All Forum Posts by: Matthew G.

@Account Closed The advantage of owning real estate is your ability to leverage. By being able to leverage or use OPM, you can get rich or create cashflow without having to accumulate hundreds of thousands of dollars to purchase a property.

The articles with these titles are probably more directed toward new investors because it shows them that they didn't need to have half a million dollars in the bank to get started. It would be great if you could buy a property without leveraging, but how long would it take most people to save that type of money?

The only thing I don't like about the titles is the number of doors you own doesn't really show how successful you are. You could have 100 doors but still have a negative cashflow. I've met people at meetups who will say they have X rentals which sounds impressive, until they tell you later they are making $80 positive cashflow per rental. They are just one bad roof or one broken A/C unit from taking away all their profits from all their rentals for the year.

First thing I would do is really go through your expenses and create a budget. You can use a site like YNAB (You Need A Budget) to get you started.

Once you've nailed down your budget and are saving a bit more, try to make extra income on the side to boost your saving potential. Think AirBnB, Uber, or any other side hustle. You don't have to jump into real estate just yet. I recommend reading this book: The $100 Startup: Reinvent the Way You Make a Living, Do What You Love, and Create a New Future. You can also just ask for a raise at your current job or start looking for a new job if you can get a salary increase.

Once you have some cash to invest, you can really start getting more into real estate  and selecting a niche based on your goals.

@Darren Bodle What kind of buyers are you looking for? Are you a wholesaler looking for flippers? Or an agent looking for homebuyers?

@Ryan Corcoran I think you have to identify your target market. Instagram has a more specific age demographic (18-24) than a platform such as Facebook. If your market exists in that age demographic, then by all means try it out.

Based off what I've read, IG users convert the best after clicking ads. Clicks are reasonably priced. It's a better fit for mobile apps and e-commerce goods. I'm not sure what type of leads you are trying to generate, I assume distressed property owners?

I'll be running some Instagram ads soon, but it will be for a real estate related mobile app. PM me if you want me to let you know how it goes.

@Anders Jax At the end of the day if you aren't adding some sort of value, investors have no reason to go through you. You should stop thinking about finders fees, and start thinking what value can I bring besides introductions.

Think about it another way, if I was already planning to invest in a deal, but knew that the company was giving out finder's fee, what prevents me from telling my friend to introduce me to them so he can collect some money? This can be easily exploited, so what company would want to offer this?

@Mandi Martinez It depends on the market, but being bolder can help give your company a certain style that buyers will search out for.

In my area, there is a flipper who has a very specific style, but it all comes together. He painted the house mint green, but sold the house above asking price. He has many other projects and people want to buy his homes because they like his style. It may limit your buyer pool, but you just need two buyers to create a bidding war.

You should let the demographics in your area guide you as to what is appropriate and not blanket statements that neutral paint is best. 

@Andrew Hinton Assuming you already have an existing track record of success, for me I would want to see a high return that isn't over leveraged. Apartment syndications that I've been presented lately have an expected 14% IRR with 70% leverage. I can get 10% annual return by lending, and I'm 1st position on the loan and have ~25% protective equity. That extra 4% doesn't make it worth the risk.

Investors will jump at your deal if it is great. If they aren't jumping at your deal, then maybe you should look at whether you actually have a good deal.

@Garret Collins I agree with Greg. There is no advantage to getting a Master's in Real Estate or an MBA. You can be just as successful without the degree.

You've already spent the money on college, so either get a good paying job and use that to help you buy your first house or jump right into real estate and try to find wholesale deals to get you started. You'll learn everything you need to along the way.

@Will Foster Are you switching careers? I don't think you have to wait two years as long as you aren't switching careers (i.e. a software engineer switching jobs between Google and Apple wouldn't raise a flag for lenders)

@Matt R. It's not an apples-to-apples comparison. The developer in this case added value and didn't just hope for natural appreciation. Sure he had to make some speculations on whether developing a new building would generate more cash flow, but he could easily calculate comps of nearby rentals, find out the cap rate and figure out whether the construction costs would exceed the value of the developed property.

I wouldn't say hoping for natural appreciation is bad, it just depends on how much risk you are willing to take and how well you know the market. If you buy a property today with zero cash flow, and the market corrects in a year and lasts for a couple years, are you okay with waiting? The areas that have the highest appreciation also have higher fluctuations in price when the market corrects. You may not be losing money, but you have an opportunity cost because you will have to sit on the sidelines while your cash sits in that property.

I think you have to consider opportunity costs when you are betting on natural appreciation. If it doesn't appreciate as much as you expected or market correction happens, could you have made better gains somewhere else?