Best rental approach with little money

[Dillon Tinlin]

Me and My interests in REI

Hey everyone, my name is Dillon (27). I have been interested in getting involved in some REI more focused on the rental property side of things. I really started researching and doing the homework not too long ago and I probably won't end up getting to the next steps until I feel I've really got a handle on the background of everything. I enjoy reading posts or watching videos of people's "what I did right and what I did wrong" to try and grasp what seems to be quite common factors, and more person to person hiccups. Currently I'm in the middle of The Book on Rental Property Investments by Brandon Turner. I watch a lot of different videos online and have been hit or miss with podcasts, but generally speaking, I have been doing a healthy amount of research.

Current issue

My main issue is that out of college my father had a patent on a product for the sewer industry but didn't have time to run a business dedicated to this product. He asked if I'd like to run a startup and I told him I would help and maybe we could get it to a decently profitable point that I'd be happy with it and we move on from there. Currently we are about to finish our second year, and because it's a startup company I am not getting nearly the pay I truly need (no not being greedy, it's just literally significantly lower than where I should/could be). I don't want to abandon ship on him, we still did decently well in sales in the past 2 years, but it's hard for me to continue this road without having a bit more money being generated for myself. 

He is by no means forcing me to stay and help with the project, but I know we have actually a few more products we're looking to get on board with, but there still isn't a guarantee that we start bringing in significant cash anytime soon. My girlfriend also teaches at a private middle school, and so she isn't making a ton of money either from that. I have been interested in finding some good deals and focusing on really getting a handle on financing to benefit a pretty solid rental property portfolio. I would like to start generating some passive income that I can look to increase over time by obtaining multiple properties and finding solid financial strategies. This way I can continue to help grow this current business while also not worrying about money moving forward.

Options/Suggestions

1.) I have a Master's Degree in Business Analytics with an Emphasis in Operations Management, and my undergrad is in Business Administration with a minor in Computer Information Systems. I could potentially find another job, make much better money (or we assume), and possibly return to REI after accumulating a better income and more money to invest with.

2.) Same as my first option, except immediately start the process for REI instead of waiting awhile.

3.) I could continue to do the same thing now for work, and try and get involved in REI sooner than later. (Finances are my biggest concern, as I stated)

4.) Continue to just slowly increase my bank account, see what happens in the coming years with this job, then invest in real estate down the road.

5.) Options/Suggestions you may have?

Concerns

1.) In all honesty I don't think I can afford a down payment on a decent property at the moment. (20% or more) I feel I would have to do an FHA loan, and I could probably swing that if my girlfriend and I wanted to do some house hacking. I'm just not sure I can really swing the finances right now, but I completely understand that.

2.) I'm here in Illinois where it seems like a tougher market to jump into currently, but being a newbie I could be completely wrong. Looking at other states pricing, I know we generally have higher prices on similar units from what I see. I don't know the areas outside of like 2 hours from me though, so another state clearly I wouldn't have much knowledge about.

3.) Backpacking off of point 2, many properties are QUITE expensive for what you're getting. If they aren't expensive, they're pretty run down and seem to be in kind of nasty neighborhoods. I have been reading a few things saying it's a harder time to get involved in REI right now, and I was reading a post about how Illinois/Chicago are even harder to find a good deal right now.

4.) Being concerned with not feeling like I know enough ( which I know I currently don't) but wondering when the initial "jump into the water" moment comes.

5.) There seems to be a plethora of information on the internet, but I haven't really seen a almost step-by-step initial purchase guide. I know there isn't a recipe or instructions on what to do, but it's almost like this idea of wanting to do more and more but not really having a starting point during the process.

6.) My initial knowledge in real estate is practically nothing, so I have to research everything without much of a starting point or assistance from people I know. I have great math skills and analytical skills, but when it comes to real estate, I don't have that expertise at all. (I know plenty of people don't or didn't, but real estate isn't even close to any work I've ever dealt with)

7.) Anything you're initially seeing a concern from your perspective?

Questions that I'd love answered (Be brutally honest)

1.) Is it worth trying to invest in real estate if you just really don't have enough income for some serious money upfront?

2.) Would looking out of state be an ok idea for a first rental property? (such a generic question, sorry)

3.) When looking to find partners/mentors, do people have less interest if you don't have somewhat deep pockets?

4.) Do you have any decent resources that you found to be significantly more helpful for a total newbie than others?

5.) Can you realistically do just about everything on your own? I hear about getting kind of a whole team on board, and when you're finding properties, finding tenants etc, that you want people to be helping you along the way. But it seems like since I'm looking to have less expenses overall, that seems to be more options that'll start adding up.

6.) Any questions you have for me?

Moving forward

I thought REI would be a great fit for me since I have more free time than I would with my other jobs, because I technically am my own boss. I might have some days I'm working literally all day getting things done, and other days that only require a few hours at most. I have enough extra time that I can be trying to get some property/deals going to start this process. I am insanely motivated in everything I do, when I do something, I like to be the best at it. It can certainly be a fault and cloud judgement from time to time, but I try hard to make sure I am doing the best I can do.

I know I could make better money for myself in general, but I do feel like this business is something special in its own sort of way. I prefer honesty over trying to avoid hurting my feelings or anything like that. I want to be told how it is, but I also want to be told WHY it is. I like explanation and am willing to hear anyone out, but I can't get behind a "don't do this". It has to be a "don't do this because ____ and ____". 

I truly would appreciate any insight any of you have in my situation. It doesn't have to be an exact scenario, but maybe you just didn't have a lot of money to invest with, but a strategy that you feel is appropriate. I feel like rental properties is my interest over other REI options because I want to think long-term. I would like to set up channels that will pay itself off, while generating cash flow, that will yield a higher profit down the road. I'm not a get rich quick kind of person.

Thank you for taking the time to read this, I'm excited to be apart of the community regardless of where I go from here.