Most people who know me know that I am into real estate. I’m very much a novice, but I see a lot of people wanting to get into it. Some have even asked me about it, or where to start. I have done a lot of research. I listen to a lot of podcasts, read a few books, and read websites. To that end, I thought I would share what I have learned and throw some resources out there that I use and have used for other people to use.
What I have learned so far through my small amount of experience and advice that has helped me:
1) First step is to figure out your goals.
Do you want to flip houses? Do you want to Buy and Hold? Do you want to develop and sell? Do you want to build on vacant lots and rent them out? What’s your income goal? Do you want to replace your income and stop there?
The steps to do this are listen to the podcasts that I recommend later in this article. The recent Bigger Pockets one about the “freedom number” was good for me. It will help you figure out your goal.
For example,you might have a goal of 2 properties per year cash flowing $200/month or something like that.
2) At the same time learn all you can about your market. If you’re willing to travel, what about other markets around you? I am in Richmond, and know nothing about, say, the tidewater region, but your local REIA groups or other meetups should help you there. Talk to people (in person, you can only do so much on-line).
3) Talk to a lending professional. Figure out if you can get financed and for how much. Knowing your own ability to get financed can tell you where to start.
4) Easiest (but not easy) way to get started is to use an FHA 3.5% money down loan to buy a duplex/triplex/4plex and get tenants to pay your PITI (Principal, Interest, Taxes, and Insurance). Once again, I don’t know what market you’re in and if that’s feasible. Use some sort of Calculator for real estate investing (such as Bigger Pockets calculators, for paid subscribers only) to figure out if the numbers work.
The things to account for in a Buy and Hold property are Principle, Interest, Taxes, Insurance, Vacancy rate, a percentage for repairs, possible HOA dues, etc.. The books I recommend later in the article will define all that for you.
5) Other successful investors, especially the ones younger than you and your same age, can be intimidating to someone who is working full time, making family time, and trying to make Real Estate work. A lot of these people who are constantly flipping and making deals happen are light years ahead of you in their real estate portfolio.
Don’t compare yourself to other people. Know what your personal goals are and reserve engineer them to lay out a rough outline (that will inevitably change over time).
6) Get started. NOW. There will never be a perfect time or the perfect property. The best way to learn is by doing imperfectly and learning.
Number 1: Bigger Pockets (www.biggerpockets.com)
Bigger Pockets (BP) is basically a social network for real estate investors and the best starting spot. They have a free course called The Beginners Guide to Real Estate Investing. They have a weekly Podcast where they interview successful members of the website. Both of these are awesome ways to get educated. They have a blog where members write posts. They have calculators for rentals, flips, etc. to analyze deals (real estate transactions are referred to as “deals” by everybody for some reason). These are mega important for due diligence prior to investing.
The most important resource BP has is the BP Community. There are forums, ways to connect, etc. and it basically is a place for you to go give and get advice; share stories and information; and read through to learn. You can post your deal on the forums and ask people to analyze it, and they will usually look at your analyses and help you figure out whether it’s a good deal or not simply because they enjoy real estate. I have asked questions down to something about mudding drywall for my water heater closet.
Everyone wants to help other investors because real estate is not a zero-sum game and when you put good things out in the universe it pays you back with interest.
Also, totally worth it to pay for Plus, if not Pro membership if you are at all serious about real estate investing.
Aside from Bigger Pockets podcast, the number one tool that I use for Real Estate (RE) education are podcasts. I have 3 real estate related podcasts that I listen to religiously every week:
I mentioned this one earlier. This is not the best quality podcast, but it is probably the most informative for just real estate. It is good for all levels of investors and covers a wide range of topics. One of the hosts Brandon, while very knowledgeable and nice, is very annoying to me (I think it’s his voice), but not so much that I won’t listen to this podcast. They interview Bigger Pockets members of varying levels of success and by listening to this you can learn strategies, see how other people off their investments, as well as be inspired.
Easily the most well-rounded, professional podcast out there. Robert Elms has been hosting a radio show for something like 25 years and has an enormous well of knowledge and contacts that he leverages to help investors, from buy and hold to flippers; and from novices to experts.
They cover all topics real estate related. They will also sometimes interview people about the Federal Reserve or other markets, just to give perspective to how economic news will affect real estate.
This is the podcast that reminded me about wanting to invest in real estate. I heard him interviewed on Entrepreneur on Fire with JD and started listening to his podcast. That is what prompted me to FHA loan and house hack (a fancy term for living in one unit and renting out the other) a duplex. A lot of his episodes are just him telling you about a specific strategy, or part of a strategy. He outlines how to do the FHA loan on a multi-unit property. He takes concepts such as total return on Real Estate and breaks it down over an hour episode. He also does some inspirational episodes and interviews with people. All of his interviews are strategic and cover specific topics.
He’s big on using turnkey investment providers who buy, rehab, rent out, and some even manage a property for you out of your home market. I understand why he recommends certain ones on his podcasts, but sometimes it seems like his podcasts are a sales pitch for some of these companies. In my research though, I have found that most people have been happy with his turnkey providers, so maybe Keith is genuinely trying to refer people to good companies.
I have to be honest in saying that I haven’t read a ton of books on Real Estate Investing, but these are ones I’ve read that were widely recommended.
Of course there is the seminal Rich Dad, Poor Dad by Robert Kiosaki, which I mentioned a few months ago that I listened to on Audiobook. It’s basically the catalyst for you. It will shift your mind and the way that you think about money. It will shake you out of the mindset that you work, save up a bunch of money, and live off of that fixed amount of money through retirement. Lessons such as “work to learn, don’t work to earn” and buying assets with the money you earn instead of consumer stuff.
Most real estate investors will tell you they have read this book ,and many will tell you this was THE book that changed their lives forever.
Okay, so you’ve purchased your investment property… now what? This book is highly recommended by several folks. If you’re not going to pay a property manager, then this is the book you need. Mike Butler has developed systems to manage his some-80 rental properties. He gives systems on tenant screening, managing those tenants, managing the property, writing leases, etc. This helped me wade through a lot of BS when finding a tenant for the duplex. Also ,when you buy the book, he gives you all the templates you could ever need for managing your properties.
Another Bigger Pockets related recommendation (sensing a pattern here?). Brandon Turner wrote this book on how to use almost no money to get started in real estate. Strategies such as syndication, leveraging portfolio loans from local banks, using private/hard money, etc. He also talks about the FHA multi-unit strategy for first timers. It’s a great read and luckily Brandon isn’t the one who does the audio book version.
Full disclosure: I mostly listen to Audiobooks.
Real Estate Investment Groups
For education as well as finding deals, these local real estate investment groups are the way to go. It is full of experienced investors, hard-money lenders, potential business partners, and newbies who you can learn from, make deals with, or even teach a thing or two. I found two local ones in Richmond (Virginia) that I attend on Meetup.com.
The best thing you can do is to find a mentor. I have a great mentor who I met through my Masonic Lodge in Reno (who is also my realtor) who is happy to give advice. I can never really let him know how appreciative I am of him, but he has no idea how much I value him being there for me when I have questions.
If you can find a mentor (probably your best chance is working for someone for free) it’s the best way to go. It could be someone you meet at an REIA group, on the street, a friend, or family member. They don’t always have to be older either.
If you want to get into real estate, I’d love to talk to you about it as a starting point, so feel free to hit me up!