Getting Started in Real Estate Investing

Front Right-Before

Before picture of my first rehab

It took 3 attempts before I actually started investing in real estate.

In 2006, my wife and I were looking to buy our first house so I figured it would make more sense to buy a two family house.  We could live in one unit and have the rent from the other unit pay down our mortgage.  Makes sense, right?  Well, at the time, the home prices in my area were so inflated that two families were going for $350k-$500k.  With the lower priced homes in areas where we didn’t want to live and the higher priced homes above our budget, I broke down after a year of searching and ended up buying a single family home.  That put an end to my first attempt at real estate investing.

Several years later, right after the financial crisis, I got the real estate bug again (I’ll admit, it was probably due to all the HGTV shows on flipping houses).  This time, I started reading everything I could get my hands on.  My wife will tell you that I had at least one book with me at all times; whether we were driving to the beach, a friend’s house or to visit her family on Long Island.  I was obsessed!  And like many people who get caught up in learning and not taking action, I thought I needed to learn everything about real estate investing before doing anything.  The little action that I did take comprised of some phone calls to real estate agents and doing some market research.  My problem was that I quickly became overwhelmed with everything I thought I needed to know before doing a deal.  This, ultimately, led me to give up….at least for a while.  Failure #2.

Toward the end of 2010 my father and I were talking about real estate investing.  The conversation led to why I hadn’t flipped my first house.  I gave him what I thought were valid reasons but he quickly discarded them and said he would partner with me.  After I thought about it, it was actually a perfect fit.  Being a general contractor, he could take care of the day to day management of the rehab and I, being an accountant, could take care of the acquisitions, budgeting, back office and selling tasks.  Once we talked more, I was back… 100% into real estate investing!

From then on, I attended networking events, researched my market and talked to as many agents that I could.  After months of nothing, I got a call from one of the agents that I had met back in 2008 (he was one of the few real estate agents I called).  There was a property a couple towns away from me that needed a lot of repairs and the seller was looking for an offer so she could move into an assisted living facility after 50+ years in the house.  So the agent, my father and I went to take a look.  I’ll be honest, if it wasn’t for my father and the real estate agent, who is also a real estate investor, I would never have pulled the trigger on this deal.  It needed a ton of work – full interior gut, addition and major floor plan reconfiguration.  But after some back and forth about the deal and the budget, the offer was submitted……and accepted.  OH S#IT! What did I get myself into?

In the end, we came out in the black but the project took twice as long, my father and I had to do a lot of the work on the weekends, and we got screwed out of some money by a contractor.

Here are the details and after picture of that first project:Front Right-After

Purchase Price – $255,000
Purchase Costs – $1,075
Rehab Costs – $79,709
Holding Costs – $2,130
Selling Costs – $16,575
Total Costs – $354,489

Sales Price – $367,500

Profit – $13,011

Clearly the profit wasn’t worth the amount of time and effort that we put into it.  It was obvious that I needed to make major changes if I wanted to be successful and not have to spend my weekends working on these projects.  As soon as we sold the property, I went to work on refining my rehab approach and spent countless hours researching my market and developing a business plan (I’ll discuss my business plan in a later post).

Even though I wouldn’t consider this project a success, it was a valuable learning experience.  Here are some of the lessons that I learned from my first deal:

Lesson #1 – Always surround yourself with people who know more than you and will support you.
Lesson #2 – Never give up.  Because your first deal could come the very next day.
Lesson #3 – Learn from your mistakes.
Lesson #4 – Understand what your core competencies are and use them to your advantage.  Outsource everything else.
Lesson #5 – Use contracts when dealing with contractor!

With these lessons learned and procedures implemented, our subsequent projects have been much more successful.


Subscribe at the top right of the page to be notified when I add new content and to get free real estate investor resources. Also, please help me share this content by clicking the buttons below and by liking my page on Facebook at

  • Sean Brennan

    Nice post Justin!

  • Very interesting story Justin.

    How did you finance that deal?
    I can imagine that the outcome would have been a lot worse if you had Hard Money on it!

  • Thanks Sean.

    Shaun – This was a cash deal so our holding costs were minimal. And yes, we would have had a loss on the deal if we used hard money.

  • Dustin Forney

    So I’m in the hospital now after having my appendix out and just bought 1-2-3 flip to get started on. Gotta start sometime right?!

    • Dustin – Wow. Get well soon.

      Great move on buying J Scott’s books. His blog and books provide awesome content and investor resources. I actually use some of the resources that he provides on his website for my business. One of them being his rehab analysis that I modified.

      It’s never too late to start investing.