How did you get started?

Question

Hi, I’ve been on BiggerPockets for a while now. I wanted to get started about 2 years ago and posted on the main forum. Unfortunately, I was in a different mindset and had a large truck payment with a high debt to income ratio. As you can imagine the responses weren’t pretty. Since then, I have “matured” both mentally and financially. I since have doubled my income and got rid of the truck halfed my vehicle note and pay off amount. I’m a mechanical designer in the oil and gas industry but I like most, don’t want to be in the rat race forever. I drive over an hour from Lake Jackson to Downtown everyday. My goal is to purchase something closer and my best bet (I believe) would be to House Hack with an FHA loan. Then go into fix and flips. I have perfect credit and only my car loan. My question is where do I get started? I’m tired of being discouraged and feeling like I can’t get traction. I feel the hardest part is taking the leap and getting started. Any advice on steps to take? Or how you started? Thanks, Omar

Kevin Dean · Answer

Hey @Omar Cantu congrats on making that progress over the last two years. My route into real estate has been through great partnerships with individuals who have far more experience and knowledge than me. I recommend this strategy, especially if you have a full time job, presumably making far more money than you can generate from a few rentals and flips in the near term. There are many aspiring investors who become overly emotional when they first hear the success stories of those who have been able to scale quickly and eventually replace their income. I understand its exciting, but I just wanted to caution you to not just jump in blindly, as many will likely recommend on this feed.You have worked hard to change your lifestyle, double your income and accumulate savings. It would be unfortunate to let your emotions and the advice of others who don't know your situation get the best of you, resulting in you blindly jumping into a deal just so that you can tell yourself you did it and made progress on your goals. With that said, I think a house hack is always a great strategy!. It will allow you to get in the game, further increase your savings rate and move you closer to your next deal while you learn what its like to own real estate.If however you have enough in savings to do another deal in conjunction with the House Hack, that is where I would recommend to reach out to others in your target market who are doing exactly what you want to do, and see if you can add value in any way. This is a great way to work yourself into a lower risk deal while maintaining your full time job.First step: House HackSecond step: Continue to increase your income and save while looking for great partners and refining your strategy going forward.Third step: After defining your strategy and finding partners with more experience, add more value than you take.Fourth step: Consistently and unemotionally pursue your's and your partner's goals.Hopefully this strategy will enable you to make progress while keeping you from rushing into anything you're not ready for.

Kiera Underwood · Answer

1. Get prequalified - so you're able to make an offer. 2. Define your criteria.3. Make an offer on anything that meets that criteria. Don't be afraid to make an offer. Act quickly on anything that meets your criteria and then do deeper analysis during your inspection period. That way someone else can't snag your good deal while you're evaluating. You can always back out during your inspection period, so do be afraid to get it locked up! I'd suggest working with an agent that specializes in investments so that you have a go-to person to answer questions along the way.

Emeka E. · Answer

Hello Omar check your inbox

Brian Nel · Answer

Omar, I'm sure you're well aware of the culture our industry has of high cash flow and consumption. It's really prevalent across all facets of O&G and takes lots of discipline to be around it daily and not participate. To me, your post is as much a statement about personal finance as it is about investment property. It sounds like you've done a great job straightening out your priorities and now it may be useful for you to sit down and look at your numbers to see what you're capable of. Without an idea of budgets, it can seem very abstract and overwhelming. My first advice to you would be to get to know your budget inside and out. Know where every dollar you're making goes and if that's an expense you want to justify. That will give you immediate insight into the timeline and feasibility of accomplishing your goals. Once you have an idea of that, just hang out on the property search sites like HAR and get a feel for what's on the market at what price. Also we have a thread going in this forum specific to Houston house hacking if you want to take a look!

Vijaianand Thirunageswaram · Answer

@Omar Cantu I hear you loud and clear. I know it's not easy to get started than all the gurus and books preach. It can only happen with your Persistence and Perseverance. I am assuming you got them both and you want to make the move. If you had gone thru the Podcast and BP books, you should have some idea what should you do. Let me quickly give you some tips,1. Set your long and short term goals. You already chose to get your rental with House hack. It's not easy to do and very scare. Try to have another plan of action if it didn't work out in certain time limit. 2 Start contacting other experience investor if possible in your area to help out.3. Start creating your team like Realtor, Loan Officer, Inspector etc., 4. Try to find properties and do your numbers and start making offers after looking at the property. 5. Make the contract work and close on the property. If you are on top of it, you should be able to close a property within 2-3 months easily. It's all up to you., You need to hard press and keep moving.. don't give up.If you need help, don't hesitate to ping me. Vijai

Kevin Wood · Answer

Yes offer on every house that meets your criteria. If you aren't making offers then you aren't getting started.

Mark Sewell · Answer

@Omar Cantu respect. You actually really are already on your way. You have taken real steps to making yourself attractive to lenders, so I think it is fair to say that you are getting closer to your goal. Now comes the fun part.Start running your numbers. Get comfortable with what things cost. Try to zero in on what you are looking for, which is also, obviously a function of downpayment and what you can borrow. The financing aspect is just as critical as the house deal itself.Also don't be in a hurry. Don't talk yourself into a bad deal (looking at myself here). Folks will be out there telling you have to take action. No, you have to take smart action. As my Russian friends like to say, measure the board seven times first, then you cut it once. Analysis paralysis will set it. Not the end of the world as long as you recognize it. At some point of course it will be time to start making offers. You'll know when. Find somebody that is doing what it is that you want to do, and just get to know them. BP is the best place for that.

Tony Castronovo · Answer

Hi @Omar Cantu. I applaud you for licking your wounds, taking action, and coming back to the forums for advice. Sometimes these forums can be a tad harsh....but can also be the kick in the butt we need. It sounds like you are positioning yourself well. It would also seem that you may be cash constrained (e.g. suggesting the FHA / house hack approach)...which isn't bad...just something to manage. I think Brandon T coined the phrase "deal delta"....saying that there are three things you need to pull off a RE deal...capital, knowledge/skills, and hustle. He also suggests that you just need to bring at least two of those to the table, then possibly partner for the third. Sounds like you have the hustle. To expand your knowledge/skills you are in that catch-22. You need the capital to get started to develop the knowledge/skills. So I wonder, do you have a retirement account that you can turn into a self-directed IRA and use those funds to get your first deal going? Once you get that first deal, you will have more confidence, relationships, and experience.

Greg Brown · Answer

@Omar Cantu Your path is similar to how I got started about 3 years ago. I house hacked a single family in my hometown then sold for a profit. (Should have brrr'd) Now I have tons of confidence and more knowledge leading to another opportunity. I made money but my mistake was not asking enough questions to my agent and lender.The first leap can be tough but getting prequalified is the best first step!!!!!!!It makes things "real".I feel like your story is much like mine. Have you already run your numbers?

Josue Vargas · Answer

I had no options when I got into REI. I had a beach apartment with a high interest rate mortgage, that I had to rent because I had to move from its location. Now is paid off, with tenants since 2007, vacancy is less than 3%. With that, I realized REI is the option to go for the coming years. It's all about taking actions, learn along the process, and don't get stuck with the mindset of "what if...". Take action!