Trouble Deciding Where to Start....START HERE!

I started out answering one dude’s question about where to start…Then after a massive typing frenzy I realized that I would post it on it’s own…I try to make post like the ones I would have wanted to see when I was getting started…So it’s fairly thorough.

One of the questions I see asked very frequently in the forums is: I’m a Newbie to the investing world where do I start?

Often times questions come from newbie investors who are feeling frustrated and mind fricked by where they should start their investing business? The truth is that anyone who’s currently succeeding in real estate has probably been there, done that, and got the T-Shirt…starting up can be a crazy thing.

From my experience a profitable and long lasting real estate business requires only a small degree of planning from the start. Then frequent updates to your plan as you go along.

To get started I would recommend taking 10 minutes and answering these 3 questions. The purpose being to align the structures of your new business and get your ships all sailing in the right direction.

Identifying your constraints- what factors are going to limit you?

  • Are you so broke that homeless people offer you change?
  • Are you a “If it weren’t for bad credit you wouldn’t have any credit at all type of person”?
  • Do you have lots of time but no money?
  • Do you have lots of money but no time?

By identifying your business constraints BEFORE you get started, you won’t run into the common nightmare of spending the year learning about a “Super Deluxe Exit Strategy”, only to find out that you don’t have the resources available to put it to work.

Define your ideal outcome
- Where do you want to end up in the next 6 months, 1 year, 2 years,…10 years. How much money are you seeking to earn and which income streams do you plan to have that money coming from?

  • Do you plan on having $1,000/month passive income from rental property?
  • Do you plan on making an extra $40,000/yr wholesaling a home every couple months?
  • Do you plan on starting out with some high paying quick turn around exit strategie, then funneling that money into rental properties?

Try to set up a realistic outcome that is both achievable and challenging. Don’t fall in love with your outcome, simply use it as a guide post to steer your investing ships in the right direction.

Choose your strategy-
Once you’ve identified your constraints and defined your ideal outcomes, you’ll need to find which exit strategy which aligns with your answers. From that point forward STICK to learning ONLY that strategy. Or as Tim Ferris says in the 4 Hour Work Week “Go On An Information Diet”. This prevents the all too frequent getting ready to get ready syndrome that plagues most newbies to the point of an exhaustive failure.

Once you’ve learned enough to get started…Don’t be an idiot…GET STARTED.

One last helpful tactic to further counteract over learning and winding up in the dreaded Analysis Paralysis trap:

1.Once you’ve identified the exit strategy that you plan to implement take 10 minutes and write out everything you already know about the subject. Doing this exercise will help you quickly identify which areas to focus your learning on.

2.Next, write a brief outline of the necessary steps to complete a successful deal using the exit strategy that you’ve selected.

3.Now compare your outline to what you already know about your exit strategy then go to work on filling in the gaps.

Once you’ve learned enough to get started then…THEN GET STARTED.

I hope this tactic helps a few of you out…I’ve seen it do miracles

Eric Medemar

Thank you belive it or not this information helps me a lot , especial the part of analays paralisation part. I think that is the biggest thing I need to get over!

Terrific Post, Eric Medemar.

I would add–Where are you living now? Are you renting the roof over your head? …Which means you are buying the property for someone else.

If you are a homeowner now, but in a single family residence, how can you live rent-free? Can you sell/swap that SFR for 2, 3, or 4 units?

If you are renting now, for heaven’s sake figure out how to use that $8,000 ONCE IN A LIFETIME stimulus money to buy a home, any home, before Dec. 31, 2009. Get your foot in the door.


Im renting right now and I was wondering if I rehab and flip would that kill my 8000 rebate/refund??
ive never owned a home before.

If you are rehabbing I’m assuming it would be a NOO property which would NOT qualify you for the tax credit (which is for first time OO props). However, I don’t believe it would disqualify you if you decided, for example, to take you’re flipping profits and turn around and buy your first owner-occupied home. Then you could get the tax credit.

I took this right off of the govts tax credit official website:

The law defines “first-time home buyer” as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse.
For example, if you have not owned a home in the past three years but your spouse has owned a principal residence, neither you nor your spouse qualifies for the first-time home buyer tax credit. However, unmarried joint purchasers may allocate the credit amount to any buyer who qualifies as a first-time buyer, such as may occur if a parent jointly purchases a home with a son or daughter. Ownership of a vacation home or rental property not used as a principal residence does not disqualify a buyer as a first-time home buyer.

Sweet…thanks JakeRodger…thats comforting.
Im gonna go see what home to buy!

Lots of good info here for this Newbie. Thanks guys

Jake, my understanding is that unrelated joint purchasers “share” the tax credit. For two buyers, each gets half of the tax credit. If A is a first time homebuyer, and B is not a first time homebuyer, then when A and B jointly purchase a primary residence, buyer A can claim only half the tax credit up to a miximum of $4000.

is this what you are saying?

This is a relatively old post, so I’m trying to remember what was going on here…I believe the quote I posted was from, which is the site of the National Association of Home Builders.

The way I interpret it is that if you’re married, and only one of you is a first time homebuyer, then neither of you can claim the credit. But if you’re not married, “… unmarried joint purchasers may allocate the credit amount to any buyer who qualifies as a first-time buyer” which would mean to me that the one who IS a 1st time homebuyer could claim the full credit. just how i see it, but I could be wrong…