First time investor, how should I engage in real estate?

Question

Hello everyone, my name is Ivan and I am new to real estate investment. This post is to say hi to everyone and hope to get some advise for investment. Recently I have a thought of buying a rental investment property to achieve financial freedom. Instead of leaving the money in the bank, why not use the money in a better way? So I picked up the book "The Book on Rental Property Investing" by Brandon Turner. (It is a very good read) I just finished reading and had some idea how rental property investment works.

But when it comes to really do my own analysis on my local market, I feel like I am overwhelmed. I am living in New York, and the housing price is very high. Of course that I will not buy a rental house in Manhattan area, even if I want to, I don't have the money. So I check the pricing in nearby areas like Staten Island or Bayonne NJ. The price for a single family is around 500K to 600K in Staten Island (In some good neighborhoods). Bayonne NJ has lower price, but still, a house would cost around 300K to 400K. Up to this point, the fear of failure emerges in my head. What if I use all my saving to purchase a rental property but thing doesn't go in the right direction? For example, I buy bad deal but I thought it is a good deal. I buy a good deal but no one wants to rent it. It is rented but it doesn't enough to cover the mortgage after the expenses. The fear of losing all my saving money is very strong.

Can anyone give me some advise like how you overcome the fear when you made your first purchase? And how did you approach your first deal to make sure the number works out.

I wish everyone the best of luck in your investment.

Account Closed · Answer

@Ivan YuInvesting can be scary when you are first getting started. It definitely was for me, I got into flips first and now do construction. The way I got confident moving forward was shadowing people who did the type of investing I was looking to do. Look for a fellow investor who might be buying rentals in your area and see what they are doing, tag along with them and see how they evaluate a property. Practice evaluating properties as often as you can and run your analysis by other investors, this will help you gain confidence and get you to buying your first property. Sometimes you think you know what strategy you would like to employ but you find out there is a better option available. There are tons of ways to invest so it’s important to gain as much insight as you can before you invest.Let me know how it goes,

Jingru Sui · Answer

Hey good luck! Welcome to BP you are at the right place. When I purchased my first rental is simply a number game. If my number make sense(I'm very conservative on my first one) I pull the trigger. In hot market where there's still plenty of cash flow (still seller market) My goal was to get the deal first. So do lots of calculation and don't wait when you see a good deal.

Clayton Mobley · Answer

@Ivan Yu I'm glad the article was helpful!Good luck!

Ivan Yu · Answer

@Clayton MobleyThank you for the recommended articles. I just finished reading. The article says that understanding the risk instead of blindly focusing on the profit makes the point. I think I should evaluate how much risk I can take, and go worry-free with real estate investment once I determine how much lost I can take and the lost will not mess up my normal life.Appreciate for your time.

Ivan Yu · Answer

@David MichaelThank you so much for your reply. Yes. I think if I really want to do something, I should stop keep doing analysis and skip the “do” part. I think it is time to get out and really get in touch with real person like, agent and sellers. Appreciate for your time.

Ivan Yu · Answer

@Anthoney HanksThank you so much for the advise on loan. I will see how I can utilize this FHA203K.Appreciate for your time.

Ivan Yu · Answer

@William LeesThank you so much for your reply. I will definitely try to see if I can find someone to follow. Appreciate for your time.

Clayton Mobley · Answer

Hi @Ivan Yu, I understand what you mean. Instead of giving you a drawn out explanation, I thought I should give you some great articles that I think will help you out. https://www.biggerpockets.com/blog/telltale-signs-youre-not-ready-to-investhttps://www.biggerpockets.com/blog/persuasive-arguments-buying-rental-propertyBest of luck to you! Can't wait to hear about your first deal!

David Michael · Answer

@Ivan YuGood luck on your endeavors let me know how you make out

David Michael · Answer

@Ivan YuThe first step is always the hardest. Don’t get stuck in analysis paralysis. Keep in mind this is a long term play. This is the first step in building wealth. Your not going to get rich in one week but you will benefit. Are you planning on living there ? You can safe more money and essentially make more money.