What part of REI are you interested in to start out? I say to start out because you can always branch into other areas later. For now, are you interested in buy & hold for rentals? or rehabbing & reselling? or wholesaling? etc?
Being very disciplined and saving as you are will open up some doors for you with lending. That will give you some more options for investing. If you bounce around now with your job, will you be able to settle in a location later? Check to see if there are any Real Estate Investor Associations near you. Otherwise, you might be able to find some Realtors who also invest on the side and can help give you some guidance.
If you’re saving that much of your check, I hope you have a decent return on your savings (relatively speaking for savings and money market returns).
This site is full of great guidance and help. I suggest you find an area of REI that interests you and learn as much as you can about it.
i am currently interested in buying a property lower than value (arent we all!); if necessary take some time to fix it up (MINIMAL AT BEST); then either rent for the time being and see about doing another valuation of the property, taking the difference and do it again. i would probably hang onto it for a little bit and rent but dont know if i want to go that option and deal with all the headaches associated with liability.
long story short -
buy and rent
or
buy and flip
Ermie - from a newbie to another… I believe the criteria you use to analyze deals is different depending on your exit strategy (if you are planning to hold it or to sell it). Also the financing would also be different - if you are planning to hold it for the long term you will probably look for a long term financing with lower interest rates. If you are lookinig to flip the interest rate will not matter much as you are going to keep the house only for few weeks or months.
So although you can probably do both, for each deal you consider I suggest you define your exit strategy upfront…
Hope this helps. Good luck.
PS: quick comment - if you are saving 2/3 of your paycheck, you should have 2/3 of your gross income saved by the end of the year (not 10%)… :O)
haha thanks! i know i am saving much more than 10%, that was the original criteria asked to save in the first posting, 
I am going to look to purchase one property and hold for about only a couple years MAX. i will rent it out in the meantime, but then would like to take profit, and reinvest in 2 properties, and continue doing it this way.
as a full time employee and most likely purchasing property in a different state, it is not realistic for me to think i can flip a property in only weeks to months. i just moved to DC for my job and will NOT be investing here as prices are way too hihg. as a newbie, i want to start small and low. thought i could probably get some good deals down in FL right now for under 100K.
I think i will try to find a REI club in the area, because i need to try to start networking so i can leverage their experience and knowledge.
Any other help would be greatly appreciated!!!
Ernie12 - are you sure you want to start investing away from home? If you decide to do that I suggest you discuss the challenges and risks associated with it. I have no experience doing that, buy I would assume that you will face a different set of challenges going this route.
My approach is to do it close to home… I feel I will have more chance of success if I do it here…
Just my 2 cents. Good luck!
PS: the idea of joining your local REIA is a great idea. I went to my first meeting this week and I thought it was good. Although I don’t feel I got the most out of it… I am now feeling much more confident for next month’s meeting… :O)
What a great post fdjake! I can’t believe this is my first time seeing it. Anyway, I’ve been saving 10 - 15 % of my gross income for 10 months. In addition, I took a HARD look at what I spend and realized that I WASTE about 5% of my income. I stopped dining/ ordering out when I was too lazy to cook. That alone saved me about $250/month. I’ve also been working every chance I get. I don’t sleep much, but I wasn’t before. Worrying about finances and having a strong feeling that I can do a LOT better will do that. Also during this time I’ve been working on my REI education. I think I said this before, but I thought I was ready to start before I joined this site. I’m glad I held back. I had NO CLUE about cashflow management. I have a good handle on it now. I’ve learned a ton from you guys. THANK YOU!!
Where is this 50% post that I can’t seem to locate.
Use the search button at the top of your screen to search for the “50% rule.” It’s talked about on the forum a lot. It’s based on a survey of thousands of apartment owners nationwide. The average for operating expenses is 50% of gross rents. Therefore, 50% goes to any operating expense you can imagine. The other 50% of your rent is for debt service and cash flow.
:beer Great points made for all us newbie’s! I’m just now starting to realize this myself “as to I’ve always thought money was easy to make.” What a joke?..HUH! It’s just that I’ve always worked for my self and if I would’ve thought about saving, I could probably retire by now. (Long story short) I’ve had fun and I’ve been taught a valuble lesson. I have some assets from my wreckless actions and after finding this site will be turning those into cash for investing purposes to help with my future decissions. :bobble A BIG thinks for helping open my eyes! :shocked
I genuinely believe that in America, if you want to be rich you can be rich.
However, if you really want something, you work to get it, you don’t just sit and wish for it.
I suspect that the majority of people who say they want to be rich, actually mean that they sure wish they could spend a lot of money. Spending lots of money and being rich are not the same thing at all.
Great point Tater, very well said.
Very good advice. I have seen people invest thousands on bootcamps and learning the theory of real estate, then as you mention they have zero discipline and never do anything. I heard 4% of them actually implement what they learn. I bet 1 in 100 people would save 10% over the next year as you recommend, then 100% of those that do it become successful. Great post.
Interesting topic to start with. Seeking for advice and yet not even heeding it.
On the contrary, this can be a critical step. Investing on your chosen career in general is worth your life as they say.
Great discussion!
- How do you feel about investing in real estate using a IRA or 401 k…have you done transactions like that and how did it go?
FD I get it TRUST ME. I don’t have the 10% to save because my income has dropped at least 75% and then I lost my job in February, but I didn’t let it get me down. I literally said, WHAT do I want to do? Well, I got a job working for my local REIA. I get FREE education now. I also have made so many connections with those much more knowledgable than me. I get paid crap, but hey, the education is priceless AND now I’ve proven myself to two people in our REIA and they are helping me along with learning short sales AND giving me a % of any they close. So, if you want it bad enough, you have to work for it one way or another. I’m not making any $$ yet, but I see the future and it’s looking positive. Short sales take time. I have a 3 year plan. I’m learning all that I can and then hopefully going out on my own, and if I work at it, I’ll have a little $$ in my pocket to start off with. Yes discipline IS important. Never loose sight of what you want, and it takes time to learn it.