What is to best way to start my real estate journey?

Question

Hello everyone, I would like to know what would you start investing, if you were me.

I only have around 35k in savings ( I moved to the US 4 years ago and I just put 33k to build my Spa).

I checked with the bank and I am only qualified to borrow 150k. A lot of my Clients pay for services and tip  in cash so the number in my income tax is not high. The house in California is at least 400k.

I make around 5k a month, after expense, I can save 4k a month.

I am working with Fund & Grow. I have $16k in business credit card with 0% interest in 10 months and 18 months.  But I am sure in the next two weeks, the amount will increase. I will keep updating the number. The money in the credit card can be sent by check to buy property. After 3 months, Fund and Grow will do another round to increase the number.

I am planning to buy turn key property out of state, gain more experience, increase my network and wait till the next recession to buy property in California. Please give me advice. Thank you for your time.

Craig Bellot · Answer

As an investor, you need to know your numbers, cold. Whether you hire out everything or are more involved, plan from the beginning to be able to step away from the business if you need to.

That requires careful analysis of the property BEFORE you buy, to determine if it meets your financial goals AFTER including all expenses.

If any turn key company sends you a cashflow analysis without at least TIMMUR:

1. Taxes,

2. Insurance,

3. Management,

4. Maintenance,

5. Utilities,

5. Repairs

Then run for the hills.

In Bridgeport, Connecticut and many North East regions we also include Snow Removal and Pest control.

Explore all markets but do your research, as to where net migration and jobs are heading.

Michael Clayborne · Answer

Hello @Uyen Thi Truc Tran!

First, Welcome to BP!

I wanted to second what @Michael Lewis Lee said, education is key! Make sure to start reading REI books and listening to the podcast, as well as searching the BP fourums. There is so much knowledge here.

Your strategy so far sounds good, and a lot of investors in your position are looking to the midwest and the south for cash flowing assets. Here in Oklahoma City 1% rentals around the 70k range are availible.

I am not a turnkey provider, but there are some active providers here on Bigger Pockets if you would like have a search. One that I see pretty active is Table Investments.

I hope this helps!

Dean Letfus · Answer

Given your relatively strong financial position and youth buy out of state in markets that good decent appreciation. American investors are quite obsessed with cash flow but you will get a lot wealthier if you pick markets that give cashflow, even nominally, but have strong appreciation. For example, you can't "make" 20K a year in rent on a house rented for $1200 a month but you can easily make 20K every year on a rental investment in a city with good fundamentals and housing demand.

Even in my "cashflow" market of Memphis some of my homes have doubled in value in 9 years.  That's where the real wealth is created!

Michael Lewis Lee · Answer

Hello  Uyen Thi Truc!  There are many things to talk about here but I would focus on education first.  Do not try to do business with a bank starting out.  Those employees are trained to only do things you do not want to do, including the time it takes to close and the "sweat equity" they require.  The more units at each address is better.  There is no guarantee on the future, even prices going down.  One thing that is for sure is that many people are moving out of California.  Because of that, I would focus on the motivated sellers.  Be cautious of anything you hear on the Internet.  There are many crooks on there trying to sell you something you do not need.  It is not policed very well.  One way to get started is just by looking at properties for sale without buying and just learning. If you are disciplined, Debt is very competitive nowadays.  Do not be afraid of debt as long as you are making positive cash flow after the debt payment.  Be careful with HOA's.  Good luck!

James Wise · Answer

Welcome aboard. Best way to get going is to buy yourself some 2-4 unit multi's. Financing terms are great & it'll get your feet wet without too much risk.

Michael P. · Answer

That is cool, congrats on your spa.  Maybe you research also commercial real estate on top of residential. Or mixed.

Alyssa Dyer · Answer

@Uyen Thi Truc Tran Great work so far! Excited to hear how your journey develops.

I agree with @Michael Clayborn that so many out of state investors (most of them from CA!) add OKC to their portfolios for price point, insulation to recession, tax rates at around 1% and steady cash flow.

A C class rental is 60-80k and you can consistently find 8% cap rates! It's a solid market to evaluate.

Uyen Thi Truc Tran · Answer

Hello Michael, thank you for your honest advice.

I have been listening to podcasts two hours a day and read three books so far. And I will keep doing that till the rest of my life.

You said “the more units at each address is better”. Do you mean a duplex or triplexes?

Yes, I will focus on motivated sellers.

I really appreciate your time. Have a good day.

What is to best way to start my real estate journey?

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