All Forum Posts by: Christian Licata

Hey! First off, it's awesome that you're in a position to get started in real estate at 22. That's a huge accomplishment already. I totally get where you're coming from with the analysis paralysis—it's something we definitely faced when we started so I get it.

For me, what helped was realizing that no matter how much I researched, there would always be some level of uncertainty. You can plan all you want, but at some point, you just have to trust yourself and make that leap. I started by setting a deadline for when I needed to make a decision. Having that deadline pushed me to stop overthinking and start taking action.

Another thing that helped was breaking down the process into smaller, more manageable steps. Instead of focusing on the entire project, I’d ask myself, “What’s the first small thing I can do to move forward?” Whether it was making an offer, scheduling a home inspection, or just visiting the property again, taking one step at a time made the whole process feel less overwhelming. Keep things as organized as possible too, so you don't miss anything and that will help create a system for future deals, making it easier each time.

Hearing stories from others who were in similar situations was also a big motivator for me. I found that most people who were successful in real estate didn’t start with everything figured out—they learned a lot along the way. So, just know that it’s okay not to have all the answers right now. The important part is getting started.

If you’re still feeling stuck, maybe try connecting with a mentor or someone who’s been through it. If you can't offer them a payment, offer them some other value to their business and see if they accept it. Sometimes just talking it out with someone who’s done it before can give you the confidence boost you need.

In the end, you'll have to learn mostly from experience on your own and through others. We've made mistakes along the way, but nothing so detrimental it put it us out of business. It only made us better at what we do.

Thank you for this. I really appreciate it!

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Hi, im 22 years old and I have the resources to get stated in real estate by buying a foreclosure and rehabbing it. The problem I’m facing is that I’m having trouble just doing it. I think i’m experiencing some anaylysis paralysis (the feeling of being unable to start something due to overthinking and/or over researching the situation.) So I guess my question is how did you guys just take the leap and just do it when it comes to this? Any advice and hearing your experiences would be great, thank you!

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Quote from @Ryan Cheek:

Quote from @Christian Licata:

Hi, i'm 22 years old and looking to get started in real estate. Im trying to decide if flipping a home or buying a rental property is the best option for my first investment. I have a good amount in savings and I'm willing to put a down payment of up to $50,000 for a rental. The problem Im facing is that my job doesn't pay much. So I don't know if it makes much sense to buy a rental property for about 200k-250k, just to make a few extra thousand a year (based on a 5% return). Should I be looking at this as a goal to keep buying rental properties to build up my portfolio? Or should I focus on trying to make more money per year before buying a rental?

The second option would be that I flip a home. If I decide to do this I have a private loan in place that would be for 250k at about 6%. I also have a close connection with an experienced developer and is willing to help mentor/guide me through looking at homes and answering my questions. Also, do you guys think that buying a foreclose to flip would be too risky for my first flip? Any advice will be appreciated, thank you!

Hi there! First off, kudos to you for getting started in real estate at such a young age—that’s a huge advantage!

Flipping vs. Rentals: Both strategies have their merits, but it really depends on your long-term goals and risk tolerance.

Rentals: If you're thinking long-term wealth building, rental properties are a great way to go. They provide passive income, tax benefits, and appreciation over time. The $50k down payment is a solid start for a $200k-$250k property. Even if your cash flow isn’t huge at the start, remember that rental income will grow over time as you increase rents and pay down the mortgage. Additionally, you’ll build equity and can leverage that for future investments.
Flipping: On the other hand, flipping can provide quicker returns, but it’s generally more hands-on and carries more risk, especially in uncertain markets. Since you have access to a mentor and financing, flipping could be a good option to generate capital quickly, which you could then reinvest in rental properties.

Foreclosures: Flipping a foreclosure can be profitable, but it can also come with hidden challenges like repairs that are more expensive than anticipated. Since it's your first flip, having a mentor who’s experienced is a great advantage, but I'd suggest thoroughly inspecting any potential flip property and having a solid plan in place before diving in. You could start with something that needs cosmetic updates rather than a full gut renovation to reduce your risk.

Balancing Income: If your current job doesn’t provide a high income, leveraging real estate to supplement that could be a smart move. However, it might also be worth exploring ways to increase your income, whether through side hustles, certifications, or career changes, to give you more flexibility in your investments.

Ultimately, it’s about aligning your investment with your goals. If you're looking to build long-term wealth, rentals might be the way to go. If you're looking to build up capital more quickly, flipping could be a viable option.

Best of luck with your decision—whichever path you choose, you’re on the right track!

Thank you, you made some great points, I really appreciate you taking the time to respond!

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Quote from @Randall Alan:

@Christian Licata

First, start off deciding what your objective is. Most of what you mention is flipping, which can give you big chunks of cash when you sell, but comes with inherent risks and challenges… not the least of which is you being out of state trying to do them. They also come with a 15-20+% tax bill when you sell them.
In today's market you need a GREAT spread between your purchase and ARV values and that isn't the easiest thing to find in a high market.

Being brand new you may not know all the ins and outs of flips… but it’s easy to get exploited in a number of ways by people you hire to do the work. Flips literally come with thousands of small decisions, and if the decision maker isn’t on site to oversee those, you will likely show up and have a lot of “that’s not the way I wanted it” type of results. Just getting contractors to show up can be a challenge, and if no one is looking over them they take ‘creative freedoms’ on how and when your job gets done.

While slightly more “boring”, with the amount of money you have to work with you could probably finance 4-6 $200,000 rentals and generate monthly income that could go a long way towards replacing / supplementing a descent portion of your W2 income. If you cleared $300/month per rental that’s $14,400-21,600 / year in cash flow. You also have 4-6 properties appreciating at market rate. Even if that was only 3% - that is $24-36k of equity you are building YEARLY on $800,000 - $1,200,000 worth of real estate… so in 10 years that would be $240k - $360k of additional profit you would make if you sold then. Plus, you get to depreciate the properties by 3.3% a year on your taxes - saving you $26k-40k of taxable income as well… all while your tenants pay down your mortgage with their money.
The amount of effort versus a flip is so much less, and your taxes are WAY better.
There is a lot less risk as well. Flips - especially your first few - can be somewhat dangerous if you misjudge your expenses or run into unexpected expenses. It’s easy to go over budget or not realize all the items you need to account for until you start ripping into things and suddenly your ‘profitable’ flip is upside down. You also have to close twice on flips… once to buy it, and then to sell it… so closing costs should not be ignored. There are also holding costs to consider including insurance, utilities, and potentially financing costs if you didn’t buy the property outright.
The thing about flips is that they are ‘one trick ponies”… you only make money once - when you sell them - then you have to start over and find a new one, whereas rentals deliver their income month after month, year after year.

We have done 6 flips and own 37 rentals. They both have their good and bad aspects… but rentals are far easier day in and day out. Flips in today’s market are more challenging and take a lot more effort.

Hope it helps!

Randy

You made some great points. Thank you for taking the time to respond, I really appreciate it!

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Hi, i'm 22 and have about 250k to start investing with. Ive been having some analysis paralysis about not knowing what would be the best option for my first ever property. Ive been trying to decide between; flipping a house that's on the market, flipping a foreclosure property, building a spec house or doing the BRRR method. I live in California and most likely won't be able to do much here because of expensive prices. I have family in Knoxville Tn, so I've been planning on investing there. It would be out of state for me but my job is very flexible and I would be able to spend some time in Knoxville if needed. Also I have a family member in Knoxville who has background in home repair and is willing to help where he can. So my question is, if you guys where in my shoes what would you do? Any advice would be appreciated. Thank you!

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All Forum Posts by: Christian Licata

Christian Licata has started 5 posts and replied 8 times.

Post: In need of some advice/guidance

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Post: In need of some advice for first property

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