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Comment by Anon84 | Hacker News Reader

What would you recommend as training/resources to get started in real estate investing? I was thinking of getting a real estate dealer license as a way to get a better idea of how the system works and go from there, but any words of wisdom from someone already doing it successfully would be most welcome.

There's plenty of "real-estate investing" information online but most of it looks scammy as hell.

EDIT: I'm based in NYC, FWIW

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I wouldn't get a license. There are a number of reasons why but one of the keys is your level of responsibility goes up in the eyes of the legal system. So a simple mistake goes from being something minor to being much larger liability.

There are lots of classes you can go to. The first thing I'd do is talk to local real estate brokers and ask them about the market and how things are going. Then see if they can introduce you to another investor that is local. Local knowledge is pretty key for real estate. Also, check into local real estate investment groups, the good ones are pretty selective but if you can meet someone on it you might be able to tag along and get some "free" education until you are ready. This is actually how I started way back when.

Real estate is local, so I would be wary of any "system" that purports to be able to identify undervalued properties using a one-size-fits-all approach. I would not recommend buying a property that's far away from you.

As far as landlording a small number of properties, most of the knowledge involved is how to be handy, or knowing trustworthy people who are handy. One piece of advice I would offer here is to charge slightly below-market rent to get better tenants, especially if you're an amateur.

And something a lot of people misunderstand is the relationship between appreciation and cash flow. They're inversely related because lots of appreciation attracts more buyers who drive down rental margins by bidding up purchase prices. Rapidly appreciating properties in a place like Seattle may have lower cash flow than you would anticipate given the demand, and properties with very little appreciation in a state like Ohio may have much better cash flow. But as I said, you should buy a local property and just accept the market conditions. If you want to invest in real estate elsewhere just invest in a REIT.

Is a REIT usually better for a more passive investment? Or does investing directly in a property gives greater control of returns?

Yes and yes. Owning a single property is less diversified, with more risk and more potential returns.

Also, one bit of advice I have found true in most states (but NYC may be different). Avoid home owners associations (HOA), they are almost always the death of a successful venture. I have only one property left in an HOA and we have been trying to sell it for 2 years but the HOA is known as an activist HOA so selling in that neighborhood, even at a discount, is hard. HOA's make rentals really hard, make flipping hard and drive the costs of everything up. And most investors will tell you the place you make money in real estate is in the older neighborhoods which are established, free of HOA's and are either being revitalized or have been already.

Townhomes and Condo's are a little different because you will always have a board for those, and I have had some good luck with Condo's but in general I avoid anything where another entity besides the local city/county can dictate what I can or cannot do.

Bigger Pockets is a good community and you can learn alot about pre-purchase analysis over there.

Kind of OT but I don’t understand why everyone with some spare time doesn’t get licensed for real estate to circumvent the cartel fees. It costs about $300 + the fees for the classes and 135 hours of time. But it can save you tens of thousands, gets you privileged access to listings, plugs you into the whole real estate ecosystem... it’s kind of a no brainer, as far as I can tell

Yep, that's what I'm thinking as well.

Here is the simple reason. It is better to team up with or employ someone with the license then to hold it yourself. There are lots of legal obligations and other issues that trigger when you are a licensed agent. Not that you are trying to do anything illegal, but simple mistakes become much bigger issues when you are licensed. Also, when licensed you have a ton of disclosure rules you must follow and missing one can be a major issue, so better to employ someone or team up with them than to be licensed yourself.

I do agree in reference to fees from brokers etc, but if you do some deals you will find someone you can work with and honestly at that point they'll work with you on the fees and you won't care as much either because they'll take the liability so their fees are fair.

Here's a couple of reasons why I don't want to do this:

1. 135 hours is a LOT of time to invest for even tens of thousands of dollars return. I could build and market a side project or two in that time, which could have potential for significantly higher return.

2. To recoup that return, I have to take a big risk, using a highly inexperienced agent (me) in a huge dollar transaction where everyone I speak with will have much more experience.

3. Worst decisioning -- if I am my own agent, I'm not in a good environment for optimal decision making.

There are other reasons outside the scope of your question (some people prefer lower touch investments), but those are a few.

Yea, to add one major point to that list, a real estate agent most states require you to house your license with a broker. And you cannot become a broker in most states until you have usually some period of time working for a broker. In my state you need 2 years under a licensed broker before you can apply to be a broker (there are some other things you can do to qualify too but it is still a lot of time). So in the end that means, you get your agent license (pretty easy <$1000 generally), work as an active agent in some fashion for 2 years before you can get your broker license and then, finally, you can eliminate 50% of the transaction fee.

The math just doesn't work out, if you get to the point you are doing that many deals, just hire a broker for your business.

Getting access to the MLS isn't that hard. And finding a good agent/broker to work with is very doable as they want to work with investors since it is a source of recurring income usually for them.

That all said, I am always interested in other peoples approach to minimize transaction fees, but most investors I know in real estate use this approach as it just works and minimizes liability.

I recommend checking out Graham Stephan on YouTube. He's got a lot of great content about real estate investing.

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