Thread: Any Tips for a First Timer?

There is no stupid questions.
If the numbers are good enough for you, go for it.
If you buy a property with a plan in mind (renting to college student close to a college, flip it, renting long term, etc...) and it makes some positive cash flow, buy it and learn from there...

I have to agree with Cody. It is mostly about cash flow. If you are not relatively close to the property you are going to most likely pay someone to manage it. Once you count in management fees and the cost of repairs if your hiring someone, just be sure the cash flow is still positive.

I would strongly recommend coming up with a 1-5 year business plan prior to investing in anything.

I own 30 homes currently and I certainly wish someone had encourages me to figure out what direction I wanted to go with thing. Homes are kind of a difficult thing to do "Trials" on because they can end up being very costly trials.

I do like to see that your willing to do something. Most people never make it beyond that point.

Originally Posted by IamNEWsorry

Hello all. I am new to the whole real estate business. Im not trying to flip any homes or anything of the sort. But I will explain my situation. I am a business major, graduated from college with my BA about 2 years ago. Im fairly young and im making fairly good money in what i do now which deals with computers. However, i really find real estate very interesting and could see myself doing that then working in some office the rest of my life. I've managed to save quite a lump of cash over the past two years and have around 60k to invest in a house. Location in the US to me isnt all that important to me (i live in New York), but rather, whether or not I can rent out the houses im investing in.

I was thinking about investing in a "trial" house persay, something i could learn from that would run around 100k, something with 3 or more bedrooms near a college so that I could possibly rent to college students or a mid-sized family. I have found a few in certain locations outside of New York. Actually, i've found the perfect home to invest in, 2 bathrooms, 4 floors (basement included). I wanted to put down around 50, and pay the rest in mortgages.

Now, I know, some of you are thinking im completely stupid, but I really dont have any experience in real estate whatsoever, and I can read books, but nothing beats speaking with people who have had real hands on experience. And thats why im here to ask if this is a stupid idea or not.

Do you think im aiming too low? do you think i should be buying an apartment or condo? Maybe some of your first time experiences could help, and the mistakes you made that one should avoid.

Again, im sorry if these questions are absurd or ridiculous, I would just like to hear from people who have experience and are willing to help a newbie such as myself out.

Thanks Again!

You need to have an exit plan before you ever make an investment. This means you need to have a plan of when and how you will turn over the property. Will it be a long term investment that you maximize your depreciation allowances and then use a 1031 tax exchange into a larger property. Or will you have your investment a short term investment say a 5 year holding period and then sell it. Unless you are planning on flipping property it is a poor idea to have a holding period plan of less than 5 years. Since the transaction costs of selling a piece of real estate are steep.

With that said I think you idea of where you will purchase the property and who you will rent it to is solid. I would discourage you from purchasing any property in upstate New York unless it is in Ithaca. As the upstate cities just are not stable. Industry in those areas continues to decline and there is no immediate end to this trend in site. That means any investment there could seriously lack appreciation. Without recieving appreciation numbers atleast near inflation rates you will have a really difficult time turning a reasonable ROI.

Texas is well known for having modest stable appreciation and high rents to property values. My suggestion would be Dallas or Houston for an investment interest such as yours. I also know that the Carolinas have some similar opportunities but they are quickly eroding.

In conclusion to this book of a post I suggest that any purchase you make be in the sun belt and you plan to visit your property at least once a year. In addition to this suggestion I would not put more than 30% down on any property ever. If you put more than this down you loose the benefit of leverage. Leverage and tax shelters is what makes real estate such a appealing investment class.

If you need anymore direction or are unfamiliar with terms that I have used feel free to ask any questions you might have.

Wow, thank you all for all the informative replies. I'm going to look into this further, and jamesww, I hope you dont mind but i might PM you with a few questions.