All Forum Posts by: Ross Kline

I talk with a lot of people who want to get into REI, but don't really know how. They just got excited because they saw some content on social media, YouTube, or TV and feel like they're missing out.

At the end of the day, most people end up kicking the can around and never doing anything. All the while, their money is sitting in cash accumulating “opportunity cost” (what the money could have earned, had it been invested).

So, what I advise people to do, is go ahead and invest the money now however they feel comfortable (Just make sure to use a taxable advisory account, not a brokerage account, so you don't pay a commission and there's no tax penalty when you liquidate)… Then, if they are really serious about getting into REI; read books, attend investor meetups, and analyze a ton of deals (At least 20 over several months. Completed deals too. Understand "Cap rate", NOI, and COCR metrics.). It takes about 6-12 months to really understand how to invest well and to get a feel for what a "good deal" looks like.

I also recommend the following resources:

• How to Invest in Real Estate - https://a.co/d/eU5yXVl
• Real Estate by the Numbers - https://a.co/d/hTbGNnb
• Real Estate Investing Forum - https://www.biggerpockets.com/

When approaching it strategically this way, a few people actually get into REI… But many realize it's WAY more work, stress, and risk than they feel comfortable with.

I imagine this will be a polarizing post, but hopefully it helps some people. To be clear, I am a big fan of real estate investing. I just find that there are a LOT of people in the position I described earlier who waste a ton of time or jump in unprepared and lose their hide.

Curious if this make sense to you, of if you've heard this advice anywhere else. Seems most people are either in the "don't get into real estate" camp, or the "everyone should get into real estate" camp... Trying to be a balanced voice of reason.

I know hiring a CPA or advisor is a good idea at any point, but at what point in an investor's progression does it become a necessity?

I imagine it depends on focus, like LTR vs STR vs development... Curious to know your thoughts and experience!

Also, at what point did you hire a professional, and what did you hire them to do?

Thank you for that thorough and well written response!

I've been analyzing deals for a couple weeks now. A mix of single-family, small multi-family, BRRRR, and even a 20-unit apartment.

I'm a numbers guy, so I've done my research and believe I am using accurate numbers when calculating NOI and cap rates.

What I've found is that on-market deals typically have a cap rate of 5% or less, and after debt service cash flow is often negative, especially at current loan rates.

So do investors just have the income and cash to buy and wait for spreads to widen as rents increase?

Would love to hear your thoughts!!