Advice for New Real Estate Investor

[Samir Ali]

As a young professional (mid 20s) I’ve spent my last 5 post college years working my butt off for a large corporation. I’m finally at a point where I have a good amount of capital saved up and have done enough research to where I feel comfortable taking my first step towards financial freedom, hoping to eventually escape the rat race, help my parents retire, and set up my family for future success and wealth (I know, how noble of me!). 

The goal of this post is to provide a bit of context on where I’m at and what I’m trying to accomplish. I’m hoping to get advice and reassurance from this great community to help me execute, as I know that wisdom comes from experience, something that I admittedly don’t have in the real estate space (yet).

I'm leaning towards getting into SFR turnkey rentals for all of the obvious reasons (low capital required for entry, less time intensive since I still work full time, etc.). Specifically, I'm looking to invest out of state as the financials don't necessarily make sense in my current market of Austin, TX (some markets I've identified include Memphis, Cleveland, Missouri). I understand the basic concepts of deal analysis and important metrics (CCR, cap rates, IRR, etc.) and am also leaning towards using a property management company. I have a very good friend who is also a loan officer, so leaning on him for financing advice and best practice has been invaluable.

While I can overcome the first widely conceived barrier to entry (money), I find myself hesitating to pull the trigger. I’m nervous about making the wrong decision, using the wrong approach, or investing in the wrong market or property. This is all natural, I presume, for anyone taking their first dive into the business. 

What are some of the best practices that have helped y'all be successful? What do you wish you would've known when you bought your first real estate investment? What major implications of going the out of state SFR turnkey route should I consider or be aware of?

I know these are loaded questions and I’m not looking for every detail. I adamantly believe knowledge is power, and I understand that it’s my responsibility to continue to do the research and leg work to make this endeavor successful. Instead, this is geared to sanity check and hedge some of what I think I already know.

Thanks in advance to anyone who takes the time to offer a newbie some guidance!

Sam