Expert: Troy Labani - 3/25/2009

Question
HOW & WHERE do we begin. we want sooooo bad to find that positive cash flow property. i try to read ALL the books for guidance. BUt we have soooo many questions. we have good credit, no experience, little money but LOTS of passion to make this work. we are in long island, NY. we NEED help locating that income producing prpty.any advice?

Answer
First, relax! There are more good deals now than at any time before. Secondly, there are ALWAYS great deals. ALWAYS. That is the first thing you need to know. Unfortunately, I am short on time this morning, so I can't give you the full answer I would like to. But I can tell you that if you know HOW to identify the best deals, then you are half way there. The next important thing to know, is that great deals are CREATED. You create them from the potential deals all around you. Again, knowing how is the trick. I am happy to help you, but won't be able to get back to my desk for another day or two. I have business out of state and will be traveling. If you send me a quick email at apt.equity@gmail.com I will be happy to help as soon as I return.

Patience is also VERY important in this business.

Follow up answer -

You are welcome. And once again I do apologize for having to postpone my answer. I appreciate your patience.

I am back from my trip, and now have ample time to devote to the issue. I am happy to assist you in any way that I can. Feel free to have dialogue here, it is in many ways easier to answer more individual scope, specific questions, than the general form of question that you asked. I cant let everything else go and devote all of my time to trading email with any one person, but I think and type quickly so that is not really much of a problem. With that said, I will do my best to address that which you have here, and I will then post it as a copy paste to the answer board so that others might benefit as well. If it relates to a specific deal you are working on that would not apply of course.

"Where & How to get started".... I suppose the first is as I suggested. Do you know what type of income property you are interested in focusing on? If so, why that in particular? If not, then what types do you have any pre-existing knowledge of? Once you  settle on a property type, then really the next sensible question is how much money do you have to invest, and how does your credit score look. These two quite honestly dictate the "how". Or at least the overriding fundamental of the "how". The more money you have to invest, the more options you have in size and diversity.

The "where" is actually quite easy. Where ever the "deal" is. But that mitigated by your comfort with traveling or not, and need to "touch" the property frequently. On a first time deal, it is usually best to have it near by, but thereafter you will hopefully learn that deals are where they are, not necessarily where YOU are. That one thing is something many never truly get, and thereby limit them selves unnecessarily. You must be wise in how you handle deals that are geographically separated from you, but there is never a good reason to avoid deals across the country unless you personally just can not get comfortable unless you can drive by it regularly. In my years of doing this I have done deals all over the southern US. I prefer these markets because of several factors. The central and southern US, has much less harsh winters. This significantly reduces maintenance expense related to annual snow and ice (extreme). A "little snow" and a "little ice" is really no issue, but typically the northern part of the county sees extremes in these, and cost associated to everything from snow removal to roof repair is affected. The life span of building materials is a factor when you are building a portfolio of income properties that you intend to own for many years. If your intent is to hold them short term and sell them, then that consideration is lessened.

There is a great deal more that I could say related to both the "How & Where" question, but this should get us started.

With regard to the fear of the unknown, I'm going to say that apprehension and caution are always wise emotions. Fear however really only has a place in circumstances that might evoke "fight" or "flight" and neither are responses that will bode well when investing. Whether that investment be in income property or some other vehicle. If you have "fear" then you will not enjoy the process, and it is apt to be something to avoid altogether. Risk is inherent to any thing, it is the knowledge that you have that aids you in mitigating the risk. Eliminating it is impossible. Finding and developing a relationship with someone you can work with as a mentor / partner is certainly the very best way to go. There is advice I can give you as well on finding that person once I understand a bit more about your current focus (property type), and resources (financial position). I do not need to know your personal information. But having an honest idea of your net worth and objectives is necessary to help you identify someone locally that you might be able to work with.

I hope that I have satisfactorily answered your questions, and stimulated a few that are new. I look forward to hearing from you soon.