New investor seeks advice - Posted by Tim

Posted by Tim on August 04, 2008 at 19:56:30:

Thanks for the advice! You are correct in your line of thinking with regards to most hotels and restaurants, however my girlfriend has the potential to work in a multi-million dollar private country club, so it is a bit different. Anyway, your advice is greatly appreciated!

On another note, only two posts so far? I was really hoping to get a bunch of sound advice from some seasoned investors out there. Anyone else care to pass on some advice to a newbie?

New investor seeks advice - Posted by Tim

Posted by Tim on August 04, 2008 at 13:45:19:

Hi all-

First off I’d like to say hello and introduce myself. My name is Tim, and I currently live in PA. I graduated last year from Penn State with a BA in Business Management. I am looking into getting into real estate investing in about two years in Southern Florida. My girlfriend is entering her Junior year (also at Penn State) in the Hotel and Rest. Mgmt (HRIM) major. Through some networking at PSU, she hopes to land a six-figure management/sales job at a private country club. Due to some excessive spending habits (that are now under control! haha) we have around $15k in debt (but thankfully I graduated with NO loans as will she). My plan as of now is to use these next two years to educate myself as much as possible about real estate investing while at the same time becoming totally debt-free (no loans or car payments, all CC debt so once it’s gone, it’s gone). My credit as of now is 715, pretty good for 23 years old I think, and I feel that if I pay everything off and don’t miss any payments (which I never have and never will) I should end up in FL with a darn good score. Right now I am in the middle of reading “Investing in Real Estate 5th Edition” by McLean and Eldred. I have some other books at home that I will read once I finish my current one, and I have thankfully found this site which I browse every single day. Basically I am coming to you seeking some advice. I guess my questions as of now would be:

  1. Is Florida a good market to be starting in? Bear in mind I am not looking to start doing deals for about two years; what are your thoughts on where the market will be, especially for Southern FL, in two years?

  2. What are the best ways to continue my learning? I love to read, so any good books one could suggest would be very helpful. How about any good courses/lectures? Should I think about taking some RE classes while Penn State is still (somewhat) at my disposal? Or could I learn the same things from a good book (a $30 book is better than a $600 class!!)? Should I think about getting my license?

  3. If you were to start all over again, how would you do it? As of now I plan on getting to FL and buying a small home (to take advantage of the good owner-occupancy financing) living in it for a year, then moving to a new place, renting out the old, and continuing the process. Thoughts/suggestions?

Hopefully if the gf/wife (by then) lands a six-figure job I can secure a decent job that will allow me to put all of my earnings strictly towards my RE investing career. I say career because that’s what I’m shooting for, making this my full-time career and developing a strong portfolio as well; basically I want to be a full-time investor who has his office at home and spends his days doing comps and analyzing deals and crunching numbers and making calls yadda yadda (to me that would be a dream come true!!). I am a very intelligent individual; I have always had a knack and a love for RE, this career choice feels right to me, deep down, and it also feels like I could make this work 110% and allow a wonderful lifestyle for myself and my family. Instead of bullshi**ing around my office like everyone else does, I read my book and browse this site. I want to tackle this head-on; I don’t want this to be a hobby I want this to be my career, what I live and breathe for and what I enjoy doing. I know it won’t happen overnight, which is why I am taking the ample time beforehand to educate myself and get all my ducks in a row, so to speak.

So there you have it. I know it was a long post, but mine is a long story, so thanks for bearing with me. I guess I have just one last question; if RE investing is as fun as it seems to be (to me at least) and has the potential to afford you a great lifestyle, why doesn’t everyone do it? I assume most people are scared of the risk/don’t take the time to educate themselves, but what would you say is the reason everyone isn’t looking towards RE as either a career choice or a way to make living more affordable? Thanks in advance to everyone who helps me out!

Tim Fisher

Re: New investor seeks advice - Posted by Jm

Posted by Jm on August 10, 2008 at 08:14:06:

“Keys to buying foreclosed and bargain homes” is a quick read and a great primer for a new investor. If you haven’t read it, I’d suggest it. Real estate investment education is an expensive tuition in regards to time, no way around that, but you don’t have to spend thousands of dollars to get the knowledge. I personally have never been to a bootcamp or hired a mentor. I feel that if you can’t educate yourself using inexpensive and free material, then you probably shouldn’t be in the business to start with. Just my opinion though.

Re: New investor seeks advice - Posted by Alexander - CA

Posted by Alexander - CA on August 05, 2008 at 13:59:43:

I think this is a great time to start looking to get into Real Estate. South Florida is going to have huge amount of opportunities especially in the next 2-3 years.

The most important thing (in my opinion) is to know your market very well. Spend time studing areas. Choose one that appeals to you. Then start making offers and getting the properties under contract. You can make some money on wholesaling or flipping contracts, remodeling… Make sure to be conservative and keep properties for long-term.

Best of luck.

You are on the right track.


Re: New investor seeks advice - Posted by thutch fl

Posted by thutch fl on August 05, 2008 at 11:27:19:

Join a real estate association. There are numerous ones in South Florida that are good.
Learn Spanish if you do not already know it, it will be more valuable than anything in a book.
Learn to evaluate properties and then make offers based on multiple exit strategies.

Become a Gator Fan, actually we have a few Nittany Lions around here.

Re: New investor seeks advice - Posted by camgere

Posted by camgere on August 04, 2008 at 18:07:25:

Ah, to be young and eager. Congratulations on your degree. You have finished so you are ready to begin. Buy and Hold with leveraging works itâ??s magic over decades so starting young is a good thing.

We all know that a sum of money can produce a recurring income. We all know a recurring income can finance a sum of money. Youâ??ve probably never invested $10,000 over the course of a year and turned it into $11,000. Youâ??ve probably never paid a $1,000 a year to borrow $10,000 for an investment. This is the bread and butter of real estate and you have to feel it not just intellectually understand it. Hotels and Restaurants are just a way of turning an asset into a revenue stream. But you can borrow money to do so and you have come full circle. Tiny chocolate candy bars on the pillow are a means to an end. Return On Investment. You are not in the customer happiness business. Oh, and the real amounts are in the tens of millions of dollars.

Personally I thought that Hotels and Restaurants were famous for exploiting newbie graduates with (overtime) Exempt Junior Management positions and running them ragged. Maybe the good old days are gone.

If you are going to be a Buy and Hold investor the single most important skill you can have is filling rental vacancies. Do this for someone even if you have to work for free. You will quickly find out that the rust stain in the kitchen sink is causing wives to turn around and walk out of the rental. It doesnâ??t matter that a cleaning person billed you for a standard cleaning. Rent is the aforementioned recurring revenue that allows you access to an asset (real estate property). You will be stuck with non-performing real estate as an investor. Learn what it takes to make it generate revenue.

If you are a Flipper, learn construction. Again you may have to work for free at first as you are worth nothing. So you scrape old tile for a while. Eventually you get to caulk a few tubs and even lay tile. You become a connoisseur of the six different kinds of grout. Same for plumbing and electrical. Work construction full time for a couple years or part time for a couple years. More is better, so get to it. Someday you will be stuck with a piece of crap and being able to turn it into a silk purse is an invaluable skill. You will never, ever have to â??trustâ?? someone that their high prices are necessary. You can look them square in the eye and say â??For that price Iâ??ll do it myselfâ??.

$20 books have much the same information as $3,000 bootcamps. Either way you have to use the information to take action.

Good Luck!

Re: New investor seeks advice - Posted by Tim

Posted by Tim on August 05, 2008 at 12:13:43:

Thanks for the advice! I definitely plan to join a RE association when I get down there; in fact I have already been looking at a list of the associations in South FL (can’t remember where I found the link, but it’s a good list). My Spanish is decent, three years in HS and two in college, but I will definitely brush up if you feel it’s worth my while. Also, when you say make offers based on multiple exit strategies, what exactly do you mean? Like if they accept my offer have a few ways of getting out of the deal? Just wondering…and I’m not sure about being able to become a Gator fan, I truly do bleed blue and white (along with black and gold for the NFL season haha!)

Thanks again!