Hello from Wyoming!
Good morning all. I have been reading advice here for years, and following it (along with some luck) has paid off. But before I start asking questions, a little about myself. I'm 27, in a relationship but not married. I have a good job and make around $55,000 after tax, along with about $10,000 +- on a small excavation/landscaping llc that is more of a hobby than something to be relied upon. I purchased foreclosed home in 2012 as my primary residence and made repairs and updates as time and money allowed. After two years, I put it on the market and within a week it went under contract. It just passed inspection and we close on the 13 of next month. This will leave me with $56,000 after its all said and done. After the mortgage is paid, my only debt will be $13,000 for equipment which I will pay off. This will leave me with $40,000 cash. And this is where my questions begin...Sheridan, Wy has high home prices, and high rents with low vacancy rates. There are deals to be had on homes that need some sweat equity and I am more than willing to do the work. I would like to eventually be able to have a sustainable passive income from rentals, and selling this house leaves me the cash to start. Would you buy a rental property or fixer upper first, and rent a primary residence until the right one comes along to buy? Or am I thinking about it all wrong. I will post later in one of the real estate forums. Thank you all for helping me get to where I am, and thanks in advance for the knowledge to come.
Jake Kraft
Jake, Welcome to BP bud. I understand what you are saying about housing prices in the Story/Sheridan area. My thought is that you look for the best deal you can find, but is probably going to have to be a distressed property to fix up. It is dam hard to find a rental property you can cash flow in your market. plus if you hold back at least 20K of your money you have now, you can use it to buy supplies in the new fixer upper.
An additional piece of advice, find out what your tax will be on the flip and set it aside now. You don't want to spend it and not have it come tax time.
By the way I over in Thermopolis.
if it was your primary residence for more than two years there shouldn't be any taxes.
If it was me I'd try to rinse and repeat all the while looking for additional deals to either flip or buy and hold. I'd look hard at getting a low down payment mortgage to keep your powder dry. Yes you'll have to pay pimple but it's worth it to have a down payment on a rental.
Having done one repair/update job on one house it should be easier the next time.
thanks all! Luckily there will be no taxes on this one since it was my primary residence for over two years. Yes the markets here in wyoming are tough. Sheridan is not quite as hard since its not affected by the boom bust cycle of oil and coal but it is a lower income town, although home and rent prices dont reflect that. This home has taught me a lot and im looking forward to doing it again with more experience under my belt. Cal C quick question about finding the lowest down payment and keeping cash on hand..would the reasoning be to focus my remaining funds on a single property rehab, or to jump on another if the opportinity presents itself?
Thanks
Jake Kraft
Originally posted by @Jake Kraft:
thanks all! Luckily there will be no taxes on this one since it was my primary residence for over two years. Yes the markets here in wyoming are tough. Sheridan is not quite as hard since its not affected by the boom bust cycle of oil and coal but it is a lower income town, although home and rent prices dont reflect that. This home has taught me a lot and im looking forward to doing it again with more experience under my belt. Cal C quick question about finding the lowest down payment and keeping cash on hand..would the reasoning be to focus my remaining funds on a single property rehab, or to jump on another if the opportinity presents itself?
Thanks
Jake Kraft
Got to love auto correct sometimes that should be pmi not pimple! I'd save it for another opportunity.
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Hey @Jake Kraft Thanks for jumping in and introducing yourself! If you haven't yet- be sure to setup some "Keyword Alerts."
See you around the site!
Welcome to BiggerPockets @Jake Kraft! Great to see that you've decided to jump in and take part in the conversations here on the forums!
Thank you for the warm welcome everyone! Im excited about the opportunities to come, and im very much looking forward to tapping into the extensive experience of my fellow members here. Thanks in advance for the help!
Jake Kraft