Resources to Learn Real Estate Investment

Back in 2002 when I was affluent I researched this, but had lots of trouble wading through crap from the get rich quick guys. By the time I had enough money to invest, we were in a housing bubble and I got laid off.

I'm thinking this is a good area over the next 10 years. So I want to pick this plan back up. Can anyone recommend some resources to get up to speed?

Depends on what you are interested in: Rental property? If rental, then residential or commercial? Are you looking to fix and flip or buy in speculative markets? Looking to build?

there are resources (books) specific to your intetests.

I'm not 100% sure. I'd like to start smaller and build a steady cashflow without over leveraging and having to worry about losing money too much.

I think residential rental. Off the top of my head if I go 50% down during the downtime I could probably get a positive cashflow from renting. Then build up slow but steady.

But I'd be interested in surveying my other options too.

Section 8 is guaranteed money if you can put up with the potential headaches.

Cool, I'll check these out.

  • The rental market is good in most places these days. Since people aren't buying, rental rates are increasing.  
  • Most rates are low (mortgage or re-fi) so money is relatively cheap if you can get it.
  • Loads of houses to pick from and this should increase over Q3 and Q4 as the REOs get flowing again.



In short, great time IMO to buy for rental purposes.  Just keep in mind that you are likely to see depreciation in most markets for another couple years.



If you can buy with cash, a cap rate of 20% isn't too difficult to find.  We shoot to have our nut back in 5 years with all rent after that being sheer profit (minus taxes and insurance).  Better areas have a lower cap rate, while not such great areas have a higher rate.  Better areas will see more appreciation, but you will probably net less income as they are more epensive to get.  You may want to find that sweet spot in your area where you get the most rent for your purchase price.



Buying, fixing, flipping in a depreciating market can be tricky.  If the rehab takes longer, you over-price the property when listing, etc.  you are up against a wall much more when values are going down vs. when they are increasing.  Also, if you go this route be sure to account for all your expenses:  cloisng costs in, rehab costs, carrying costs (PITI in financed), closing costs out, etc as well as allowing for profit.



Books are good, but RE is very local specific re: values, costs, laws, rents, etc.  I def think that great info can be had from a book, but be sure to get yourself familiar with your area.  A good Realtor can also help.  As a buyer you won't be paying their commission.  Sometimes you can get good deals outside the MLS as well.  Be aware of investment clubs.  While they may be good resources, just make sure a 'wholesaler' isn't giving you BS comps to inflate his value and 'substantiate' his asking price.



Sorry for the long post.  Hope it wasn't too confusing.  One of the best things I can tell you is just to get very familiar with your local market:  prices, areas, rents, closing costs, etc.  You'll need to be able to apply what you read in the books to your local market.



Good luck!


^Good post

I bought my own house last year and did about 5 months of research leading up to. I've pretty much continued looking around, so I'm building a good knowledge of the area.

I did know there was a RE investor club in my area, but until I have money to buy I didn't think it was worth going to, but maybe I'm wrong.

OneScoup - I bought my own house last year and did about 5 months of research leading up to. I've pretty much continued looking around, so I'm building a good knowledge of the area.



I did know there was a RE investor club in my area, but until I have money to buy I didn't think it was worth going to, but maybe I'm wrong.


 If you are serious about investing, it may not be a bad idea to go and start learning.  Not having the 'money' may be a good thing as you won't be able to jump on the first thing that sounds like a good deal.  I def think you can learn something from an investment club, but be aware of other members:  some may just be trying to hack off their properties (some of which may be good deals), others act more experinced than they are, etc. 



I personally know of a guy that was totally steered poorly by a local club.  Guess it is a bit like advice by committee.  Guy had  great chance to buy a place almost turnkey for a decent renter.  The property was in a good neighborhood and would have eventually apprciated at which time he could have fully rehabbed and sold.  Instead, after buying and at the suggestion of the club, he rehabbed and tried to sell.  Used multiple Realtors, then tried to sell by himself, finally rented the brand new rehab.  Now the new work is going to get worn in and possibly become outdated to a degree.  In addition, he wasted so much cash (paying for the rehab) as well as not having any income for close to a year.



In any case, good luck and just learn all that you can!  It's a process. 

I'm not sure if this is an efficient use of my time or money, but what about going through the coursework to become a certified appraiser, salesperson or broker?

 I have my license and it helps.  However, a lot of what I know is just from doing it and being around others who do it.  Think about it like a good gym:  being around other good fighters helps you become better because you see how they train, learn their techniques and are exposed to their winning attitude.



Getting your agents license is easier than your brokers license but still will require a significant amount of time and energy (and possibly cost).  In addition, you don't really learn anything about how to help people buy and sell let alone how to invest.  Most of the coursework (at least in MD) deals with law (how not to get in trouble) and the framework of RE transactions.  There is very little "how-to" information.  In addition, there may be significant, recurring, costs such as subscriotions to your local MLS and dues for local boards.  You may find it useful, but I know many investors who are not agents.... but I know some agents that do a bit of investing.... sorry, that may have been no help at all.



If you think you could get some other, non-personal, transactions done during a year, getting your RE license may be advisable.  You will save yourself some commission on the sale and earn a bit of commisison on the buys of your personal properties.  It would depend on how much volume you plan to do in order to determine if it would be enough of a net gain to you to make it worth you time, effort and money to get a license.  In MD, you also need to affiliate with a brokerage who generally will take some sort of cut of your commission (even on your own deals).  This can vary from 50% to a couple hundred bucks.  If you think you may go this route, look into the above locally.  The above are some good points to think about, but your state may be very different than mine.  Do some local research first.



I don't personally think that getting your apprasiers license would help much, but I am not an appraiser so can't speak with much confidence on that.

mcq - <ul> <li>The rental market is good in most places these days. Since people aren't buying, rental rates are increasing.  </li> <li>Most rates are low (mortgage or re-fi) so money is relatively cheap if you can get it.</li> <li>Loads of houses to pick from and this should increase over Q3 and Q4 as the REOs get flowing again.</li></ul>
In short, great time IMO to buy for rental purposes.  Just keep in mind that you are likely to see depreciation in most markets for another couple years.

If you can buy with cash, a cap rate of 20% isn't too difficult to find.  We shoot to have our nut back in 5 years with all rent after that being sheer profit (minus taxes and insurance).  Better areas have a lower cap rate, while not such great areas have a higher rate.  Better areas will see more appreciation, but you will probably net less income as they are more epensive to get.  You may want to find that sweet spot in your area where you get the most rent for your purchase price.

Buying, fixing, flipping in a depreciating market can be tricky.  If the rehab takes longer, you over-price the property when listing, etc.  you are up against a wall much more when values are going down vs. when they are increasing.  Also, if you go this route be sure to account for all your expenses:  cloisng costs in, rehab costs, carrying costs (PITI in financed), closing costs out, etc as well as allowing for profit.

Books are good, but RE is very local specific re: values, costs, laws, rents, etc.  I def think that great info can be had from a book, but be sure to get yourself familiar with your area.  A good Realtor can also help.  As a buyer you won't be paying their commission.  Sometimes you can get good deals outside the MLS as well.  Be aware of investment clubs.  While they may be good resources, just make sure a 'wholesaler' isn't giving you BS comps to inflate his value and 'substantiate' his asking price.

Sorry for the long post.  Hope it wasn't too confusing.  One of the best things I can tell you is just to get very familiar with your local market:  prices, areas, rents, closing costs, etc.  You'll need to be able to apply what you read in the books to your local market.

Good luck!
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Fantastic post...and this is exactly what i've been doing for the last year or so. I have about 11 properties so far, and i'm getting a cap rate of about 14% per property (average).

There's a website called "bigger pockets" that's a MUST READ resource. Basically its just like this forum, but just for people who are investing in real estate...from flipping to renting. Personally, the market in my area is scary for flipping. You have to find a cheap property, rehab it, and then still price it better than all the cheap forclosures on the market (which there are ALOT of). I like the idea of slowly building my empire and becoming one of the largest landlords in the area (a long shot, but why not?!)

One market im just starting to get into is the Corporate Rental market. Basically, if you can find a good condo in a decent part of town (preferably next to some large corporations/hospitals), you furnish it and then rent it out to military or people on business from out of town. We found a great unit, just finished furnishing it, and are now actively starting to market it. Its a bit more of a headache, but i like the extra process involved and the returns will be MUCH LARGER (like more than double normal rent). So we have our fingers crossed.

Good luck man.

Exactly my plan - at this stage im guessing my GF & I are 5 years away from buying our first house and intend to "flip" houses for a living. Thats 5 years of knowledge I can acquire, learning formulas etc.

We plan to buy the cheapest house we can afford to buy, smash as much of the loan as possible, borrow against it, upgrade then renovate & sell the first house and keep going like that.

I plan to have zero emotional attachment to the houses we buy to flip, just a strict formula. Is it within x distance of schools, is it a 3 br home or 2 br unit etc., if it doesnt tick all our boxes we dont buy.

For houses we dont intend to flip immeadiately, I also believe you can get a list of recent foreclosure notices from the County Court, i plan to contact some of them directly, make them an offer to buy and also offer tenancy, so you're effectively relieving of their mortgage stress without forcing them to relocate. You could also offer them "rent to buy" terms

effertime - 
mcq - <ul> <li>The rental market is good in most places these days. Since people aren't buying, rental rates are increasing.  </li> <li>Most rates are low (mortgage or re-fi) so money is relatively cheap if you can get it.</li> <li>Loads of houses to pick from and this should increase over Q3 and Q4 as the REOs get flowing again.</li></ul>

In short, great time IMO to buy for rental purposes.  Just keep in mind that you are likely to see depreciation in most markets for another couple years.



If you can buy with cash, a cap rate of 20% isn't too difficult to find.  We shoot to have our nut back in 5 years with all rent after that being sheer profit (minus taxes and insurance).  Better areas have a lower cap rate, while not such great areas have a higher rate.  Better areas will see more appreciation, but you will probably net less income as they are more epensive to get.  You may want to find that sweet spot in your area where you get the most rent for your purchase price.



Buying, fixing, flipping in a depreciating market can be tricky.  If the rehab takes longer, you over-price the property when listing, etc.  you are up against a wall much more when values are going down vs. when they are increasing.  Also, if you go this route be sure to account for all your expenses:  cloisng costs in, rehab costs, carrying costs (PITI in financed), closing costs out, etc as well as allowing for profit.



Books are good, but RE is very local specific re: values, costs, laws, rents, etc.  I def think that great info can be had from a book, but be sure to get yourself familiar with your area.  A good Realtor can also help.  As a buyer you won't be paying their commission.  Sometimes you can get good deals outside the MLS as well.  Be aware of investment clubs.  While they may be good resources, just make sure a 'wholesaler' isn't giving you BS comps to inflate his value and 'substantiate' his asking price.



Sorry for the long post.  Hope it wasn't too confusing.  One of the best things I can tell you is just to get very familiar with your local market:  prices, areas, rents, closing costs, etc.  You'll need to be able to apply what you read in the books to your local market.



Good luck!

<br type="_moz" />






Fantastic post...and this is exactly what i've been doing for the last year or so. I have about 11 properties so far, and i'm getting a cap rate of about 14% per property (average).



There's a website called "bigger pockets" that's a MUST READ resource. Basically its just like this forum, but just for people who are investing in real estate...from flipping to renting. Personally, the market in my area is scary for flipping. You have to find a cheap property, rehab it, and then still price it better than all the cheap forclosures on the market (which there are ALOT of). I like the idea of slowly building my empire and becoming one of the largest landlords in the area (a long shot, but why not?!)



One market im just starting to get into is the Corporate Rental market. Basically, if you can find a good condo in a decent part of town (preferably next to some large corporations/hospitals), you furnish it and then rent it out to military or people on business from out of town. We found a great unit, just finished furnishing it, and are now actively starting to market it. Its a bit more of a headache, but i like the extra process involved and the returns will be MUCH LARGER (like more than double normal rent). So we have our fingers crossed.



Good luck man.
That's great man!  11 properties in a couple years is no joke.  You doing it full time?  What are using for funds.



I will have to check out that website.  Thanks for the info.

 

For houses we dont intend to flip immeadiately, I also believe you can get a list of recent foreclosure notices from the County Court, i plan to contact some of them directly, make them an offer to buy and also offer tenancy, so you're effectively relieving of their mortgage stress without forcing them to relocate. You could also offer them "rent to buy" terms


 Nice.



What you are explaining above sounds a lot like a short sale.  I don't know the particulars of what you plan to do or know your local laws, but... on most foreclosures these days, the people owe more on their mortgage than the house is worth.  As a result, if you are going to alleviate them of their loan, you would probably need to pay more than it's worth (no good) or get a short sale approved by the bank.  And sometimes the bank will still require a seller to sign a promissory note.  Sounds like you're on the right track thinking outside the box, but just make sure you nail the specifics.



Just an FYI:  I deal a lot with foreclosures and there likely will be nowhere near the same inventory in 5 years as we have now.  However, we should have an appreciating market again, which tends to bode well for flippers.

mcq - 
Just an FYI:  I deal a lot with foreclosures and there likely will be nowhere near the same inventory in 5 years as we have now.  However, we should have an appreciating market again, which tends to bode well for flippers.


I question this notion. I expect that two major events will either cause new crashes or suppress appreciation:

1. New buying rules requiring larger down payments. Talk has been 20% minimum requirement, which based on the American tendency to not save would have eliminated most of the home buyers in the past 5 years.

2. Interest rates will rise in the future.

The only mitigating circumstance I see is with inflation people will want to buy houses, though they will probably need 20% down.

OneScoup - 
mcq - 

Just an FYI:  I deal a lot with foreclosures and there likely will be nowhere near the same inventory in 5 years as we have now.  However, we should have an appreciating market again, which tends to bode well for flippers.




I question this notion. I expect that two major events will either cause new crashes or suppress appreciation:



1. New buying rules requiring larger down payments. Talk has been 20% minimum requirement, which based on the American tendency to not save would have eliminated most of the home buyers in the past 5 years.



2. Interest rates will rise in the future.



The only mitigating circumstance I see is with inflation people will want to buy houses, though they will probably need 20% down.


Sorry, I don't quite follow.  Are you saying you believe the above to cause less demand therefore lower prices and less appreciation?










Yes. By "home buyers" I was talking about the regular folks, not investors.

 ^^^ We'll see - guess only time will tell.



However, at some point, people will get accustomed to the new envronment, will consider it the 'norm' and start buying again.  After all, people were still buying when they needed 20% and rates were in the double-digits.



I also believe that with the reduction of the REO supply there will be less houses where the seller needs to liquidate and prices the property so aggressively.



Hopefully, the decrease in supply will offset whatever decrease in demand that we may have and we see appreciation here in a couple years. 

Was 20% the normal down payment back in the day?