From the Forums: One Thing That Most Beginner Investors Should NOT Do

Dec 4, 2024

Wondering if you should borrow private money for your first real estate deal? Experts weigh in on the risks for beginners. Struggling with tenant screening? Learn how to navigate red flags like late payments while managing inherited tenants. Plus, discover effective strategies for raising rents without losing good tenants. Also, get insights into the 70% rule for house flipping and how to spot a steal in the market. Whether you're investing, renting, or flipping, these tips will sharpen your strategy!

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ADVICE

Private Money for First Deal?

Avoid raising private capital for your first real estate deal if you have poor spending habits.
It's a big responsibility and mistakes are likely, so partnering with family or friends is better.

ADVICE

Partnering vs. Private Money

Experienced private lenders rarely invest in rookies; partnering is better.
Partnering allows flexibility if cash flow falters, preventing property loss due to liens.

ADVICE

Tenant Red Flags

Evaluate tenant red flags individually, considering context and recent history.
Prioritize vacancy over risky tenants, especially with a history of late payments.

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Should you borrow money for your first real estate deal? We’re not talking about taking an interest-free loan from your mom; we mean using “private money” to finance your investment. This type of investment property financing is usually reserved for the more experienced investors, but is it a bad idea for someone with such little experience? Is there another way to finance your first deal that gives you more wiggle room if you make a mistake?

This is just one of the BiggerPockets Forum questions we’re answering today from investors like you. One investor on her second rental wants to know whether bankruptcy or late payments is an immediate red flag in a tenant application. She’s struggling to fill up her property, so should she take on a tenant with sub-optimal finances? What do you do when you inherit a tenant paying substantially under-market rent? How do you raise rents the right way?

Finally, Henry the house flipper shares his thoughts on the 70% rule and gives his own house-flipping formula you can perform on the spot to see if your deal is a steal!

Looking to invest? Need answers? Ask your question on the BiggerPockets Forums!

In This Episode We Cover:

Whether you should or shouldn’t borrow private money for your first real estate deal

Tenant red flags and what to do when you’re struggling to fill a vacancy

Raising rents on inherited tenants and why we DON’T ask for market rates

How to attract better tenants to your rental property (and whether to lower the price)

Henry’s house-flipping formula that beats the 70% rule calculation

And So Much More!

Links from the Show

Join BiggerPockets for FREE

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Ask Your Question on the BiggerPockets Forums

Grab Henry’s New Book, “Real Estate Deal Maker”

Find Investor-Friendly Lenders

The Comprehensive Guide for Financing Your Very First Real Estate Deal

Connect with Henry

Connect with Dave

(00:51) Use Private Money for FIRST Deal?

(06:21) Tenant Red Flags

(11:24) How to Attract Tenants

(13:47) Raising Rents on Inherited Tenants

(19:55) Ditch the 70% Rule?

(27:54) Ask Your Question!

Check out more resources from this show on BiggerPockets.com and https://www.biggerpockets.com/blog/real-estate-1052

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