5 steps for new Texas real estate investors

How can I  get started in real estate investing in Texas?

You were at the pickleball courts in Dallas and someone told you about how they are making a killing renting out a duplex in Ft. Worth TX?

You have been working at your JOB for 12 years and now you see that some family members who bought real estate in Denton TX have made more in appreciation in the last 5 years than you made at your job?

Your parents have been real estate investors in McKinney TX for twenty years and they want you to start buying properties and learn the “business” so they can pass their rental portfolio to you in the next few years?

Build a landlord or rental investment team

Do you have a real estate agent you are working with? Have you gotten with a lender? Do you have a mentor or advisor?

You will need all of three of these people.

Get your real estate investing mentor

You will want to find a good mentor or advisor.  Sometimes it is best to get someone who you know who works in another market or who isn’t worried about making money off of you.

I have had several different mentors.  My father-in-law, my retired neighbor, and others.  You need to find someone you trust.

Once you have a mentor you should ask them to help you decide which lender to work with.

The importance of having a great lender

A lot of people think that any mortgage broker will work.  Just ask the guy down at the bank.  He makes house loans.

You may need to look around more.

I remember when we bought our home.  I am self-employed and so is my wife.  We knew that getting a loan was going to be a little tricky.

Our real estate agent recommended Shane.  Shane had helped him get a loan when the realtor didn’t think he would qualify.

We talked to Shane and he said he could make it happen.  We had to get some serious help when the underwriters didn’t want to close the loan because of our income.  Shane helped push it through.

Shane helped us on our investment property and got us going in the landlord business too.  He knows our situation, he can get us the funds we need.

Find a Realtor who understands investing

Not all real estate brokers are created equal.

I think about when I was a full-time Realtor.  There was a lady in our office who sold a ton of real estate to people who were relocation clients.  They were moving to town and she got those referrals and found them a house.

She was good at finding homes for executives moving into town, but that is not the skill set you need for investing.

You want someone who owns investment real estate properties.  You want an agent who is also a landlord.  They know what you need.

Just ask them about it and interview 3, 5, or 10 real estate agents until you find one you like who can help you find what you need.

(Caveat.  I have NEVER met a real estate agent who would tell a prospective client that they don’t really understand investing.)

The 5 simple steps

I suggest the following steps to get you started on your real estate investing journey:

1. Go to your bank or credit union and tell them exactly where you are. Don’t over-exaggerate anything. If there is a skeleton in your “financial closet, share it with them. They will see it eventually.
2. Go to 2 other mortgage brokers, banks, or credit unions, including your LENDER we discussed above and do the same thing:”I have a 732 credit score, I make $65,000 per year, I owe $5k on my credit card, I have $800 in car payments, my rent is $1250 a month, etc… etc….”They will give you a rough idea of the type of money you can borrow.  Each of them will probably give you different numbers.Put them all in a spreadsheet or on paper.  Throw out the highest and lowest amounts.  Now look at the rest.

   Plan on the minimum, but you may be able to borrow the average.

   Get a pre-approval letter from the lender you are planning to work with.

3. You will need to have some money for a down payment.Usually about 20% of what they will lend you. So if they will lend you to buy a $200,000 property, you will need 40k in cash for the down payment.If you have read some books telling about how you can buy great real estate deals with no-money down and use OPM, that probably won’t happen in today’s market.  Even Donald Trump has to bring some money to a deal in a strong real estate market.
4. Once you have some idea what they will lend you, a pre-approval letter, and the down-payment, you are good to go. The next step is to find a real estate agent who knows investment real estate.I have been a full-time Realtor, and have worked with a lot of Realtors and brokers. Many of them focus on personal home purchases. You can ask around here, or look at websites in SA to see who knows investment real estate.
5. Start looking. PATIENTLY.You may have to wait a few months for a deal to come up that you like. Don’t rush into anything.  But don’t wait too long or procrastinate too much.

I have seen too many people do this list in exactly the opposite order.

I did it when I started.

I found something I liked, went to a Realtor, they sent me to the lender, then I realized I didn’t have enough down-payment. I had to back up and start from the top of this list.

You can easily get started with investing in real estate in Texas or anywhere by following this simple list.  Be sure to send us some information about your success or put a comment below telling us about what worked for you.