Information Overload! Where to start?

Question

Hello BP Universe,

I'm here asking for any guidance, tips and tidbits of information that may be able to help me get started investing in Real Estate. Quick background, I'm 23 years old currently working in the tech industry out in Charlotte NC. I've decided to take the plunge into the real estate world because I've quickly realized the corporate environment is not the way to create generational wealth.

My original goal was to purchase a single family investment property in an up and coming neighborhood in the Charlotte Metro area. After speaking with both a real estate agent and a mortgage lender a single family investment property had to many up front costs for me to afford off the get go. I spoke with some folks I know who dabble in Real Estate Investing and they suggested purchasing a duplex, and that it would be best for me to live on one side while I rented out the other. I was told this would decrease the barrier to entry but I was hoping for some clarification on that (hence one of the reasons for this post).

I've done some research into contract selling and even REIT's but with all these articles, blogs and posts i'm experiencing a little bit of information overload. Everyone seems to have a different opinion on what would be the best way to start out. Since there are folks who may have recently been in the same position as me along with others who have an extensive track record in this field, my question is, what are some good strategies to get started in the Real Estate biz given my current environment? (Preferably ones with lower barriers to entry) Although, I'm open to any and all suggestions. For those who made it this far, I thank you and hope you've been safe/healthy during these uncertain times.

Wei W. · Answer

Hey @Nolan Brendese ! I'm also in CLT and working in tech. I am currently under contract and hoping to house hack my first home. Would love to connect since it seems like we are both just starting out and I'm always interested to talk real estate. Like @Anais Hawkins mentioned, researching the type of home you want and where you want to live at is a great place to start! Best of luck!

Chris Lounsbury · Answer

Hey Nolan, It really comes down to if you have 20-25% for a down payment on a home you are not going to live in, and the repair costs to fix it up if needed. Depending on your cash position, and it sounds like your lender/realtor don't think you have the funds to do this, then buying a house you can live in is going to be your best bet for sure. I know here in CLT and where I live, Rock Hill, it is difficult to find a 2-4 unit property where you live in one side and rent out the others. Some alternatives to this, would be finding a split-level home or a home with a basement that could be converted into a 2 unit. Other options would be buying a home with quite a few extra bedrooms and bathrooms and renting out a couple of them while you live there to help offset costs. Remember, decreasing your housing expense is just as effective to continue saving money as cashflowing from a rental. Another alternative is buying a home that you may not love to live in, but would cashflow if rented out. Live there for a year before moving to a new home. You can then start renting this property after you move out. This will allow you to qualify for those 3.5-5% down payment homes.If you ever have any questions, please feel free to reach out. I also host a monthly Real Estate Meetup here in Rock Hilll. It's always great to meet with other investors and bounce ideas of them!

Anais Hawkins · Answer

@Nolan BrendeseHi Nolan! I know exactly what you mean. We wanted the dual duplex option, it's called House Hacking, but we decided to save that for a more expensive market like Denver. We hope to move there at some point. I have lived here in Charlotte for about 7 years and my husband and I are currently looking to invest in the area. I had an information overload and had to make myself a checklist. 1. What time of home do you want to get? (you've already done this)2. Research you market. We can all agree it's Charlotte, but as an example I'm saying research to the degree where you are choosing - Sharon Amity, University, Central, Independence ect.3. Find a team - You're already talking to people so that's great. In regards to multi-family homes they are very hard to find. Apartments shoot up like weeds around here but the cost shoots up with it. I've addressed this several ways. I am looking outside Charlotte such as Matthews and Concord as well. I know that the new rail-line has been approved so I am looking at homes that will be near there because after it is built the value of the homes/units will increase. UNC in University area is a college that has a good amount of choices or duplexes. Many people worry about renting to students. A recent webinar I went to gave excellent advice. David Green suggested not to market to the students but to their parents. If the parents are on the line for the damages then they will police the children so you don't have to *chef's kiss* I don't know why I didn't think of that sooner. There will always be risks of course, but I would hope this brings clarity. Also did anyone else think to invest in Rock Hill, SC? It's very near Charlotte and a lot of people I work with actually live there to avoid high cost and taxes and simply work in Charlotte. I follow the money and sports teams are money. With the Panther's moving their team down south maybe you can also look down there while the pickings are still good? You can still have a place in Charlotte but it doesn't hurt to look outside the box. We are looking for a finance partner and you might be able to bounce ideas off of them if you have them without having to put so much up front.In conclusion I would just say narrow down on one decision find your specific markets and go from there. A team will also help you. One step at a time.

Michael Barnhart · Answer

Hi @Nolan Brendese welcome to BP! If you haven't read it already this is a great place to start: https://assets2.biggerpockets.com/uploads/user_file/file_object/329/UBG_2018.pdf

Christopher Aranguren · Answer

Hey @Nolan Brendese! I am also in CLT and recently just purchased my first property here. By no means am I a vet in the space, but I would say that I was also on an information overload before I decided to just pull the trigger on a property. For me and in hindsight, taking action on anything I saw as reasonable I think was the best learning I could ever have done. I certainly have learned more from the experience than from my educational attempts beforehand.With that preface in mind, to address the question specifically, a few options:1. What I did was live in the property I purchased for a year with the intention to rent it out afterwards. I was a renter beforehand, so this made the buying process also a learning process for me. But in terms of up front cost (barrier to entry), it greatly decreases the amount you can put down to just a few percent (I put 5%) rather than a full 20%. You can the allocate the rest of your capital as appropriate for in-house projects. I would recommend this if analysis paralysis is getting in your way and living with ongoing projects is something you (and any SO) are okay with. It’s especially good if you’re interested in doing some things yourself or want to learn how to do them, since you can take things as slow as you need. Of course this also doesn’t restrict you from pulling the trigger on future deals while you live in it. 2. You could always look for a partner. It doesn’t necessarily have to be someone more seasoned than you to show you the ropes, as long as both parties understand the risks this can de-risk your first purchase without diminishing your learning experience by you taking it on as the point person. I’m sure you can find someone through BP or local meetups, and I know someone who did this elsewhere.3. I like the duplex option you can live in if that fits your lifestyle. I would have done this, but it didn’t work for my SO too. I’d also note that I did not have much luck finding CLT duplexes that I would be comfortable in, but I did not look too much into this for the reasons stated. If you can find any multi family units that you’d be happy to live in, I’d do that (it sort of meets option 1 too)I would strongly recommend buying something (read: really _anything_) as a newbie that makes you happy rather than looking for the perfect deal. I truly believe the experience itself would be worth it regardless of whether the deal is meh, good, or relatively even. I’ve sent you a connection request, happy to discuss more as we proceed on our REI journeys. Hope you find a deal that makes you happy!- Chris