How To Buy Your First Rental Property In 2024 Even If You’re Broke

so you're looking to buy your first rental property this year and you probably don't know which way to go you've got questions of whether you should go into multi-family single family a condo maybe you should get into Airbnb and even if you go that route should you do short-term rentals or monthly term rentals the list goes on and on and so many people are confused about what is the best way to get their first rental property in this video I'm gonna break it down step by step for you on what you should do in your current situation for buying your first rental property this year if you've got a normal w YouTube job and you're making less than 100 Grand you can buy your first rental property this year if you're an entrepreneur and you don't have two years tax returns and you're worried about getting a conventional loan you too can still buy your first rental property this year and if you want to build wealth really fast and you're not making the money you want to make right now it actually might be best that you don't buy a rental property this year if you're new to my channel my name is Ryan Pineda I'm a real estate investor and entrepreneur I've flipped over 500 homes I currently have over 550 rental units this is a range of single family I own airbnbs and apartments in my fund Pineda Capital so let's jump into the different scenarios and figure out what you need to do to buy a rental property so the first thing you need to do is understand what Market do you actually want to invest in when it comes to Runner properties there are basically two schools of thoughts you're either going for cash flow or you're going for appreciation cash flow markets are typically in the midwest part of the United States and their homes that are actually very cheap you can go buy houses still today in the Midwest for under fifty thousand dollars now I wouldn't advise any of you watching this video to ever go do that the reason being I've done it and I know it is way more headache than it's worth back in 2018 I went on a binge of just buying random houses across the country that were cheap I bought a house for seven thousand dollars in Indiana I bought a Triplex for twelve thousand dollars in Pennsylvania about a duplex in Saginaw Michigan for fifteen thousand dollars and I bought some other random properties where I thought wow these are such great deals there's no way I lose and after about a year of holding many of them I realized yeah I'm definitely going to lose on these for many reasons one of the reasons I lost was that a repair can cost you as much as the entire house for example the triplex I bought in Pennsylvania cost me twelve thousand dollars I had to go put fifteen thousand dollars into it and even once it was rentable I still had thousand dollar problems every single month that I had to go repair and it basically ate up the cash flow in fact I was losing money year over year even though I didn't have a loan on it and I paid for it cash and this is a property that was making about twelve hundred dollars a month it's kind of crazy because people strive to get the one percent rule meaning that whatever you pay for the property you want it to rent for one percent of that per month so if you have a 200 000 property ideally you'd want it to rent for two thousand dollars a month well I had the 10 rule on this property I bought it for twelve thousand and it was renting for 1200 a month but it was the worst deal even at that role because the repairs were so expensive that tenants on those kinds of properties were not great and after a year of dealing with this I just put it back on the market and I ended up taking a loss I don't even remember what I sold it for but it was not as much as I put into it and that leads me to one of the problems with cash flow markets is that they usually don't appreciate much if you buy a property for fifty thousand dollars it's very likely to be worth fifty thousand dollars when you're ready to sell it a twenty percent increase on a fifty thousand dollar property would be sixty thousand twenty percent appreciation is a lot and so when you're dealing with cheap properties like that you're not going to get rich from them and this leads to the other side of the coin which is what I always pursue these days which is appreciation markets Las Vegas where I live would be an example of an appreciation market now the good thing is properties are going to go up in value as time goes on the bad news is when you buy it it's usually not going to pencil out and many times you would be losing money on a monthly basis but if you're able to hold on to it for the long haul you are going to cash flow and it's going to appreciate like crazy to give you an example of this five years ago in Las Vegas you could go buy a house for three hundred thousand dollars in a really nice neighborhood now that same house might have only rented for eighteen hundred dollars a month and your mortgage was going to be around eighteen hundred dollars a month once you factor in your property management expenses your vacancy any kind of Maintenance to the property you would lose money every month on that and so back then five years ago I wouldn't buy those properties because I would look at it and say well this doesn't make any sense why would I buy a property that's going to break even or lose money but on the flip side I saw a ton of investors buying up these properties like crazy and I just couldn't understand why well fast forward five years later and I Now understand why that property is now worth probably five to six hundred thousand dollars plus it's now probably running for at least three thousand dollars a month so not only has it been making great cash flow but it's also increased by 200 to 300 000 imagine if you would have bought five of those properties five years ago you would already have the net worth of a millionaire just from buying those properties plus you would have some properties that are cash flowing over a thousand dollars a month and not to mention in appreciation markets a lot of the big investors like them more because the houses are newer and the climate is better so here in Vegas many of the houses are built after 2000 and so they have way less maintenance than other properties and they will continue to have less because our climate is so much better than somewhere in the midwest where you have snow and all of these other conditions also when you're buying a more expensive property when you do have an issue with repairs maybe you got to go pay six thousand dollars to get a new AC it's not as big of a deal than when you got to go replace an AC on a cheap property where it's the entire value of the home so as you can tell I am a big believer in appreciation markets especially when it comes to single family homes now let me say I do invest in cash flow markets when it comes to big apartment buildings we have buildings in Iowa that are doing extremely well and we're able to force appreciation because the multi-family game is a a totally different way of valuing property they go based on net operating income and so we can force appreciation in cash flow markets when it comes to commercial real estate in single family you can't really do that because it's dictated upon what other properties around you are selling for so I want to make sure that distinction is clear I'm not all against cash flowing markets but I just believe if you're going to buy single family homes and appreciation Market long term is going to be significantly better now you might be saying Brian what are appreciation markets what's the best Market to pick then well I can tell you a lot of the hedge funds are trying to buy properties in Nevada Arizona Texas Florida basically anywhere in the Southern United States people are migrating South because the weather's nicer there's a lot of tax benefits in many of these places like Texas Nevada and Florida and they're just better places to start businesses because there's going to be more Talent available I can't tell you how many people are coming to Vegas right now it's app absolutely insane and despite the real estate market having been slow we're back on the rise again because the demand to live here is so high but what I always tell people is if you're just getting started your backyard is always going to be your best bet at least for your first one if you're in the Midwest and you know the Midwest better than anything else I think you should probably get your first one there versus trying to go buy something in Vegas where you have no idea what's going on in my opinion local will always supersede any strategy especially when you're starting out but you do need to think about cash flow versus appreciation in the Long Haul as you start building up your portfolio now once you've picked up the next thing people always ask me is okay now that I've picked a market and I've identified homes what should I do with the homes should I Airbnb it should I go long term should I do a monthly rental what do you think the first thing I always say is make sure that your local laws allow for Airbnb every city has different restrictions on it and so you want to make sure you are following the law because if you don't eventually you are going to get popped and they're going to get rid of your Airbnb and if you were solely relying on Airbnb as the way that it was going to make sense as a deal then if that happens to you you're in trouble so for me I always wanted to make sense as a long-term rental first and foremost but if I am able to Airbnb it then I'll go that route because it will make more cash flow and to be honest managing an Airbnb is not that difficult especially if it's just your first one and by the way we just launched a brand new program called Pro host where we teach people how to get their first Airbnb so you can learn more about that and all of our other programs for real estate investing by going to wealthyinvestor.com now that you understand the macro big picture of rental properties and markets and exit strategies the next thing you need to think about is where you are at currently now I'm going to break this down into two sets of people the first rw2 workers whose incomes are capped and they have no desire to leave their job the second are entrepreneurs who want to grow their business so to the W-2 workers if you currently have a W-2 job there are many benefits to this the first is that if you have two years there you now have stable tax returns and getting loans is going to be very easy for you and this means it's a great opportunity for you to buy your very first rental property now how you go about using your loan status is going to be up to you and if you just want to go buy a rental property the conventional way you're going to have to save up 20 and use that as a down payment personally I'm not a big fan of this way I hate putting 20 down on anything in fact what we teach our students at wealthy investor is to put zero money down on all deals by just raising private capital and using other types of loans but if we're just going the conventional route there are still other options to get your first rental property with much less cash the first is to just go buy it as a primary residence now when you buy a property as a primary residence the benefit is you can put less down you can do a three percent conventional loan you could do a three and a half percent FHA loan if you're a veteran you could get a VA loan at zero percent down and so the cash out pocket is significantly less if you buy as a primary residence now when you buy as a primary residence you are saying that you are going to live there so you do not want to lie and just go buy it as a rental property this is what we would call mortgage fraud and I don't think buying your first rental property is worth going to jail for so you do need to go live in this property but what I have seen a lot of Real Estate Investors do is upgrade properties every single year they'll go buy a primary residence they'll live there for a year they'll then go buy another house as a primary residence move into that house and make the other house a rental property they'll then go live in that new house for a year and then repeat the process they'll go buy primary residence again and now they have two rental properties and a primary and they're just stacking up these properties year after year with low down payments and so your first rental property might actually be a primary residence to start and I think that's an amazing way to build your real estate portfolio I don't like when people say hey don't buy a primary home it's not an investment well it may not be an investment today but it can be an investment a year from now so I love that strategy for my W-2 workers now let's talk about the entrepreneurs entrepreneurs have the problem of not having good tax returns because they're doing side hustles maybe they're writing off way too many things so they're not showing enough income I see all kinds of problems with entrepreneurs because I went through those same problems when I was getting started early in my career now even with bad tax returns there are still ways to buy rental properties you can do it through creative financing and take over people's loans via subject two you can do seller financing you could also go about it with hard money loans and dscr loans and all these Alternative forms of financing these Alternative forms are going to definitely be higher interest rates and more fees but if you're really gung-ho and getting your first rental property there's lots of options available to you as an entrepreneur but I did say at the beginning of this video I I do not believe that every entrepreneur should buy a rental property this year you see for me I teach something called the 3M framework which means make manage multiply I believe that the first skill an entrepreneur should learn is how to make 250 000 this could be doing anything you could wholesale real estate flip real estate be a salesperson I don't really care just figure out one skill that makes you 250 000 because if you can do that you're going to have that the rest of your life and at 250 000 a year you can live pretty good you can save money you can start investing and you can build a ton of wealth over the long run from there the second step of the framework is manage once you've figured out how to make 250 with a skill you then need to learn how to use that skill to build a business and this is where management comes into play you're no longer the guy doing the skill anymore it's now you learning to be the boss and manage other people who are going to do the skill for you and this is what we call running a business you're now the business owner you're having other people do the thing that you're good at and for me I don't believe you've conquered stage two until you've made over a million dollars in this business once you've graduated you then go to stage three which is multiply and this is where Investments and new businesses come into play you can start taking all this money you're making from your business start multiplying it by buying rental properties by starting new businesses by investing in other things or by just reinvesting it back into your business and scaling it to the next level and if you're an entrepreneur this is the path that I teach across all of our coaching programs because this is the fastest way to build wealth if you can conquer stage one and stage two buying rental properties the rest of your life will not be a problem the problem is most entrepreneurs get shiny object syndrome and so they're still in stage one maybe they're making seventy thousand a year maybe they're making a hundred thousand and they're already thinking about new streams of income they want to get a rental property they want to start a new side hustle and they're doing all of these things but they're not really good at anything the most successful people in the world are good at one skill before they ever worry about anything else LeBron James did not worry about all the other endeavors he's got going on in his life today until he first got great at basketball I didn't start all the other businesses that I have today until I first got really good at house flipping and you will see this time and time again with all very successful people and so my advice to you as an entrepreneur is that instead of worrying about getting a rental property that might break even take that money take that time and develop the skill that's going to help you make 250 Grand a year reinvest that money you would have put into a rental property and invest it into you you are a far better investment than any piece of real estate real estate and money and wealth can come and go but what you understand in your experience will never be taken away from you so the most important thing you can do is invest into you develop that skill and build a business from there once you build a good business then you can start multiplying your money and buy rental properties at scale then you can start other streams of income so for many of you watching this this might not have been the news that you wanted to hear because you're an entrepreneur and you want to buy a rental property I get it I was there but guess what I flipped 50 houses before I ever kept one as a rental property and the reason was I understood I needed to learn how to build this skill I needed to learn how to build a business I wanted to redeploy every dollar I had back into myself and into my business and in turn that helped me become wealthy really fast and then I was able to start buying rental properties long after the fact now we have over 550 of them I'm only 33 years old I'm just getting started and I'm gonna have way more because I took the right path I built up my foundation and then I started buying but anyways that's my advice for any of you who are trying to buy your first rental property this year hope it helps you out let me know in the comments where you are currently at right now in the stage our ew2 trying to get that first one are you an entrepreneur who's looking to scale your business and if you like this video you're really going to like this next one I did so make sure you click here and go check it out

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