I'm just starting out and wanted some advice on the best first investment given my goals.
I learned the fundamentals (from analyzing deals to financing strategies etc) in a BRRR program but then realized that a traditional BRRR wasn't ideal for me since I really need to replace my paycheck and quit my day job ASAP. I've been considering options like STR vs multifamily etc. and would really like some perspective from others with more experience. I'm based in CA but definitely open to investing in other states.
I'm just wanted to pop in and emphasise (not that this is what you were insinuating) not to rapidly quit your day job to jump into real estate investing. One of the first things my managing broker shared with me that he thought was a cruel joke, was that people get very excited and save up a lot of money to jump into real estate investing only to realize that they needed their job to qualify for a loan. Loans make the world go round here.
As for what is the best first investment to replace your income, we are taught the key to income replacement is based off of two factors: Equity (or assets) and Cash on Cash return. If you need to replace $100k in income you can have $2 mill earning 5% or ~$1.5 mill earning 7%.
If you have the capital, and you want to go immediately for income replacement, then high cap, high cash flow is probably the way you want to go, but if you need to build capital you might want to prioritize markets/strategies that focus on equity growth vs cashflow.
Hi Ron, glad to see you are eager to get into real estate investing!
I think all these different options you mentioned are great and usually will tie into each other.
Depending on your current situation a house hack might help you achieve your goal of quitting your job because ultimately reducing overhead would also make that more feasible. I would love to hear more about what you are looking to do!
I'm just starting out and wanted some advice on the best first investment given my goals.
I learned the fundamentals (from analyzing deals to financing strategies etc) in a BRRR program but then realized that a traditional BRRR wasn't ideal for me since I really need to replace my paycheck and quit my day job ASAP. I've been considering options like STR vs multifamily etc. and would really like some perspective from others with more experience. I'm based in CA but definitely open to investing in other states.
Thanks a ton!
Hello Ron, I recommend south central Wisconsin. Consistent 15% to 20% cash on cash returns. Good luck.
I agree with Frank. House hacking is a great first step for a few reasons, 1. you start earning some rental income, 2. you reduce your housing overhead and 3. learn how to manage a rental. With reduced overhead you'll be able to save up quicker for your next investment.
Personally, I would look for a SFR with an ADU or a small multi family and live in the smallest unit to maximize your rental income. SFRs with an ADU tend to have less restrictions than multi family as far as tenant laws if you are living in the property, of course, you'll need to check local rental ordinances.
I'm also in CA, Los Angeles. Although CA isn't a very landlord friendly state, the rents are high and I tend to fill vacancies quickly which a plus.
I think BRRRR would be of a long term play instead of replacing your income now. I flip full time and easily replaced my W2 income. In our business, we take our excess revenue to invest into long term investments like STR and Multifamily properties.
I'm just starting out and wanted some advice on the best first investment given my goals.
I learned the fundamentals (from analyzing deals to financing strategies etc) in a BRRR program but then realized that a traditional BRRR wasn't ideal for me since I really need to replace my paycheck and quit my day job ASAP. I've been considering options like STR vs multifamily etc. and would really like some perspective from others with more experience. I'm based in CA but definitely open to investing in other states.
Thanks a ton!
If you are open to investing out of state, I would recommend the major cities in Ohio. There's an abundant amount of Multi-family homes that can get you some steady cash flow. I brokered a bunch of deals in Cleveland, cash flow is king up there. The price to rent ratio makes for great investments. Not just that but because of the high demand for affordable housing, our appreciation has been higher than the US national average.
What's important is surrounding yourself with a great team (lenders, contractors, PM's) and building your network to get a good strategy and find a deal that is right for you.
Hi Ron, I am based in Northern Virginia but I primarily buy small multi family in Cleveland. One of the ways I got started was working with turnkey companies and that is something I would recommend you explore if you have a busy 9-5 job and don't have experience owning real estate in a different state. Feel free to reach out and I would love to share my experience.
I'm just starting out and wanted some advice on the best first investment given my goals.
I learned the fundamentals (from analyzing deals to financing strategies etc) in a BRRR program but then realized that a traditional BRRR wasn't ideal for me since I really need to replace my paycheck and quit my day job ASAP. I've been considering options like STR vs multifamily etc. and would really like some perspective from others with more experience. I'm based in CA but definitely open to investing in other states.
Thanks a ton!
Hey Ron,
Definitely House Hack first, you will be able take advantage of the higher leverage and lower down payment loan.
You can also do STR / Mulifamily after or even concurrently depending on your financial situation.
Once you get it going aim to use your equity to scale your business so you can quit your job.
Thank you for all the advice! Although house hacking is clearly the most recommended option for obvious reasons, it might not be an option for me since I already own my current residence. So, STR/Multi still seems to be where it's at for me, in the short term, given my priority to maximize cash flow.
I'm just starting out and wanted some advice on the best first investment given my goals.
I learned the fundamentals (from analyzing deals to financing strategies etc) in a BRRR program but then realized that a traditional BRRR wasn't ideal for me since I really need to replace my paycheck and quit my day job ASAP. I've been considering options like STR vs multifamily etc. and would really like some perspective from others with more experience. I'm based in CA but definitely open to investing in other states.
Thanks a ton!
Hello Ron, congrats on getting started.
I have some definite recommendations for you. Check your inbox. South central Wisconsin is fantastic for cash flow. 15% cash on cash.
I'm just wanted to pop in and emphasise (not that this is what you were insinuating) not to rapidly quit your day job to jump into real estate investing. One of the first things my managing broker shared with me that he thought was a cruel joke, was that people get very excited and save up a lot of money to jump into real estate investing only to realize that they needed their job to qualify for a loan. Loans make the world go round here.
As for what is the best first investment to replace your income, we are taught the key to income replacement is based off of two factors: Equity (or assets) and Cash on Cash return. If you need to replace $100k in income you can have $2 mill earning 5% or ~$1.5 mill earning 7%.
If you have the capital, and you want to go immediately for income replacement, then high cap, high cash flow is probably the way you want to go, but if you need to build capital you might want to prioritize markets/strategies that focus on equity growth vs cashflow.
Thank you for all the advice! Although house hacking is clearly the most recommended option for obvious reasons, it might not be an option for me since I already own my current residence. So, STR/Multi still seems to be where it's at for me, in the short term, given my priority to maximize cash flow.
You can still House Hack even if you own a primary already.
You can still House Hack even if you own a primary already.
For sure. I guess I just meant that I currently live in CA and would
need to move to another state to house hack, since I'm looking to invest
out-of-state. Not impossible per se, just not very ideal for me right
now.
You can still House Hack even if you own a primary already.
For sure. I guess I just meant that I currently live in CA and would
need to move to another state to house hack, since I'm looking to invest
out-of-state. Not impossible per se, just not very ideal for me right
now.
If want to move then move, but you could still house hack here in California and invest out of state. Lots of people do it. Even David Greene.