for those of you in the area. The wife and I both work full-time and I'm convinced passive income from real estate is the only way I'll ever retire so I'm definitely "bought in" to the concept of buying and holding rentals. To that end, we decided to payoff our mortgage of our home last year (yahoo - mortgage free as of March!) simply because the wife didn't want two mortgages (happy wife = happy life) and to do it, we had to throw some of the cash we were saving for an investment property at the principal balance. Long story short, we're now mortgage free but a little short on cash, and I feel like the clock is ticking. The good news is that we have a bunch of equity in our home now (~$400k) which i'm debating pulling out to purchase a duplex/triplex with, but I'm struggling with how to do that (insert LLC questions, financing questions, rates, cashflow, etc). So, at the end of the day, I'm super overwhelmed with what next steps to take. I know I need to get an agent to find a place, talk to a bank/banks on financing options, decide if I'll get a property management company (then vet them), and so on, but struggling with the best way to do it all. I'm thinking renting my house for the cashflow and using that to grow it all faster, but struggling on if that even makes sense. Anyway, a bit of a ramble, if nothing else I just wanted to see if I was alone in my struggles, say hi to the group and see if there are any tips for a newbie struggling with analysis paralysis. :)

Thanks! 

-Mike

[Account Closed]

Mike,

Your story sound similar to mine. I was an engineer with 3 kids and I used a HELOC from my home as a down payment for a rental, fixed it, learned how to landlord, rinsed repeated. I worked on my rentals after work and on weekends then just waited for the process to evolve over 20 years. This allowed me to quit my job at 45 and have 13 paid off homes in the Salt Lake Valley and now I just kindof goof off :-), I'm 54 now. You are on the right track by being wary of debt and being conservative. If you want to meet I can give you some of my tricks and tips. The big thing for you is to start right and then hang in there when the going gets rough (which it will!).

Real estate investment is  stinky, dangerous, frustrating and a scary thing to do.  Its not glamorous, you are going to have to learn to talk to renters and understand a different socio-economic world than your own.   And guess what, contrary to popular belief there is not a "team" that is going to do this for you. That BS. You are alone dude!  You have to learn to do math correctly, read people correctly and fix your homes on your own most of the time.  

Also, (even though I'm a realtor, I got my license just for kicks an giggles), and with apologies to my realtors friends, realtors are almost 100% useless in helping you be a real estate investor. In fact, most of them will guide you to ruin with their ignorance to purchase a home that is wrong for you. They don't understand what you are doing and don't know how to help you. They don't think well financially and 80% of them are broke and the good ones are completely engrossed in customer relationships and networking most of which is not that useful to you as an owner of rental homes. In 20 years as an investor in Utah I have only found one realtor that even understood what owning rental property is all about. No realtor has ever found me a home that was right for a buy and hold property. I found them all myself on the MLS, HUD repossession, through wholesalers etc.

To find a cash flow home you are going to have to invest in the bad part of town and landlord some pretty rough people for some years until you figure it out.  I would be happy to sit down and give my tricks and tips and even evaluate a deal (I help people all the time, for FREE, just because its fun for me to talk about real estate and I always learns something).  I'm located in Sandy.

And be careful of multifamily 4 plexes.  The renters move out more frequently, you are going to have more tenant conflict as well as tenants that are poorer and less able to pay rent on time and the 4 plexes don't appreciate as well as single family homes.  Save multifamily until you get some practice. Its probably best for you to get a single family home close to you in your county that cash flows.

Regards,

Darren