You want to get started in real estate investing?
That's great. It's a nice field to get into. The question is why? Did you see a show on HGTV? Did you see the thousands of dollars they made...realizing of course, that it can take 2 – 6 months--and sometimes even longer!--from the time you close on the deal, until it's ready to be sold. Then, you have the time it takes for a property to sell. You're competing against EVERY OTHER HOUSE ON THE MARKET! While, in theory, it can happen within 90 days, once it's ready, it's not uncommon for houses to sit for 6 – 12 months, or longer. When you decide that you want to get into real estate investing, the most important things are not only what your end goal is, but how are you going to actually get to that end goal?
These blog posts will take you through some of the many methods of real estate investing, and will give you starting points. There are many aspects of REI (Real Estate Investing). The main types of REI are SFH (Single Family Homes), MFH (Multifamily Homes, like apartment complexes and mobile home parks), Commercial, and lots/land. There are more, and as I mentioned, REI has a lot of areas. For the purpose of this series, and for anyone who wants to learn with us and JV, our focus will be on SFH. This is mainly about the numbers. Could we focus on, say for example, land? Yes. But, when you look at it, nationwide, do you think there are more people who have homes to buy and sell, or lots/land?
I also want to provide some elaboration, regarding single family homes. For the most part, it's just what you would think: a simple home, with a one or more bedrooms, bathrooms, a kitchen, and maybe some other rooms. But did you know that often, in investing, and even regarding financials, “SFH” is considered “4 units or less.” This means it can include duplexes, triplexs, and even quadplexes (sometimes called four-plexes). However, once it goes to five units—by the “powers that be”--5 seems to be the “magic number” for it to be multifamily.
Investing in SFH
Other properties that can be considered SFH include town homes, row houses, condos, and mobile homes. It should be noted that for the most part, few investors invest in mobile homes. Let me elaborate. First, if it's in a +55 community, that is a very specific niche. When you buy, you want to buy with the end goal in mind. With everything else, an investor wants as many people as possible to look at buying their property. With this ages restriction, it limits your end buyer, and puts an unneeded risk for most investors. Then, there is the very fact that it's in a community. For the most part, unless you develop a great rapport with the owner, or manager, as the case warrants, you'll need to make sure it's ok to rent your property inside of their community. There are people that do this, and there are a lot who don't. You need to make sure all the rules you may give your tenant(s) align with the community. Most don't want to do this, simply because they don't understand, or want to bother to learn, all the nuances. Thus, most investors won't do mobile homes. Also, if for some reason, there's complications, and they have to move the mobile home, and it's not a simple rv/trailer, it can cost anywhere from $2k - $10k, to move the mobile to a new site. Thus, it becomes another expense that investors don't want to loose sleep and money over. The exception, of course, is if the mobile home is not part of a park. If the owner also owns the land/lot that it sits on, and the owner is looking to sell the whole thing, then there tends to be more interest in it, since the end investor has more control of the deal. Many of the above reasons can also be why some, or most, investors don't want or like to invest in condos, or in HOAs. HOAs aren't deal killers, but not something all investors will deal with.
In the next post, we'll look at some of the various REI methods. Stay tuned!