Podcast Summary
Four new investors share their first deal experiences: Starting a real estate investing journey requires taking the first step, building local networks, and utilizing resources like DealMachine for lead generation.
Learning from this episode of the BiggerPockets podcast is that real estate investing is a journey that starts with taking that first step. Four new investors share their experiences of completing their very first deals and the lessons they learned along the way. Whether you're a seasoned pro or just starting out, there's always something new to learn. One of the guests, Nicholas Stevens, shares his story of buying his first buy-and-hold investment and primary residence together in Boston. The podcast also highlights the importance of building a local network and using resources like DealMachine for lead generation. The episode offers valuable insights and tips for both new and experienced investors. So, whether you're looking to wholesale your first deal or expand your current portfolio, tune in to learn from these inspiring stories.
Exploring Real Estate Investment with No Money Down and Effective Property Management Tools: First-time investors can enter the real estate market with discounted properties through Rent to Retirement and simplified tenant screening with RentReady's property management software.
Rent to Retirement offers investors the opportunity to get new construction properties at discounted prices and invest with no money down, while RentReady's comprehensive property management software simplifies the tenant screening process with automatic proof of income verification. Nick Stevens, a first-time real estate investor, shares his inspiration for entering the real estate market. He was initially saving up for a single family home but realized the high costs in the Boston area. After learning about his sister's positive cash flow situation from a 2 or 3 family property, he started exploring this option. He contacted a realtor and her husband, who is a mortgage broker, for guidance. Good tenant screening is crucial for successful property management, and RentReady's new feature makes this process easier and more thorough. With TransUnion certified tenant screening and proof of income verification, landlords can ensure financial stability and confidence when renting out their properties. Rent to Retirement and RentReady are valuable resources for investors looking to start their real estate journey with no money down and effective property management tools.
Using an FHA 203k loan for multi-unit property purchase and renovation: FHA 203k loans enable purchasing and renovating multi-unit properties with a small down payment, by incorporating repair costs into the mortgage, simplifying financing process. Requirements include working with a licensed contractor and filling out extra paperwork.
Using an FHA 203k loan can make it possible to purchase and renovate a multi-unit property with a relatively small down payment. This type of loan allows the repair costs to be incorporated into the mortgage, making the financing process more manageable. However, there are some requirements, such as working with a qualified and licensed contractor, and filling out additional paperwork. The speaker shared their personal experience of using this loan to purchase a 3-family property in the Boston area, where they lived in one unit and rented out the others. The property was listed at $400,000, and after negotiations, the purchase price came to $383,000. The speaker highly recommends considering this option for those looking to invest in real estate.
Understanding tenant situations in real estate deals: Effective communication and clear understanding of tenant issues can lead to successful real estate transactions. Despite initial challenges, renovating a problematic unit resulted in a profitable rental property.
Effective communication and a clear understanding of tenant situations are crucial in real estate transactions. The speaker's experience with a problematic tenant on the third floor almost derailed the deal, but they ultimately decided to move forward and renovate the unit, transforming it into a profitable rental property. Despite the initial challenges, the speaker was able to secure tenants for all three units, resulting in a positive cash flow. However, the complexities of the eviction process in Massachusetts served as a reminder of the potential risks and challenges that come with real estate investing.
Navigating the duplex buying process as a first-time homebuyer: Work with an experienced real estate attorney and be prepared for challenges with banks, especially when dealing with FHA loans, to successfully buy a duplex as a first-time homebuyer.
Buying a duplex as a first-time homebuyer can be an awesome experience, despite the steep learning curve. The speaker shared his personal experience of managing the process of becoming a homeowner, a minor construction lead manager, and a landlord all at once. One major lesson he learned was the importance of working with an experienced real estate attorney when dealing with legal matters. Another lesson was the challenges of working with banks, especially when dealing with FHA loans and the regulations they come with. Despite the difficulties, the speaker emphasized that anyone could go through the process with the right resources and support. He also suggested considering buying a duplex or triplex instead of a single family house for fewer headaches. Overall, the speaker's experience highlights the potential rewards of taking on a project like this, even with the challenges that come with it.
Living with tenants in an old house: Benefits for landlords and tenants: Living with tenants in an old house can benefit both parties, with the landlord potentially living rent-free and gaining experience, while tenants enjoy a more affordable living arrangement. Utilizing a 203k loan and learning from wholesaling deals can help new investors start their real estate journey.
Having tenants living downstairs in an old house can be beneficial for both the landlord and the tenants, as long as the landlord is willing to accept the potential noise and other related issues. This strategy allows the landlord to live rent-free while learning the ropes of being a landlord. Additionally, the 203k loan is a great option for new investors to buy their first investment property and live in it while learning the ins and outs of real estate investing. Finding a knowledgeable lender is crucial for a smooth process. Ezoan Hawkins, a new investor, successfully executed her first wholesaling deal just a few months after joining BiggerPockets. She and her husband decided to invest in real estate and used their small savings to get started. Ezoan learned about wholesaling on BiggerPockets and saw it as an opportunity to add to their investment fund. Her story serves as an inspiration for new investors looking to start their real estate journey.
Persistence and negotiation lead to successful wholesale deal: Despite limited resources, persistent contacting and negotiation secured a deal. Unexpected setbacks didn't deter determination, and unusual contract terms closed the sale.
Persistence and negotiation are key in wholesaling real estate. The speaker, despite having limited resources for marketing, was able to secure a deal by relentlessly contacting landlords and negotiating a lower price for a property. Even when faced with unexpected setbacks like pneumonia, they remained determined and eventually closed the deal by advertising on Craigslist and accepting a low offer from a buyer. Additionally, the speaker learned that sellers may be open to unusual contract terms, such as a low consideration and deposit, which can help facilitate a quick sale.
Staying committed and flexible in wholesaling: Learning valuable lessons with minimal financial risk in wholesaling through staying committed and flexible to unique situations
In real estate investing, especially for beginners, mistakes can be costly but not as devastating as in house flipping. The speaker shared an experience where a seller owed back taxes, and despite initial reluctance, the seller was able to bring the necessary funds to the table to close the deal. The speaker also offered a portion of their fee to keep the deal moving. In another instance, the speaker was able to acquire a property for a dollar, but ensured the sellers were aware they could sell it to another investor and emphasized the importance of disclosures. Despite initial apprehension, the deals closed smoothly. These experiences highlight the importance of staying committed and flexible, as well as the potential for learning valuable lessons with minimal financial risk in wholesaling.
Success in wholesaling comes quickly with persistence: Persistently reaching out to sellers and utilizing resources like BiggerPockets can lead to quick success in wholesaling. Good tenant screening is also crucial in property management, simplified by RentReady's new feature.
Persistence and dedication to the wholesaling business can lead to success in a shorter time frame than expected. The speaker in this conversation shared her experience of selling a property quickly after the seventh day, which went against her initial expectation of a longer time frame. She emphasized the importance of being proactive and continuously reaching out to sellers to secure deals. Additionally, she highlighted the value of using resources like BiggerPockets to learn and grow in the industry without having to spend large sums of money on courses or classes. The speaker also acknowledged the importance of good tenant screening in property management, and mentioned how RentReady's new feature simplifies the process. Overall, this conversation provides valuable insights for those interested in wholesaling and emphasizes the importance of being committed and resourceful in the real estate industry.
Automating tenant screening and insurance for real estate investors: RentReady streamlines tenant screening with automatic income verification, while NREIG offers comprehensive insurance coverage for various property types under one monthly bill, saving time, stress, and resources for investors. BetterHelp's online therapy offers a flexible and effective solution to help individuals manage their time and priorities.
RentReady simplifies and streamlines the tenant screening process with automatic income verification, ensuring financial stability and eliminating the need for gut checks. Meanwhile, NREIG caters specifically to real estate investors, providing comprehensive insurance coverage for various property types under one monthly bill. Lastly, BetterHelp offers online therapy, enabling individuals to prioritize their time and energy towards what truly matters, making therapy more accessible and convenient. Matt's deal success story highlights the potential of targeting tax-delinquent properties. By marketing to individuals with impending tax deadlines, Matt was able to secure a distressed property at a favorable price. However, the property was in poor condition, demonstrating the importance of thorough inspections before closing the deal. RentReady's automatic tenant income verification and NREIG's specialized insurance for real estate investors can save time, stress, and resources for investors. Meanwhile, BetterHelp's online therapy offers a flexible and effective solution to help individuals manage their time and priorities.
Beware of vague property descriptions: Personally inspect properties before buying, as descriptions can be misleading and hidden damages can lead to unexpected repair costs.
Buying a property based on someone else's description can lead to unexpected repair costs. In the discussed situation, the buyer discovered significant damage in a townhouse after the seller described it as "good" and "only needing some work." The floors were damaged, there were holes in the ceiling, and other issues required thousands of dollars in repairs. The buyer ultimately bought the property for $5,000 cash and the seller's tax debt, but the property sold for $22,500 shortly after being listed. This experience highlights the importance of personally inspecting a property before purchasing it, especially if the description provided by the seller is vague or uncertain. Additionally, it's essential to research local real estate rules and regulations to understand the process for buying a property with an option contract.
Patience and persistence pay off in real estate deals: Being patient and persistent in real estate deals can lead to higher offers and ultimately, significant financial gains. Adaptability is crucial when unexpected challenges arise.
Being patient and persistent in real estate deals can lead to significant financial gains. The speaker initially planned to sell a property quickly for $25,000 but ended up receiving multiple higher offers due to a delayed contract signing process. Eventually, they secured a $31,000 cash offer, which was accepted. However, unexpected challenges arose, including a large HOA fee debt and the need for multiple siblings' signatures for the sale. Despite these complications, the speaker was able to negotiate and ultimately close the deal, demonstrating the importance of persistence and adaptability in real estate transactions.
Effective communication and preparation lead to successful real estate transactions: Clear communication and preparation during a real estate transaction can help avoid unexpected issues, ensure all necessary paperwork is in order, and potentially lead to cost savings.
Being well-prepared and communicative during a real estate transaction can lead to a smoother experience and potential cost savings. The speaker, Matt, shared his experience of buying a tax lien property and encountered unexpected issues, such as the buyer attempting to close early and asking for reimbursement of lease penalties. Matt stood firm on his agreements and ensured all necessary paperwork was in order before closing. He also learned that the buyer had hired workers to start renovations before the closing, which Matt used as leverage to resolve the issue. Through clear communication and preparation, Matt was able to close the deal successfully and make a profit. Additionally, Matt's inspiration for pursuing tax lien properties came from reading about the opportunity to acquire free and clear properties at a discount due to unpaid taxes.
Investing in Real Estate at a Distance: Despite high-priced markets, investing in real estate at a distance is possible with thorough research, a property inspector, and a property manager.
It's possible to succeed in real estate investing even in high-priced markets by investing at a distance. Meiran Kamari, a BiggerPockets moderator and active member, shares his story of starting with his first investment being his primary residence, then moving on to a duplex in Indianapolis. He did all the research online, used a property inspector as his eyes and ears, and bought the property with conventional financing. He faced no issues managing it from a distance with a property manager. This interview serves as an inspiration for those in high-priced markets, showing that investing in real estate at a distance is a viable option.
Vetting a Property Manager: Doing Your Homework: Thorough research and asking the right questions are essential when choosing a property manager. Utilize helpful resources like crime reports and Google Street View, and look for properties in desirable areas. Building strong relationships with like-minded individuals is also crucial for successful real estate investing.
Thorough research and due diligence are crucial steps in making a successful real estate investment. The speaker shared their experience of vetting a property manager and finding a great partner through the BiggerPockets community. They emphasized the importance of asking the right questions, relying on helpful resources like crime reports and Google Street View, and looking for properties in desirable areas. Additionally, they highlighted the value of working with like-minded individuals who share the same investing beliefs and goals. Overall, their success story underscores the importance of doing your homework and building strong relationships in the real estate world.
Leveraging BiggerPockets for Confidence and Feedback: Joining BiggerPockets and sharing deal analysis with experienced investors can help new real estate investors gain confidence and make successful deals. Building a cash-flowing portfolio is important for financial security and pursuing real estate investing full-time. Gerard S. Pipe's book offers insights into successful real estate investing psychology.
Being an active member of the BiggerPockets community and seeking the advice of experienced investors can help new real estate investors gain confidence and make successful deals. The speaker shared his personal experience of buying a short sale property for $21,000, investing $3,000 in rehab, and estimating an ARV of $40,000. He also shared how posting his deal analysis on the BiggerPockets forum helped him overcome analysis paralysis and gain valuable feedback from experienced investors. The speaker emphasized the importance of building a cash-flowing portfolio to eventually replace income and pursue real estate investing full-time. He also recommended the book "How I Turned $1,000 into 5,000,000 in Real Estate" by Gerard S. Pipe for understanding the psychology behind successful real estate investing.
Setting goals and staying motivated: Clear goals and motivation can lead to productivity and success, even when faced with challenges. The BiggerPockets community is a valuable resource for investors to learn, connect, and grow.
Having clear goals and a strong motivation can make an employee more productive and motivated, even if their ideal work situation isn't perfect. Mehron, a successful real estate investor, shared his experience of working towards his goals despite not being able to work his preferred shift. He emphasized that everyone has the dream of working for themselves and having the freedom to spend time with family and friends. Mehron's determination and motivation have made him a better employee and have contributed to his success in real estate investing. This interview highlights the importance of setting personal and professional goals and staying motivated to achieve them, even when faced with challenges. Furthermore, the BiggerPockets community is a valuable resource for investors, regardless of their location or experience level. The community provides a platform for investors to learn from each other, ask questions, and offer support. It's a place where investors can connect, share ideas, and grow together. So, in summary, having clear goals and staying motivated can lead to personal and professional growth, and the BiggerPockets community is an invaluable resource for investors looking to learn, connect, and grow.
Find the right real estate agent for investing success: Connect with local market experts through BiggerPockets Agent Finder for neighborhood insights, number analysis, and deal confidence in real estate investing.
Finding the right investor-friendly real estate agent is crucial for those looking to get into or advance in real estate investing. The market may be unpredictable, but staying invested for the long term is key to achieving financial freedom. With BiggerPockets Agent Finder, you can easily connect with local market experts who can help navigate neighborhoods, analyze numbers, and build confidence in making real estate deals. This free resource is available exclusively at biggerpockets.com/deals. Remember, investing in real estate involves risk, so always consult with qualified advisors before making any investment decisions. BiggerPockets LLC disclaims all liability for any damages arising from the use of this podcast's information.
