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What’s Your Biggest Real Estate Investing Question?

by Brandon · 46 comments

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Hey everyone, just a quick post today. I want to do something a little different and just ask a simple question:

What is your biggest real estate investing question?

It doesn’t matter how advanced or how simple the question is. You know the saying, “there are no stupid questions.”

I just want questions. Lots of them!

I plan on creating a giant “Frequently Asked Questions” post and I need questions to answer. So what’s your biggest question?

You can (preferably) leave them in the comments below or email me at Brandon@RealEstateInYourTwenties.com, or ask me on Twitter or Facebook.

Also – in case you haven’t heard, RealEstateInYourTwenties.com was nominated for “Best Real Estate Investing Blog” on REIClub.com. If you find my blog helpful and want to help support me (and help me win an iPad!) please come vote for me. It will only take like two seconds!  Thanks in advance! (Also make sure to vote for “BiggerPockets” in the “multi-author category!)

To vote for me, click here or visit: http://www.reiclub.com/realestateblog/contest-best-real-estate-investing-blog/

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Thanks guys! Have a great day and don’t forget to leave me a question below in the comments!

About Brandon

has written 69 Awesome posts in this blog.

Brandon Turner (G+) is the BiggerPockets.com Senior Editor and Community Director and owner of RealEstateInYourTwenties.com. He is also an Active Real Estate Investor (Flips, Apartments, and Buy-and-Hold), Entrepreneur, World Traveler, Third-Person Speaker, and Husband. Come hang out with him on Twitter!

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{ 46 comments… read them below or add one }

Brandon (also) November 19, 2012 at 5:05 pm

What is the best way for deciding which improvements to make in a home?

What is the best way to approximate the DOM your renovated home will sit before selling?

What are the best ways you have found to find investment properties?

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Ryan Ferguson November 19, 2012 at 5:46 pm

How do I estimate the cost-to-rehab a property without lots of trial, error, and (potentially) costly mistakes? As a new investor I’ve found that the scariest part of purchasing my first property is fear of hidden costs and some knowledge to combat this fear would help a great deal.

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Dale Osborn November 19, 2012 at 5:52 pm

Not much is available on NNN leased properties – would like more info on this subject.

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Rene November 19, 2012 at 6:03 pm

Hi Brandon,

It would be interesting to hear what was the most important thing you learned that you didn’t know a year ago?

Cheers,

Rene

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Joe Dirt November 19, 2012 at 6:22 pm

How do I find properties that I can flip? (What tools are use?)
How do I determine cost of a flip? Is there something I can use that will say X amount of hours in labor, and Y amount in material for this size or this utility?

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Sabrina Laplante November 19, 2012 at 9:19 pm

Done deal, I voted for you, John, and Bigger Pockets!!!!
Okay, I’m not sure if this really is a legit question, or just something that I have a hard time dealing with…I am no expert in real estate investing, and there are still many things, and always will be, to be learned. At times, I feel like I can go out and get started and do alright. Other times, I feel half confused when a question comes up, and it makes me think, wow, maybe I need to set back and study this whole deal a while longer. My family and I had invested a great deal of money in the whole Flip this House Armando Montelongo deal, and then another great deal of money with what was the James Smith Company, and changed to Wealthrock. However, I guess what I am trying to say is how do I know that I am ready to go out and take a project on, and be prepared to convince someone that I can help them, or that I am the right answer, when I am not 100% confident myself? Does this make sense, or am I babbling on like a crazy person? I swear I am not, just somewhat confused. I really want to make this my life, and not have to worry about a 9-5, answer to a boss type of life. When did you know it was time for you to make the 1st move and dive into your 1st investment? Thanks so much, I value all of your advice friend!!!
Sabrina

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Crista November 23, 2012 at 6:37 pm

Sabrina,

You are not the only one. I recently graduated with a management degree and I am nowhere close to knowing much about real estate investing. Yes, getting a mentor would be ideal but when do I know that it is the right time to stop reading about investing and actually start with it?
Besides that, how can I get in touch with a successful investor and get him/her to teach me?
How easy/ difficult is it to move to a new city and start investing there?

Thank you Brandon for such a great blog.

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Terillius November 19, 2012 at 10:51 pm

How to I do investment property valuation without comparing to other sales?

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Ali November 28, 2012 at 3:41 am

I often use the income-to-value approach. If you are working in an area that can’t provide good comps (ex. Atlanta where the appraisal system is broken), you can judge the value of an investment property by working backwards. Do this by using the cap rate. What would you consider to be a cap rate of a “good” investment? Let’s say it’s 10%. Then make sure the price you are paying on the property will give you a 10% cap rate.

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Elizabeth November 19, 2012 at 11:16 pm

I want to know how you found such inexpensive contractors, and their names! LoL Exterior house paint job for $1500??? Send him over, I’ve got half a dozen waiting in the area… :D

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Paul November 19, 2012 at 11:41 pm

What are some of the surprises you weren’t expecting? I.E. 90 day rule for FHA buyers, 2nd appraisal requirement in some instances for loans or similar roadblocks that a newbie might learn the hard way..

Should I become an RE agent/broker? Why/why not?

What are your experiences in negotiating on an REO? Have you been able to further negotiate after your offer is excepted and you find surprises after doing a thorough inspection, or do you just back out at that point?

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Feng November 20, 2012 at 2:35 am

Hi Brandon! I’ve been reading your blog ever since this summer and I really appreciate all the detailed posts (especially the 5-point marketing plan)! I’m just starting out, but I’m living in a very expensive real estate market (San Francisco). As such, my budget mostly calls for buying fixer-upper homes. How do you determine which contractors to hire (how do you interview them or research them?) and what do you look for when determining the quality of their work? Also, what are the easiest renovation projects for a homebuyer to tackle (as opposed to hiring a contractor)? Thanks so much for your help!

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Nick November 20, 2012 at 4:54 am

I’m NOT a US citizen, but my wife is. We both currently working abroad and save around $4000 per month and would like to invest in real estate for the long term and would like to get out of the rat race.

I have read all the books, have $100 000 in cash.

My BIGGEST QUESTION: which state should we focus on, what kinds of properties, should you buy when you are overseas – just focus on the numbers? and can it work if we are not physically present, in other words, can it be done with a property manager?

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Ali November 28, 2012 at 3:28 am

Nick,

I would love to help you out. I work with international investors every day from various countries. You are in a great position if your wife is a US citizen because you don’t have to worry about going through higher hoops of tax and legal structuring, and you can qualify for better financing options than with the private lenders who most internationals use, if they finance at all.

The absolute key for buying from such a long distance away is your property manager. They will make or break your investment. You can also use your property manager to check on the quality of a home if you are buying sight unseen, in conjunction with a trusted inspector.

If you are interested, I can tell you all of the key markets internationals are focusing on for long-term investment properties, and I can get you connected with all of my resources.

ali@hipsterinvestments.com

Talk soon,
Ali

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Alex November 20, 2012 at 1:16 pm

Brandon, first and foremost, I voted already for you as the best investing Blog. Even if you don’t win it, You are the best!

To me, here is the absolute cliche and most ever Real Estate Investing question:

1) How I can start doing this with NO money?, or
2) How I can start doing this without enough or significant money? (to at least being able to come up with the 35% down pmt. now required by hard money lenders).
3) Let’s say also that both questions are from the perspective of a new investor that has little or no probability of finding a partner or an angel investor to fund their ventures.

Even when I have read many of articles, books, newsletters, from a wide a variety of different authors, all doing their best to prove that you can start investing in RE without significant money, I simply don’t see it in today’s lending market!. The reality is that you do need money to do this. You certainly don’t need to be a millionaire, but you need some cash in the bank to start doing this. The other day, I was negotiating a deal with a Hard Money Lender and this is what they required to me to pay up front: 1) The 35% down payment ($35k in that case), 2) 5% up front fee which cannot be included in the loan, 3) All closing costs, like mtge deeds, stamps, attorney fees, etc. At the end, I had to come up with approximately $40k to fund a $100k deal. Even with a partner, you still need $20k.

To me, that’s the major and most recurrent questions of new investors. But, that’s the beauty of our business, it’s force and push us to be creative if you want to fulfill your dreams.

Alex,

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Ryan Ferguson November 20, 2012 at 1:40 pm

Alex -

I just read your comment and had to respond: that Hard Money situation you described (and all hard money situations really) seems an absurd prospect and I have a hard time seeing how you justify that sort of risk and spend. Is this purely for flipping? If you’re saving that much already why not just buy outright with a little bit of extra savings? The sort of up-front costs and high interest risk you’re taking with that situation screams ‘not worth it’ to me – it’s a loser’s bet.

Maybe Brandon can extrapolate on the best way to manage a Hard Money situation for profit while mitigating risk exposure.

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Alex November 25, 2012 at 2:40 pm

Ryan,
Thanks for your comment. Certainly, hard money financing is what I called “the dark side of our business”. You can be lucky sometimes, but most of the times you are going to get harmed. Specifically addressing your question about “how you can manage a hard money situation for profit while mitigating risk exposure”, I would say that the best way to accomplish that is by buying a property at a substantially discounted price, that will give you enough profit to offset and justify the high cost of hard money. But, this is something that you cannot accomplish all the time.

I’m using Brandon’s Investment Calculator Spreadsheet and one of the three analysis is the one based on hard money; to be very honest with you most of the times the transaction becomes unsustainable in a hard money scenario.

Good luck and again thanks for your comment.
Alex

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Austin November 20, 2012 at 2:43 pm

How do you get past paralysis by analysis? I’ve read tons of books, been to local investment club meetings, looked at several properties and can’t seem to pull the trigger as I study the property for so long to make sure I’m not missing any costs I end up losing the deal. Thanks!

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Ali November 28, 2012 at 3:31 am

Austin,

I have an engineering degree, so I know all about paralysis by analysis :)

My recommendation, and what I do for myself, is to run the exact same numbers for every property. For example, for a rental property you are going to hold, write out the monthly taxes, insurance, property management fee, a % for vacancies, a % for repairs, and the mortgage if applicable. If all of these numbers combined, subtracted from the monthly rent received, show a positive return, believe it. There are other factors with buying of course, like what market you are buying in and the potential of that market, but you still use the exact same numbers. Keep it simple, run the same numbers every time, and it will stay more clear.

Coming from one who loves her spreadsheets!

Ali

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Camilla Sauder November 20, 2012 at 2:47 pm

Brandon,

My question is:

What state or federal regulations do I have to follow to borrow money from my parents or friends who live in other states to invest in real estate? I’m not advertising or asking for their business. They are asking me! If they were in my own state, it would be no big deal, but they are not.

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Craig Kucera November 20, 2012 at 7:36 pm

There is a lot of big money (private equity, hedge funds, etc) that is buying up foreclosures in bulk in certain markets in the country. How can the small investor compete?

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Braden November 20, 2012 at 8:08 pm

What is the best book and/or course that you would recommend to get started in real estate investing that would help someone start part time and grow into a full time business?

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Brian November 20, 2012 at 8:17 pm

I currently have equity in a rental house that I own and would like to use that to buy another investment. How do I tap that equity? Is it smart to use that equity to purchase other properties? Would I still have to put a down payment on my next property?

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Devon November 21, 2012 at 12:30 am

I’m not a creative person. Is it wise to use my real name or parts of my real name for my LLC’s name.

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Stan November 21, 2012 at 3:20 am

When buying multi family properties what are the main things you look for? What do you do when these properties already have renters?

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CM November 21, 2012 at 7:24 am

What are the essential math formulas needed in analyzing properties/deals?

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Cliff November 22, 2012 at 1:34 pm

Where can you find financing for single family rentals held in an LLC?

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Nomoreuntdebt November 23, 2012 at 3:04 pm

I’m thinking about taking advantage of a first time home-buyer FHA 3.5% down payment to purchase a multi-family unit, then live in one and use the cashflow from the others to cover the mortgage / insurance / maintenance expenses. I have no consumer debt, just a pile of student loans. Would this be viable strategy to further reduce living expenses while I’m still aggressively paying down debt?

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Blair@LifeDollarsandSense November 24, 2012 at 2:12 am

Hi Brandon, I really enjoy your blog. I am still very much in the educating myself stage of investing. However, I do have a few questions I would love to know your take on. 1. I believe I read that you do not recommend renting to friends or family. Can you elaborate on why? I would ideally like to start in real-estate by owning a owner occupied duplex or a single family home and rent out rooms to friends/acquaintances. 2. What is your take on buying rental properties outside of the market you live in?

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Ali November 28, 2012 at 3:36 am

Hi Blair,

I hope I’m not stepping on toes since you asked these questions specifically to Brandon, but I’ve been reading through and trying to answer questions when a topic hits on things I have experience with.

1. Brandon may have some other input on the friends/family issue, but the problem with renting to people you know is that you are much more willing to accept excuses for delays in pay, skipping pay, etc. You’ll feel bad for them, or you’ll know their situation and forgive them, etc. I think it was Rich Dad who said ‘never become emotionally attached to your tenants’. For exactly that reason. You’ll buy their excuses, feel bad, and not put your foot down. Typically, at least.
2. I only invest outside of the market I live in (I live in Los Angeles…eeek). Not only outside of my market, but states away. I’d be happy to talk to you about how I do that, why, and how it can work.

Ali

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Terry November 25, 2012 at 5:31 pm

Great blog.

My question is: when do you think the real estate market will turn around?

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Kenyon November 27, 2012 at 12:05 am

In wholesaling what is the best strategy advice on closing on the deal? And if we find a house owned by someone to sell how do we go about doing it so we get paid as the middleman w/o the owner and buyer communicating or are they

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Buy Properties In Colombo November 27, 2012 at 9:55 am

A lot of good information you have provided. Your post will help many people to invest their money in real estate market.
Regards
Buy Properties In Colombo

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Chris November 27, 2012 at 8:47 pm

How to talk to sellers and not being afraid to make offers?

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Ali November 28, 2012 at 2:46 am

Is anyone allowed to answer these questions? :)

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Brandon November 28, 2012 at 2:49 am

Definitely, Ali!

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Ali November 28, 2012 at 3:37 am

Cool! Hope I’m not stepping on toes, but I figure why not answer questions I can help with :) Hopefully more people will start answering questions too, I may even learn something new. By the time multiple investors have answered everything, you may be able to publish a whole book from it!

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Brandon November 28, 2012 at 4:19 am

Lol I agree! If you don’t mind – I’ll include your comments in the big epic FAQ post I’m working on (out tomorrow… I hope!). Multiple answers is always a great idea! Thanks for the help!

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Martha January 27, 2013 at 9:58 pm

Things you should not forget about when preparing to become a real estate investor.

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Junior Salters May 6, 2013 at 9:57 pm

Without the help of a real estate agent or MLS listing, what is the best and most (I know its still not perfect) way to find comps for a house that you plan to wholesale?

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Brandon May 6, 2013 at 10:34 pm

Well, official comps are definitely the way to go, which you can find on a site like Zillow or Trulia or Redfin. Or – you could try to establish value from looking at the current “for sale” prices of homes in the area. Or you could look on Craigslist and determine what people are trying to ask for their homes (and then make it much less!)

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Junior May 10, 2013 at 9:53 pm

Hey Brandon, my biggest question for you is have you ever bought rental property that had previous tenants in it? How do you feel about that situation in general? Are you ok with not having screened the tenants yourself?

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Brandon May 10, 2013 at 9:58 pm

Hey Junior,

I have. I just did with that 4-plex I bought, which came with 4 tenants in it. Obviously, it’s a little rough, not picking the tenants, but I think most property managers do a decent job so I haven’t had a problem. I think it’s important to start training them right off the bat though. Like this month, two people in that new 4-plex didn’t pay on time. Yep – two late fees. I’m training them now!

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Phil May 17, 2013 at 3:38 am

Is there a Law That says that if there’s something wrong in a condo unit we bought caused by the developers can we get a refund to the amount that we have paid to them??

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Ali May 25, 2013 at 4:58 am

Lol! I don’t mean to laugh, but if life was only so easy. You should have some recourse in your contract. If not, you may be screwed. Unless the developers are really nice.

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Feasibilitypro July 25, 2013 at 10:32 am

Nice article, thanks for sharing. My question is can I become rich by flipping? Thanks

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