Beginning Investor Learning The Ropes
I have read many books, listened to several programs, attended seminars, spoken with investors, and read more books on the finer points of investing in real estate.
I live in Southern Califiornia where I believe it would be hard for someone trying to break into real esate investing and become successful. I have considered purchasing and rehabbing property in Arizona or Nevada.
Any thoughts or words of wisdom for the new investor?
You'll never make a dime in this business if you never get started. If you intend to rehab, it will be difficult dealing with contractors that you don't know that far away from home. There's alot to rehabbing that demands your attention, especially until you find the right people.
I'd try to stay closer to home. Learn your market, and you can thrive there too.
It's all about finding motivated sellers.
That means marketing.
Determine how you will find motivated sellers: mailers, flyers, door-knocking, targeted letters, newspaper advertising, business cards, bulletin boards, email, bandit signs, magnetic car signs, networking... the list goes on.
Basically, learn how to market yourself as someone who buys homes so that motivated sellers think of calling YOU when they NEED to sell, or find the the motivated seller at the right time.
Follow-up is crucial. Most times, a potential seller must see or hear about your name/business 2 to 7 times before they'll make a move to call you.
When you find a motivated seller, pass the lead on to a more experienced investor who will help you through the process of making the deal for a cut of the profit, or who will take the deal themselves and pay you a bird dog fee.
AllCash
I have seen some interest foreclosure in LA. typically not great neighborhood, but if that's o.k. for you to rent out, go for it.
The problem I have w/ you of the area properties is, who gets called at 3AM for sewer backup, do you know the area and market, cost to visit property, etc.
When you are getting started you can learn a lot from the location and the property. If you spend time in the same areas then you really start to know the place, the people there who are making deals happen, etc.
Investing at a distance is completely different. At some level the locals will always have an advantage. If you have a large chunk of cash then you can still do good deals. If you lack cash and limited in your knowledge then distance becomes a real problem (consider the cost to get to the remote location).
I have invested at distance for years (investments over 11 time zones). I did not start by investing at distance.
The only compromise that I think works if you really can not invest locally is to consider investing with someone more experienced or someone who has special skills. As you mentioned rehab you might consider partnering with a local contractor who is close to the subject property. Work up a deal where they are in the game and only win when you win (they do not get paid by the hour for one).
John
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