Newbie in need of help

[Emily Simmons]

Hello! My name is Emily Simmons and I initially wanted to start flipping houses but I do not have enough funds to buy a house right now. I have some funds saved just not quite enough. So i've been reading up on wholesaling but I would really love to talk to someone on the best way to get started. If anyone out there would like to help please let me know. I appreciate you taking your time to read this.

[Leo R.]

@Emily Simmons you mentioned you're a beginning investor, which begs the question: why take on all the risk and difficulty of advanced strategies like flipping or wholesaling, when there are easier, less risky (and just as lucrative) strategies that are more beginner-friendly?

I know you mentioned a house hack wouldn't be desirable because of your family, but could you get by house hacking a multi-family property?  ...I ask, because a HH is typically a much better strategy for a beginner...

Flipping and wholesaling are both (comparatively) high-risk strategies that beginning investors should think twice about--beginners can get into extremely hot financial and legal water very quickly with those strategies...heck, even experienced folks can get themselves in very sticky situations flipping/wholesaling...

All other things being equal, a house hack is a better strategy for a beginning investor who doesn't have much prior experience...

Why? Because, house hacking is comparatively simple and beginner-friendly (and therefore has the highest likelihood of success), but strategies like BRRR'ing, flipping, wholesaling, etc. are far more complicated, and have a far higher chance of failure because they involve so many "moving pieces".

I always use this analogy: would you tell a beginner skier who has zero experience to ski a double black diamond (the most advanced terrain) for their first run? (obviously, no; a beginner could easily get themselves killed on double black diamond terrain!). Beginners should start off on beginner terrain, where they actually have a chance to learn and succeed. A house hack is like that beginner run (but flipping or wholesaling is more like a double black diamond).

With a house hack, you can make money while learning the essential skills you'll need to succeed in RE investing (e.g.; how to analyze properties, how to find an investor-friendly agent, how to engage in a strong due diligence process, how to screen tenants, how to manage the property, how to build a network of contractors, plumbers, electricians and other pros, how to manage the book keeping of the property, etc., etc., etc. If you want to succeed in RE investing, getting this experience will be critical). So, you can make money and learn invaluable lessons with a HH, but it's typically a much lower risk strategy than BRRR'ing, flipping or wholesaling--which are strategies that (when executed poorly) can easily bankrupt a beginner.

Moreover, house hacking can be very lucrative, and there are multi-millionaires who built their fortunes on repetitive house hacking! Although it's a strategy that's good for beginners, there are plenty of very experienced RE investors who continue to HH.

Plus, if you do decide to BRRR/Flip/wholesale a property in the future, you'll be much more prepared to do it if you have a HH or two under your belt--a ton of the lessons you'll learn from a HH can be used to successfully execute a BRRR/flip/wholesale! ...in fact, I'd say that a HH should be a necessary prerequisite to those strategies for most folks!

Now, having said all that, house hacking isn't necessarily easy (if it were, everyone would do it)...it's just easier than the more advanced strategies...House hacking still takes significant due diligence, skill in analyzing the market and the property, time and effort to learn about tenant screening and property management, the ability to anticipate appreciation/depreciation trends, etc., etc., etc....and even with lots of skill and preparation, things will still go wrong (vacancy, plumbing leaks, bad tenants, etc.)--but that's the nature of the game. As James Brown sang: you gotta pay the cost to be the boss.

Good luck out there!