Investment Strategy For Second Home
Hello all! I'm new to the forum as well as real estate investing and looking for some advice as I figure out my strategy.
I'm located in upstate New York (albany area) and currently live in my first home (single family) which I purchased almost one year ago with very little down. I have less than 10% equity built up in the home, so there's not much leverage there. I would like to invest in my second property later this year or early next year. I've been approved for a $250k conventional loan, however, I don't have $60k laying around for a down payment (multiple lenders are requiring between 20% - 25% down since this will be an investment property). Realistically, I'd feel comfortable spending no more than $15k - $20k of my own money. That means I can only afford a $70k - $80k loan when factoring in closing cost.
Initially I thought my strategy would be to buy and hold a turn-key multi-family unit in a "B" area here in upstate NY. That is until I ran the numbers and realized that I'm priced out of that market. It seems I'll only be able to afford mostly vacant run-down properties in "C" areas here in upstate NY. With that said, I think I need to reevaluate my strategy. If I'm adamant about investing in my own backyard (upstate NY), and all I'm eligible for are mostly vacant run-down properties in "C" areas, then does it make more sense to scrap the "turn-key" strategy and invest in a property in a "C" area and employ the BRRR strategy?
the problem with run down properties in c areas is that it's going to cost you a lot to rehab and unless you're doing a 203k type loan then most of that is cash draining from your account. i wouldnt necessarily have tunnel vision whether a c class or b class property. A deal is a deal regardless. and they dont fall into your lap either. when ive needed down payment help, ive done many things including refinancing my car, borrowing against my 401k, borrowing from friends / family, and i've borrowed hard money as well. the resources are out there you just need to find them. think of it like a toolbelt and it makes it 10x easier to invest when you have the right tools handy. there are plenty of hard money lenders on here. you can also consider finding a business partner and splitting initial investment and responsibilities, i've done that as well.
Feel free to reach out to me at any time for questions as this seems more involved than a back and forth post.
Much success - happy investing !!! Bob
Quote from @Gary Bonds:
Gary, sometimes you have to face reality that the YouTube gurus aren't always honest about the true cost of real estate investing. Property prices are still very high compared to a few years ago. They may be unaffordable. Even if you could afford something, it may not pencil out.
Be patient. Keep learning. Look for creative solutions. Find off-market opportunities. Partner with others. Where there's a will, there's a way.
Quote from @Gary Bonds:
Hello all! I'm new to the forum as well as real estate investing and looking for some advice as I figure out my strategy.
I'm located in upstate New York (albany area) and currently live in my first home (single family) which I purchased almost one year ago with very little down. I have less than 10% equity built up in the home, so there's not much leverage there. I would like to invest in my second property later this year or early next year. I've been approved for a $250k conventional loan, however, I don't have $60k laying around for a down payment (multiple lenders are requiring between 20% - 25% down since this will be an investment property). Realistically, I'd feel comfortable spending no more than $15k - $20k of my own money. That means I can only afford a $70k - $80k loan when factoring in closing cost.
Initially I thought my strategy would be to buy and hold a turn-key multi-family unit in a "B" area here in upstate NY. That is until I ran the numbers and realized that I'm priced out of that market. It seems I'll only be able to afford mostly vacant run-down properties in "C" areas here in upstate NY. With that said, I think I need to reevaluate my strategy. If I'm adamant about investing in my own backyard (upstate NY), and all I'm eligible for are mostly vacant run-down properties in "C" areas, then does it make more sense to scrap the "turn-key" strategy and invest in a property in a "C" area and employ the BRRR strategy?
I think it is all about your goals and how you want to get there. I always like to run numbers and do pros and cons lists. A huge thing that helped me was finding a mentor. If you are set in your area then start calling around and asking people to meet with you. You can learn so much from others that are doing what you want to do. Personally, I would start with that. Keep saving. If you meet with people and you start to realize it really won't make sense for you to invest in upstate then look out of state and start running numbers elsewhere.
@Gary Bonds Hi Gary, I'm going to send you a message. I'm an agent in the Albany area who works closely with investors. Would love to chat and discuss some strategy in this market with you.
