From Aspiring to Investor in 8 Short Weeks!

Fundamental Principle

There’s a threshold where researching no longer adds value - make 2021 the year where you learn the fundamentals, put the initial pieces in place, and take buy your first property!

Our Story

As with many real estate investing stories, it started with a podcast. In this case, a tech podcast (This Week in Tech) with a now-infamous real estate investor as the guest speaker. It was the summer of 2016, and along with preparing for our October wedding, we were beginning to shop for our first home in Orange County.

One podcast led to the next, and soon - Nick was hooked by the concept of house hacking. We both loved the idea of help with the mortgage, especially considering our desired neighborhoods' prices. We purchased our first home (and house hack) in November 2016 - and were lucky enough to have incredible tenants move in shortly thereafter. That home was our first (and last?) experience with "mailbox money" - and Nick was excited to begin building an out-of-state portfolio (as in-state felt far from feasible with a California address).

Nick discovered Norada Real Estate's Podcast and began investigating the markets in which major turnkey aggregators worked - as clearly, these were markets with potential for investors to make healthy returns. He created a shortlist and then did some light research on each market - primarily Googling net migration patterns. He seriously considered a few cities in Alabama and Florida, eventually picking Indianapolis for its affordability and the sheer number of investors and possible exit strategies. We were also fortunate to have family nearby who could give us some sense of the area - which was valuable considering we planned to purchase without visiting in person.

It took us about six months to get our first property under contract - primarily due to extensive (and expensive) repairs needed on our primary house hack. When we had the funds (and some spare to cover the unexpected), we chose to move forward with a turnkey provider. At the time, we didn't have a team, a lender, relationships with other investors - but we knew enough to take that first step and get a property under contract.

In hindsight, we might have done things differently, but we don't have any regrets. For one - we purchased the property in 2017 for $72,000 and sold it in 2020 for $95,000 (with loan-pay down along the way). For another - that house gave us exposure to the process of purchasing a home, placing a tenant, evicting a tenant, and turning a damaged property. Surviving that acquisition gave us the needed confidence to buy our second, third, and fourth properties. We've become more sophisticated with each transaction - but we're grateful we didn't wait to have it all figured out before we bought that first door.

On the flip side, we know aspiring investors who have been researching for more than five years without purchasing a single door. Nick speaks with new investors regularly and hears many of the wrong questions from those who haven't yet bought their first door. Yes - eventually, you do need to worry about legal entities and private money - but these are not matters which need sorting before you buy your first house.

Call us crazy - but we firmly believe it's realistic, assuming you have the disposable income/savings, to start researching and buy your first property in less than two months. If we could do it all over again - here are the steps we would and wouldn't take - and how much time we'd devote to each.

Identify Your Why 🙇🏻‍♀️

Time Commitment: 3 hours

Perhaps you want to join the FIRE movement, build generational wealth, or create an income stream that provides additional stability for your family. Whatever your why - make sure it's crystal clear because it will keep you going when things go wrong.

This is also the time to get on the same page with your partner (business or life) if you have one. Having a unified, or at the very least, complementary vision will be essential in your business and relationship. Check out this podcast for some tips and ideas! Note: this is likely to be an ongoing discussion throughout your relationship - not a one and done!

Set Your Budget 💵

Time Commitment: 3 hours

Before you begin building a team and exploring markets, you need to consider your finances. Our advice (and it isn't very objective, as it's how we've built our business) is to maintain a stable W2 position that can cover your personal expenses as well as the mortgage on the property you're acquiring. You will have vacancy, repairs (both expected and unexpected) - and you might face circumstances (say - a global pandemic) that your analysis didn't consider.

Regardless of your situation, it's essential to establish an investing budget that considers your personal expenses and the business expenses you're likely to incur. Your budget is likely to inform the markets and strategies you choose - so don't skip this part of the process.

Conduct Basic Research on Rental Property Investing 🏡

Time Commitment: 30 hours

There are some fundamentals you should understand before you purchase your first property, including the fundamental types of real estate investing, the key elements for your strategy of choice, and the high-level process.

Areas to explore include:

• Basic Deal Analysis Rules
• How to underwrite a deal using a basic rental property calculator
• Key Real Estate Terminology
• The purchasing process, including escrow & title (your agent can help you here)

You can cover most of the basics via podcasts and books - likely during your commute, while completing household chores, etc. Learning is a lifelong journey, but we think you could cover the above in 20-30 hours (especially if you listen to content at 2x speed).

There are a few fundamental books and podcast episodes we'd recommend if you're just getting started - but take a look at the date published for each and recognize that numbers and market conditions probably have evolved. These include:

• How to Invest in Real Estate
• The ABC's of Real Estate Investing
• Rental Property Investing
• Long-Distance Real Estate Investing

Find Your First Market 🗺

Time Commitment: 20 hours

We've spoken to several new investors who have gone down the market analysis rabbit hole but still never purchased a property. Market analysis seems to be a stage where many get stuck - so it's even more critical to establish a window of time for this activity - and then move forward.

When exploring markets, there are a few factors you'll want to consider:

1. Are other investors investing there with proven success? There is no need to recreate the wheel - stand on giants' shoulders in this particular arena. As a shortcut, we'd recommend you start by exploring markets where large turnkey companies operate.
2. What do the net migration patterns look like for that particular market?
3. What are the employment sources for that particular market (i.e., is it entirely dependent on one local military base, or are there a healthy mix of white and blue-collar jobs with stable employers?)
4. Are real estate laws particularly housing provider or tenant-friendly?
5. What are the rent-to-value ratios in that particular market?

Note: If the answer to number one is yes - the following questions are likely to support the market's viability as well. That's why we'd recommend starting with number one to develop a shortlist and then exploring a select few markets at a deeper level.

Begin Building an Investor Network 📞

Time Commitment: 20 hours

It's worth conducting primary research and solidifying your "why" before engaging other investors - but don't wait too long to start building relationships with those ahead of you on the path. You'll find many of the steps below recommend speaking to other investors - so you'll want to take the time to explore your local Facebook Groups, Meetup Groups, REIA, etc.

Reaching out to established players in your market might feel intimidating - but the real estate investor community tends to be surprisingly generous with both time and knowledge. The key is how you choose to engage this audience - and we have a few recommended topics to both explore and avoid.

Do:

• Ask about neighborhoods the investor works in and what they do/don't like about them
• Discuss what strategies make sense, and ask for advice on the path you're planning to pursue
• Bring a deal to the table that you've analyzed, and ask them to review it with you to see if you've missed anything
• Ask about groups to which they belong and other investors they'd recommend
• Follow up and let them know how you've applied their advice and help

Don't:

• Start the conversation by asking for our 'Core 4'. It's not that we aren't willing to share referrals - but we're not going to waste our team's time before we know you're serious. If you have taken all the necessary steps - the right person to ask about is an agent. Until you're under contract, the rest of the team can wait.
• Ask us to repeat information we've shared publicly on podcasts or blogs or generic information readily found elsewhere. We write/produce this content to answer common questions at scale. Do your homework and bring the questions that matter specifically to you.

Pro Tip: As you're building your network, seek out investors at a similar stage in building their business. Identify someone you trust and like and make that person your accountability partner - someone who will hold you accountable to the commitments and goals you share. They will be your sounding board and the person who pushes you past the inevitable roadblocks as they arise.

Determine Your Big-Picture Criteria 🖼

Time Commitment: 10 hours

Have conversations with some investors you admire, and read/listen to blogs and podcasts that outline some of the various strategies you're considering. During this time, ask yourself a few key questions:

1. How involved do I want to be in this business?
2. What is my level of risk tolerance?
3. Who do I want my tenants to be (if you're planning to hold)?
4. How important is cash flow vs. an increase in my net worth over time?

Answers to these questions, paired with insights gained from other investors, should give you directional data around the right approach for you. Every strategy comes with tradeoffs - so you'll need to determine which pain you can best absorb - be it risk, high-maintenance tenants, or lower margins. For example:

• Afraid to take on a significant rehab as your first project? Flipping in a hot neighborhood might not be the right approach.
• Not interested in being hands-on and willing to sacrifice some margin to reduce your involvement? Private money lending could be the right approach.
• Can't stand the idea of evicting a tenant or dealing with major repairs to your property? You should probably avoid the C and D-class properties which look great on paper.

Find an Agent, a Lender - and GO! 🏃‍♀️

Time Commitment: 10 hours

Leverage your investor network and local groups to help you identify an investor-friendly real estate agent. This same group can help you with lender referrals, as can your agent. Finding an agent and lender shouldn't be a laborious exercise - but you'll likely need to network your way to good referrals - so we've budgeted that time.

Once you've identified your agent, you can set clear expectations and begin the work of deal hunting. We'd recommend analyzing multiple deals/day and making several offers/week. Hint: You don't have to offer the asking price - every property is a deal at some cost. That said - do sense check with your agent - if the property is likely to go for asking, you don't want to waste your agent's time.

Your time commitment/week for 8 weeks: Less than 2 hours/day! 🤯

On the flip side, we know many aspiring investors who have spent years researching and are yet to purchase a property. Outside of the analysis paralysis and general fear that blocks many from taking the first step - we see new investors getting stuck putting every piece into place far sooner than necessary.

Buying your first door? Worry Less About:

1. Identifying the perfect market

   You can expand from here - good enough is good enough.

2. Legal Entities & Structure

   Yes - eventually you'll want a legal structure in place so you're not purchasing multiple properties in your personal name. This is not necessary on day one in order to buy your first property.

3. Building out a 10 person team

   Yes - eventually, you should have a CPA and an attorney. You don't need them on day one.

4. A plan to purchase properties once you've used your 10 loans

   You're buying your first house. When you're on number eight, let's make this a priority!

5. Identifying Private Money

   We firmly believe you should not be using anyone's money but your own (and your bank's) to buy your first deal. Prove yourself a few times; then you can start to seek out private lenders.

6. Setting up perfect systems and tools

   We're still using free tools and evolving them as we go, and we're 50+ doors in. The right system for your first door won't work at door 20, so don't worry too much about it. Iterate and learn as you go!

7. Finding Time

   You don't have to follow our schedule - if it takes you six months to get to your first door - that's fine. If time is an issue, consider some of the lower maintenance approaches, such as investing in A-class markets with an established property manager or providing private money for other investors. That said, if your "why" is meaningful, you'll make the time.

8. Reading All the Bigger Pockets Books

   Information overload is a real thing in Real Estate - there is so much content (much of it good) available - it is truly overwhelming. Get back to basics - you don't need to know advanced strategies for purchasing a mobile home park. Hone in on the essentials and keep learning as you go.

In two months, we firmly believe (finances permitting) you can go from a vague idea to owning your first door. After all - what's stopping you? 😉