I am thinking of trying to get into real estate investing and had a few questions for you experts out there.

First let me set the scenario and go from there. First, I am a 24 teacher. I just recently bought my first home with my wife. I am not looking to make this my life, and I am not looking for the get rich quick scheme that will promise to make me millions over night. I have always had an interest in real estate, and with the 3 months I get off every summer I was hoping to find a way to break into the market. As I start to invest my money I want to try and find the niche that works best for me.

The first thing I want to ask is can real estate investing be done as a part time deal? Like I said before,three months a year I can focus directly on my real estate, but the rest of the year it would take a backseat to my teaching/coaching jobs.

What do I need to do in order to get more involved? I have been reading the forums for a bit, and like anything the more information you can get your hands on the better. That being said, is there a particular way some of have found more effective when a person has tried to break in?

Thank you very much for any help you all may be able to give. Also, please do not feel bad if say this is just not something you can part time. In the end that will save me a whole lot of money and headache

Dear Dave,
First of all, I hope you don't teach English, because I would hate it if I had a school-aged child trying to learn spelling and grammar from you.

There are many ways to get into investing. Do you want to fix and flip? Buy multi-family units and deal with tenants? Buy REIT's? Own storage units? Do you have some start-up money?

Despite what you may see on the infomercials, you really need to have some form of capital. Money you can put to work without it causing a strain on your family. If you have equity in a home, you may be able to tap into that with a home equity line of credit.

Owner occupied properties are easier to finance than non-owner-occupied. Could you see yourself living in one unit and renting out others?

There's many different ways to go about it. Read, read, read about the different ways. Figure out your risk tolerance. Figure out if you have the kind of personality to deal with tenants. Do you have handyman skills? Would you be paying someone else to do repairs?

I started with a small foreclosure house that cost me $8,000, using collateral from another source. I later sold the home for more than double what I paid for it, after renting it out for several years. Those are small dollars, it's true, but the principle is the same even if you're going after a more valuable property.

Most investors will tell you that you make your money buying at the right price. So that means you need to research your area so that you recognize a buying opportunity when you see it.

Sorry about the grammar in the first post. I guess I should read my post more carefully before pushing that submit button.

Anyways, back to the topic at hand. We do have a good amount of equity in our house that we just bought. We put down 20%, which came out to a little over $32,000. From everything I have read and learned I am going to stay away from any type of 100% financing deals. There just does not seem to be any wiggle room for unforseen expenses.

I would love to find a small home like the one you described as you got started. I do not want to take a multi-family with my first investment. I would like to find a single family that could be rented out for a while and then sold. I have some handyman skills, but some repairs I would have to pay for.

What techniques do you use when it comes to researching the area? Do you use county records to try and asses value, or go by sales history?

Also, what is the difference between a short sale and foreclosure? Which of the two gives more room for negotiating? What did you find to be the best resource when looking for a foreclosure?

Thanks

I would recommend teaming up with a good local realtor who can help you do research. I check
http://www.foreclosure.com
for local foreclosures. No site is perfect, but that one is pretty good. It won't give you exact addresses unless you subscribe. Some of the others just snag their material from other websites. Most foreclosures also are listed in the MLS, so that's always a good place to look. I also check for local HUD listings, read my daily paper for upcoming auctions and keep my eyes open for properties with unplowed driveways, overgrown lawns, windows with stickers on them posted by utility companies or property management companies. When I find one that looks interesting I check it in public records to find out the assessed value, for a ballpark idea if there is more owed than the property is worth, and if there has been a recent sale. Properties being sold at the court house may have encumbrances such as second mortgages, IRS liens, unpaid taxes and so forth. The owners may have owed more money than the house is worth. It's good to have an attorney or title company that can help you uncover problems ahead of the sale.

Once you figure out your plan, include your realtor in your planning. They can alert you to new opportunities.

There are sometimes opportunities in short sales; however, this is a grueling, lengthy buying process that frequently doesn't work out. The above-mentioned website may give you properties for which a lis pendens has been filed, or recent bankruptcies. The owners of these homes are headed for foreclosure unless they find a way to work it out. It is possible to contact them and try to work a deal.

You can also physically go to your local county clerk's office or wherever public records are stored and ask to go through lis pendens and other such documents.

It boils down to doing a lot of homework, and you will need to work with several local trusted people: a contractor, a title company or attorney, a good real estate agent, possibly a home inspector.

I found the home I now live in because there was an auction notice posted at the post office! So be alert; you never know when or where your opportunity may come from.

I think with younger people beginning to text message like crazy, with all the abbreviations and shortcuts, the idea of people using perfect spelling and grammer is now officially as dead as the Latin language. Ha, Ha.

You may find some investment clubs available who invite newcomers. We have a few here in Houston. Those guys will give you the investor side of things...up to and including how to use real estate agents to do the dirty work before cutting them out of the deal. However, it is one more source for you if you are interested in learning investing. You are young...go for it. One thing I have always practiced in my career is not to take on something until I was the best at what I was currently doing. That worked extremely well for me until I got into real estate.

Anyway, good luck to you.

It is all about what you'd expect out of your investment. If you expect a very high return within a short period of time, you need to devote more time and effort. If you plan for the long-term, e.g., as a part of your retirement portfolio, you can do it on a part-time basis.

You are young and time is on your side. Even if you go through the real estate market downtime, you can ride it out. Many have said that the real estate market return fares well, if not better, than the stock market.

Maybe you could try bird dogging during your three month vacation period for a year or two until you decide which area of investing you are most comfortable with. You'll get an education and build some seed capital in the process.

Dear Dave,
Don’t worry about spelling, I don't think that your critics spell better:-) and we are not in English class here.

About the 100% financing I would say just do it, depend what equity you will have on your house. If you buy a house with 30% equity and finish up with 15% after repair you are good.

Good luck!

Dave

Your not even close to committing to anything or making a decision. To your general question can you start part time, yes.

Do you need a lot of money, no. I started with what would be about $500 in todays money, and I had zero credit.

Now do what you should have learned in college. Do some serious research, check out books at the library, go online to sites like this and creonline and start reading the archives, read and read and you will find out investing is a job and not some passing whim. Buy a book or two at the bookstore and start your investing library. Keep a notebook. When you finally have a foundation of some kind then ask specific questions and we can help.

Dave - Bay area Brian is spot on.

You can do this part time and there are many methods that require zero cash.

Do your research and attend a couple of REIA meetings and figure out what appeals to you most.

The national reia site might list one or more near you.
http://www.nationalreia.com

Chris

100 financing should be the only way to go. It's all about leverage. When you invest in real estate you should use OPM (Other peoples money)

Dave, a short sale happens when someone is forced into foreclosure because of default. So basically foreclosure property sales are part of short sale. They aren't different, rather interdependent.

Dave –

Dabbling in Real estate part-time is possible. But it is important that you keep up-to-date on market behavior all through the year and not just for those three months. Keeping a tab on the Real estate market can help you observe and calculate your investments and opportunities better. Thorough ground-work is the best way to go about in a new field.
For detailed information about real Estate investing, please visit - http://www.jasonhartman.com

I never consider investment to be part time
and always find time and the other thing is that you can have good deals on weekends too

Investing can be good, and it can be done with very little money down.

Having said that, you NEED TO BECOME A EXPERT! Investing can be great, but like anything else, it can become a quick money pit and you can loose quite a bit of money.

Hook up with a local Realtor that works with people in your position. I've teamed up with many first-time investors and showed them how to make a profit. You have to understand as much as possible in order to make money, what you don't know can harm you a ton.

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.