Concept
Starting Out
What it is
Starting out is the phase where you don’t have a portfolio, don’t have contractor relationships, don’t have a track record with lenders, don’t have a buy box dialed in. Every investor starts here.
Ross’s framing: “If I had to start my real estate business over from scratch, this is exactly what I would do.” He’s been investing for 15 years, flipped 300+ houses, owns 150+ rental units, and when he maps out the starting-over plan, it’s almost none of what the gurus sell.
Why it matters
Most investors never start. They get stuck in analysis paralysis. They become a spreadsheet warrior. They read books, set up LLCs before they own property, attend seminars. Meanwhile the knowledge times experience multiplier can’t compound because there’s no experience.
“I want to gain momentum for myself. I don’t want to go for big swings and possibly lose. I want to get 20, 30, maybe $40,000 on a deal and then put it towards my next one and then my next one.” base hits win ball games. Moneyball is the mental model. The Oakland A’s weren’t trying to hit home runs. They were trying to get on base. That’s how you start.
The first deal teaches more about underwriting, contractors, and your own market than any book. You’re investing in your skill, not your portfolio, for the first year.
How it shows up
Define a buy box first. “The key thing to a buy box is the neighborhood. You don’t buy houses in a zip code. You buy it on a specific neighborhood, which is really defined by census tracts.” Ross’s starter box: houses 800-2500 square feet, around the city’s median price, up to 20% above median max. In his city that’s under $400K. “That’s a safety zone. A lot of people like to do luxury type of houses. Those can be big home runs, but I like base hits.”
Go direct to seller. The car dealer analogy: Kelly Blue Book says your trade-in is worth $20K, the dealer offers $13K, then sells it for $23K. Wholesalers and real estate agents do the same thing. “You need to go straight to the source.” That’s where the margin lives.
Get a team of two, not twelve. You don’t need a CPA, a bookkeeper, a lawyer, a property manager, a real estate agent, an insurance broker, and a mentor on day one. Ross’s minimum first-deal team: “An all-arounder, which is the meat and potatoes of my business, and a lender. You’re not lining up the lender before you get the deal. Lenders in our game don’t care so much about you or your credit score. They care about the deal itself because most of them are graduated house flippers, graduated real estate investors.”
Pick your first strategy. house hacking a small multifamily with fha loan (3.5% down, live in one unit, rent the others) is Ross’s favorite starter move for people with a W2. A cosmetic renovation flip in your own backyard is the other path. Keep it small. Keep it close. Don’t chase gut job complexity on your first swing. Build skill stack before scale.
Related
house hacking, cosmetic renovation, buy box, base hits, skill stack, knowledge times experience, analysis paralysis, spreadsheet warrior, fha loan, direct to seller