Real Estate Investing For Beginners 💁♀️
11m
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V12 Bat
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You would want to start with a single family residential unit. A two or three bedroom single family house as opposed to a multi family property something like a duplex or triplex. This way you avoid the overhead of dealing with multiple units and keep things simple as you learn. You should also avoid commercial properties as your first step as they usually require more complicated financing methods and are just more involve more things to learn and are not a great way to get started. The reason you should focus on a single family house is simple, there is only one tenant you have to deal with so when things inevitably break you only need to deal with that one tenant. There is less paperwork involved and trust me there is a lot of paperwork to deal with even with one property so you want to minimize that as you are getting started and learning the major pitfalls. You will make mistakes in a fact, there is no avoiding the goal should to be lessen the impact of those mistakes as you get started so that why you should start with a small property to lower your risk and maximize your learn-to-cost ratio. Another reason why it is important to start with a single family house is because worse case scenario you can fix problems that come up or hire a contractor to do it for you. The benefit of hiring contractors is two fold first if you want to separate yourself from your investment projects. That means you should set them on auto-pilot in order for you to be able to scale up in the future and truly benefit the passive income from those investments. Secondly and probably more importantly is the tax benefits. When you hire a contractor you can write off that cost against your rental income whereas if you were to fix the property yourself you would not be able to write off that expense. Ultimately it is very important to outsource as much of the work of real estate investing as possible. That is why you should do your best to hire a property management company. I like to iterate this is not to be mistake with a property manager, because at the beginning when I was first getting started I always assumed it's an individual who will be taking care of your property for a fee. That is false. The property management is actually a team of experts who have managed hundreds of properties and have a network of contractors who they can tap into when something goes wrong quickly. Property management companies can be your biggest asset when investing in real estate. A good property management company is absolutely an invaluable asset. They can help you with inspect of the property before you buy it. They can refer you to banks they work with if you need financing or need to refinance if you're using a BRRRR strategy (I talk about this in another one of my videos for more advanced investors). And as I mentioned they can help ease the pain of when things break but tapping into their trusted network of contractors. The typical 10% property management fee is absolutely worth it specially if you're getting started in investing in real estate. Do you need a lot of money to start? I highly recommend for those trying to get started in real estate investing to start with an affordable area. There are parts of the country where you cannot purchase a property for less that several hundred thousand dollars you should stay away from those areas. There are on the other hand many parts of the country where you can buy a brick single family residential for less than $50K! For example Memphis, TN or Cincinnati, OH or Detroit, MI to name a few. Absolutely get started with cheaper areas before you work your way up to more expensive real estate markets so when you make mistakes they don't cost you as much. Once you're making solid income from your first property then it's time to move into multi-family home, maybe a duplex, triplex or quad-plex. At that point you should have enough experience to make sure at least you are not going to make basic mistakes.
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