I've inherited money... what's the best way to start!?

Question

Hello Bigger Pockets!

I have zero experience in buying real estate and am looking to one day step out of my 9-5 and gain financial freedom through real estate. I am relatively new to the site and have been listening to the podcast/reading books for months now to learn as much as possible. I've recently inherited a very healthy amount of money and I fully intend to use it to jump start my real estate investing career.

I am very eager to get started as I feel I've learned a lot, but am ready to learn even more by jumping in and learning by doing. Over the last month or so, I have connected with three agents (two of which are property managers), two wholesalers, three lenders and two contractors. I've been trying to gain connections and build relationships as much as possible. I am also looking to possibly work with a mentor as I believe that could be very beneficial.

Understanding that there are many strategies to build wealth, I am very open to different strategies and/or combining strategies. I am open to fix and flips, turnkey rentals and very intrigued by the BRRRR method (I'm in the middle of reading David Greene's book on the BRRRR method).

I am looking for any advice, tips or suggestions on strategies to use moving forward. What's the best way to start? What would you do if you inherited six figures and had that type of a head start as a newbie? Thanks in advance!

Colton Fairchild · Answer

1. I wouldn't tell people on BP you inherited 6 figures and are a newbie. You will get all kinds of messages on why you should invest in their deals. Just be cautious...

2. Try and determine what strategy makes the most sense for your goals. Instead of wanting to try them all, choose 1 strategy and focus on executing.

Mary Browder · Answer

My boss Scott raises some wonderful points. I'd like to say I agreee with them, but here's what I'd sprinkle on top: 1. Educate, educate, and self-educate some more. Crack a good old fashioned book called The Contrarion's Playbook for some simple breakdowns of time-honored REI strategies. It's a GREAT high-level overview, and may actually be a reminder of some stuff you've learned already. Although I'm so nuts I got a Rhetoric degree, the thing I love about this book is you hardly need an 8th grade education to understand its language and points. With complex ideas, I hate when people muddy up the basics with flowery words. And I'm a legal writer. Unnecessary words pay my bills. Or they would if I worked anywhere else. Fortunately, my boss is a smart dude who hires smart people and trusts our expertise. For that reason, he digs my plain English explanations of legal concepts, because it easier for investors to understand them. Asset protection can be heady stuff that even experienced REIs swerve because it's full of Legalese. And sure, I could easily make it headier if I felt like it, but since it's too heady to begin with? It's better to break it down, Barney-style if necessary. Simple language makes tough concepts easy to grasp, while Legalese makes easy concepts HARD. The number one reason folks fail to protect assets or take other legal precautions is because they just don't get why they need to. Simplifying language around law, REI, and other tough stuff makes the business of learning easier. When you aren't decoding word-by-word, you'd be surprised how much strategy you can learn in a few hours. This book is also one of my faves because there are many ways to get it for free: online, by borrowing from the library or a friend, or simply sacrifcing under $10 for your own electronic or print copy. Heck, you could get both for that price--one for commuting, one for reading at home. Even if it's the only book you ever read, fine. Maybe articles and podcasts are more your thing. You're in a great place for both, free to you and penned by field experts. Even making your way

2. Lose other people's money. While you are out there mixing it up, meeting other investors, and asking questions, don't just pay attention to the win stories. Pay extra special attention to anyone who tells you about how they LOST big. These are what we in the legal field know as "honest people" and frankly, investors are great at many things. Including embellishing. Gut honesty isn't always our forte, and who doesn't love to lead with their successes? That's not even dishonest, it's just human nature. So anyone offering up the vulnerable stuff, like how they've lost, who they should have listened to, or what they should have done better (Spoiler Alert: Most people will say 'due diligence,' just usually in more words)? They're giving you REAL freebies. Take them. Lose their money and pay attention so you won't repeat their errors. There are plenty of success stories here on BP and online you can learn the details of. Learn about the ways to avoid losing. Bad deals and lawsuits, to borrow another line from Scott Smith, are the two biggest ways REIS lose. Asset protection knocks out lawsuits, but bad deals are inevitable if you invest long enough. What's not is losing everything because of one, or even losing a penny more than you "have" to. The dirty laundry those other investors will freely share can save you hypothetical millions before you've even gone in on your first property. The matter of "how" will become clear as you learn more. The best "how" for you is something only education, time, and just plain doing it will teach you. Hope that helps!

Emily Hill · Answer

Congrats on your real estate journey!

Take one thing at a time. Find the market that you want to invest in. Start building a team. I’d suggest finding a realtor first because they have all the contacts. They can send you a list of lenders to get you preapproved. They will most likely have a list of handymen, contractors, cleaning person, property mgmt etc. And if they don’t have these things I bet they can point you in the right direction.

Back to your original question:

If I inherited money I would buy a rental home with conventional financing and go from there. Start with the basics. See if you like being a landlord and if not then maybe flipping is your thing. You will learn as you go.

If you live in a pricey area, look at other markets. I personally invest in the Midwest because my money goes a lot further there.

Good luck and pm me with any questions. I am fairly new to this as well!

William Johnston · Answer

I've been investing in RE for over 40 years, bought and sold 100rds of properties and in every way imaginable. My best advise is learn as much as you can about RE investing, decide the path you want to take... IE rentals, flips, etc., decide the market you want to invest in, learn everything about that market & try to avoid using your own money.

My first 3 houses were FHA foreclosures, that was the limit the banks would finance me at that time (1960's). After that I had to find creative financing to expand my rental portfolio.

Depending on how much money you have to invest, you might consider being a "private lender" or "hard money lender."

I've paid those people lots of money over the years, while preserving my personal cash for other things.

Be sure to learn before trying to earn.

Anthony Venezia · Answer

Thanks for the advice Scott! I feel like I'm on the fence right now between just wanting to jump in, but also wanting to make sure I find the right deal and not just buying a property just to buy. The BRRRR strategy really intrigues me and I've been spending a lot of time learning about it. I feel that is the main strategy I am going to employ when I'm in full swing. I have agents who are keeping their eyes out for leads, I've gotten on wholesalers buyers lists, I've gotten pre-approvals from lenders and I've connected with contractors. Next step is to make offers and I'm very excited!

Jermell Shavers · Answer

@Anthony Venezia since it’s your first time find an agent you trust and depending on your market for multi family and do buy and hold and get a PM until you feel comfortable either doing it yourself or you’ll probably like having a PM I know I do and most of all go in by yourself no partners especially if you got 6 figures. A partner can and will be a issue imho especially your first time. You probably won’t get that head start again. You can do it!!!! If you need anything feel free to message me or reply to this.

Anthony Venezia · Answer

Good to know.. wasn't thinking about that. Thanks for the advice!

Terry N. · Answer

@Mary Browder,

Great input! I especially like your second point - listen to the bad stories as well as the good. I was just talking to someone about this the other day. I feel like we all-to-often only hear the good stories and they make us overly optimistic. They give us the impression we can jump out there and immediately have success, which isn't necessarily true. We need to be smart, calculated, and understand why we're doing what we're doing to help us ensure we're successful in the long run.

Anthony Venezia · Answer

Understood! Right now I'm in the process of researching the best market to invest in the Greater Philadelphia Area. Thanks for the advice!

Anthony Venezia · Answer

Thanks for the advice Josh!

I've inherited money... what's the best way to start!?

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