All Forum Posts by: Michael L.

One other option I thought of would be to start off with wholesaling since it is less labor intensive and would allow us to build up a larger capital base before jumping into a rental...

Not sure if we would be able to get enough wholesale opportunities to make this feasible though.

Maybe I should have phrased things a bit better or not included a specific number of houses or a specific number of years.

I'm not looking to grow this too quickly unless of course that is feasible and reasonable.  I see this as a business venture that will take several years to turn into an actual business rather than a side hustle/passive income.  I don't see my partner or I wanting to take on more than we can handle as we both work demanding full time jobs.  I see it as growing organically as we are willing and able to take on more.

I guess I'm really looking for financing advice on how to start without limiting ourselves to one property for several years.

Things that come to mind are taking on a couple of outside investors (family), promising them X as a return rate, and once that is returned, they no longer own a piece of the property.

Another would be to split the house with outside investors and let them remain investors in that specific property for perpetuity.  A twist on that would be to include some type of buyout clause after X number of years of participation.

Can't think of many other ways, which is why I'm here!

Totally agree that we have to get involved to learn.  I guess I'm more of an analytical/planner type where I like to learn as much as I can about what I'm looking to get involved in and be able to outline a reasonable and feasible plan before diving in.

It feels like to me, if we start with just one house, without a plan for how to get another one or two, then we will potentially shoot our load or prevent ourselves from other opportunities by not considering how to move forward. 

I don't want to put ourselves in a position where we could have managed our financial situation better from the start that would allow us to do what we want to do...

Hello Everybody,

A friend and myself have been researching investing in real estate together for a little while.  We both agree that we would like to be in the rental space and would eventually like to turn this from a side hustle into our full time jobs.

Baby steps...

One thing we are having a hard time figuring out/understanding/strategizing is how we go from one property, to two, to three, five and more.

If we each put 10k or 15k down for our first multi-family rental, that would be all the funds we could both invest.  From there, without outside investors, I don't understand how we would be able to buy another property in a reasonable timeframe to scale our business.  It would take several years before even breaking even from the CFs from the initial property.

If we needed to bring in outside money (would be from family), what kind of deal structure would typically satisfy an investor in this type of situation?

I just don't want to see us buy 1 house and be stuck with just that one house for years until we save/make enough to buy another.  I want to be able to buy a house and buy 2 more within 3 years.

@Leland

@Leland Barrow Thank you for taking a read and providing some advice.  Unfortunately house hacking won't be an option for us.  We both live in NYC, my friend with his fiancé.  We will likely be investing in an area within an hour drive from us.

@Michael Boyer Thanks for the suggestion.  I think my partner and I are both on the same page in terms of wanting to add value to our properties over time, but I think the problem with using this as a strategy to grow, is again, it will take a significant amount of time to be able to access those funds (equity) to purchase another property.

I want to be able to grow the business.  One rental property per 3 years isn't going to cut it.  There must be other ways...

My friend and I have been planning on starting a real estate investment company for the last 8-12 months.  Researching, reading, making guides, listening to podcasts.

The ultimate goal is to turn this into a full-time job for the both of us in the next 3-5 years.

We're young (27) so we don't have a ton of capital to invest ourselves, but we should be able to raise some funds from family/friends.  Lets say realistically we can start out with 80-100K.

The issue we are trying to figure out is how to get things off the ground.

My idea is to do 2-4 flips in order to more quickly raise larger sums of capital which will then provide us a larger capital base, affording us more flexibility in our investing and operations in general.  This will also allow us to illustrate more appealing returns and in a good timeframe for outside money. I'd like the business to be a 2 arm approach, where the flips fund the rental property/buy & hold approach. 

My friend on the other hand, only wants to purchase a multi-family rental.  He thinks a flip is too risky.

My issue with this is, it will never cash flow enough for us to buy another property, at least for several years.  We also won't be able to go to investors, as we will not be able to provide them a sufficient return, and even if we promised to pay them out first, we run into the problem of that not being a reasonable timeline and we would not put any money back into the business to buy another property.

I'm not willing to buy just rental properties.  I want a business that can grow.

Is there an alternative to these options?

How do we reconcile our differences of opinions on this?

Is it possible for beginners to flip 3-4 houses in a year?

Is it possible to purchase additional properties after buying your first with a limited capital base?

All suggestions, ideas, opinions are more than welcome!  Here to learn!

Thanks!