Dave you need to find a really good Investment real estate broker in your area.

The BIGGEST mistake I see is not using a broker/agent to help you formulate a plan and find your deals.

New investors think ok I don't want to pay an real estate fee so I will go it alone.They never realize you will lose FAR MORE money from your inexperience and negotiation skills on purchase in the real estate game.

Another common mistake is to purchase for a flip and then do the work YOURSELF to save money!Often times the investor is part-time starting out and they have a full time job.That leaves only the weekend working on the property.What happens is enthusiasm is high at first taering down the property but as time goes on the goals and timelines fade and that 2 month timeline turns into 6 months or longer.Meanwhile from making mistakes and having to redo things,ordering the wrong parts,and paying for utilities monthly,and loan payments that 3 to 4 k you thought you would save doing it yourself costs you 10k or even more.

It's better to have a competent contractor that knows his subs that can do quality work bank it out in 3 to 4 weeks and get back on the market.You are not paying retail prices here!

Hook up with someone and learn the ropes before going on your own.

Dave,

I'd try to answer your questions and see if I got you right.
Of what I understand you try not to make it a full time job anyhow. This is a good stating of constraints. You may also consider saying you try not no affect your life with this investment thing. I recommend this: you wouldn't like to spend money every month on your property. This will not allow you to increase the amount of property involved, gradually. And last, if I were you I wouldn't go into nothing unusual. no foreclosures or so on. Keep it for your second time.

So, I think a methodic attitude to your situation should state something as follows:
a. Minimum down payment.
b. No negative cashflow.
c. Mininum amount of time for ongoing management.
d. Low risk property as first deal.

In my opinion - try to find some condo or flat you can easily rent. But keep it simple.

Now, some things to keep in mind:
1. Save time - pay to professionals. Take a decent agent, attorney, and so on. Don't try to do other people's work better than them. Save your energy to trying to find out which of the people you speak to is decent.
2. Try leveraging wherever you can. Look at it this way: if you got into troubles with loans, use what you plan to use as a down payment. But if you didn't, you got a spare cash for other kind of troubles, or for next time.
3. Keep it simple. For now. You will learn the most (and find your way) from doing it, not just from reading. So make sure you can make the first steps. This is the only way to start walking and then running.
4. Plan. Plan carefully, and plan not only your investment, but how your family's budget is affected. Plan the next investmen, given it's the same. Don't overplan, but when you have something in your hand, make a complete plan before you start.

I'd be glad to give further advice, but I really think this is the best path in your case. This will let you in smoothly. It's better to start slowly because in this field falling is hard.

Steve

Summer break sounds like a great time to pick up a rental property or two. I know some schools kind of "shut down" after standardized tests are done (FCAT in FL, SOL's in VA, Regents in NY), so you could start checking out what is for sale. After the last teacher work day for the 07/08 school year and the kids are out, that would put you a few steps closer closing, rehab underway if needed, listed and tenant ready by mid summer. You know the school year starts Aug/Sept, those are popular moving months too. Along with Jan/May/Jun.
I know someone who is a great coach in helping others with their first RE Investments deals... http://www.kevianpartners.com Check him out!

Hi Dave, I am a real estate consultant with 25 years of real estate investment experience. I have made money in good markets and bad markets. One of the first things that you must decide is what do you mean by "investing in real estate?" That is like saying you want to go to Europe! Where, when, how long, etc.

Real estate is a huge and varied field. Do you want to invest for income, long term appreciation, what are your goals? What resources are you starting with? These are just some of the questions I or anyone else attempting to help you would need to know the answers to.

Once you formulate the answers to these questions you will have a point of departure. You will then be able to formulate questions that will get you specific information.

Be sure to keep the state of the real estate market in mind. What works in a rising market can be a death sentence in a falling market. Don't be discouraged by the collapsing market we are in. The famous author, Robert Kiyosaki (Rich Dad Poor Dad) says that you can make more money in a bad market than in a good market. And he is right. Foreclosures are the hottest part of the market now and for the next few years!

Wish you the best.

Bill Young
631-561-3864

On this topic, I actually have some questions to.
I'm a Realtor, but new at investing. I've been slowly doing my homework and I read quite a bit.
Read several real estate investment books, including Gary Keller's "Millionaire Real Estate Investor" But still have questions on how to take the plunge.

My husband and I want to start investing in the area I service (Humboldt County, CA). But home prices are much higher than rental prices by quite a bit.

We would just barely be able to break even if we were to purchase a Multifamily 2-4 unit property, but when my husband and I crunch the numbers we still fall short with a loss of at least $300 to $500 per month. Purchasing a single family as an investment...forget it, we'd be way in the red.

Do any of you buy investments that initially may lose several thousand dollars per year for at least 5 years?

Is there any suggestions in general you might have? I have thought about investing out of the area, but my husband doesn't want to at this time.

How much money do you currently have to invest??

You will find commercial is much more stable than sfr.Some areas won't cash flow from a rental standpoint and in those areas you generally resale and flip.In California I would stay away from both of those right now.You could purchase and hold but it would have to be for th elong term.

I can tell you the number one mistake new investors make is buying into a marginal deal and then when something goes wrong there is no wiggle room and you are STUCK for years waiting for the property to appreciate and rents go up.I see it alot in my area.

It's better to wait and put lot's of offers in to find those motivated sellers.Finding a small strip center for sale with about 10 shops can be a great investment and there are a bunch of ways to create value.If you were in Ga I could help you out.

Generally with commercial you can raise the rents easier,the tenant is responsible for most of the interior maintenance,they keep the property in shape because they want there business to look good to customers who patronize it.

What kind of cap rate you will be able to purchase at depends on the quality of tenants,the condition of the strip center and location,and the length of the leases and rent increases included.

good luck

Your husband might not want to go out of the area but will probably have to to not hit negative cash flow which to me is not an investment but a problem.

Thanks super realtor
Since I'm still building my real estate business and client list we are slowly building enough capital to invest. We don't have enough yet.

Thanks for the advice. I think I needed to hear this from an investor and not my husband that it has to at least break even and of course, better yet give us cash flow. We may just tak your advice and throw in some lower offers in our area and hope one seller bites.

If your going to start with one house avoid track homes.Look for areas in transition that are in need of revitalization.Check your dot,planning,commission,zoning board,and land use plans to see where commercial and residential growth is headed.Then buy the dumpy has on the land and rent it out and cash flow until the commercial or residential developer comes knocking on your door to buy you out.

This is called landbanking you might want to read up on it some.

Thanks for the great advice and ideas. Didn't even think about landbanking. I'll definitely look into this.

Super Realtor

Good advice, I would avoid track homes too. One fast moving train and your investment is gone.

Dave,
The first thing you need to do is determine your goals.

1. Why Real Estate?
2. What do you want your investment to accomplish? Quick cash? Long term Wealth Building?
3. What types of investments meet your personality type? Hate dealing with whiners? Don't be a Land Lord. Don't like to get dirty? Dont be a rehabber. Love carpentry and home improvement? Maybe rehabs are for you.
4. What skills and resources do you bring to the table? Cash? Credit? Carpentry skills? Knowledge?


Most newbie investors make the mistake of having lots of enthusiasm but no goals or plans. They jump in and wind up in a bad situation or one that does not meet their intended purpose.

When you understand what you want your investment to do, evaluate what kind of deal will meet that need. It might be rental property, it might be renovations, it might be note buying, or other options.

Once you have identified areas of interest, put yourself through "self taught" college. Read every book you can find on the subject and join your local REIA (Real Estate Investors Association) Go to seminars and find a mentor who does those types of deals.

Review periodically to see if your chosen method of investment still suits you.

Beware of slick "get rich quick" schemes, Pushy Realtors, or others who are just dying to "give" you a great deal. If the deal was so great, why aren't they taking it for themselves?

It has been my experience that 99% of Realtors dont truly understand investors needs. Realtors get paid to close deals, not to make you money or keep you from making a bad deal. Now if you find that 1% Real Estate Agent, become good friends. You will make each other a lot of money over time.