How to Start out - Tips/Recs/Advice
Hi all,
I've been scouring this forum for a while now and I love the energy and the tenacity you lot have and it inspires me to reach that level!
With that being said I'm sitting on some cash and looking for a multifamily house in Bridgeport CT as either an investment or house hacking. Any thoughts or plans you might be able to suggest when first starting out? I understand ill need a property management company as an expense but what other expenses might arise, if there are any solid connections/recommendations you guys can share that would be really awesome!
I'll be looking forward to reading from you guys soon!
N
@Neil Mansilla, having capital to work with and an investment strategy already in place is a good starting point that I see many beginner investors fail to realize. Your next step is to link up with an investor-focused real estate agent and lender who will help get you prequalified. When working with an agent, you want someone who predominantly works with investors and invests as well. If you can connect with a real estate agent who has house hacked before, then even better. As far as accounting for expenses, this is dependent on the property. If you're buying a newer property, then you can be a little more lenient when it comes to maintenance and CapEx. Vice versa for older homes. When it comes down to interviewing PM companies, be very upfront and clear on the services they do and don't provide. Going cheap for a PM to limit expenses isn't always the best move. Best of luck!
Congrats on making that move! I’m sure you already know this but house hacking vs using that money as a pure investment can yield dramatically different results. Just depends on how uncomfortable you’re willing to be.
You also may not need a PM when just starting out, but a good one will make things easier. If cash flow is low you may want to reconsider especially if you have >4 (or whatever arbitrary number) units
@Michael Dumler Gave an excellent rundown that I would stand behind myself. Well said!
I will add that if you can house hack, it would be a phenomenal way to get started. Utilize the FHA loan, put little money down, and keep the rest of the capital you have to either invest in the property for strategic reasons and/or have liquid in the bank for your next opportunity, while you live at a discount or for free on the hack.
For your expenses, understanding the basics on a rental is a good start(vacancy, maintenance, capex, PM, insurance, taxes, etc), but with it being a small multi-family, knowing your utility situation is going to be critical. Is electric/water/gas/etc. separately metered? Only the electric? Can the water be submetered if it isn't? None of it? If not, are you billing it back to the tenants(if legal in your state)? This way you can get an accurate idea of what your expenses truly are when diving into the financials. Not an all-inclusive list, but will get you on the right framework for analysis. Your investor-friendly agent can help guide you through these things though.
Best of luck and excited for the beginning of your journey!
Quote from @Neil Mansilla:
Hi all,
I've been scouring this forum for a while now and I love the energy and the tenacity you lot have and it inspires me to reach that level!
With that being said I'm sitting on some cash and looking for a multifamily house in Bridgeport CT as either an investment or house hacking. Any thoughts or plans you might be able to suggest when first starting out? I understand ill need a property management company as an expense but what other expenses might arise, if there are any solid connections/recommendations you guys can share that would be really awesome!
I'll be looking forward to reading from you guys soon!
N
I'm using a company now who handles lead generation, marketing, acquisition and disposition, so far dialer and list is the expenses I covered when I started.
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#2 Managing Your Property Contributor
- Property Manager
- Royal Oak, MI
Go with house-hacking to minimize your downside and gain valuable experience
I say that finding an investor-friendly lender is where you should begin, one that owns real estate in the same area you are in or an area that you are familiar with. If they are good, they'll work with agents that close, and that's where you will find your agent. It's up to you, but a lender is going to look at your financial situation and determine if there's anything you need to improve (Credit, DTI, etc.), and then once you are conditionally pre-approved, they'll point you in the right direction of an agent. Then determine if they're a good fit for you, even if they are an investor. Do your due diligence.
Then I'd get very clear about your goals! Get your first house hack done, but figure out why you even want to invest. Then take a step back from that and figure out what that looks like, and then another and how to get there, again and again until you get to today (Brandon Turner calls this reverse engineering your goals). It'll help mitigate paralysis-by-analysis and keep you focused to help make better decisions.
Best of luck! Hope that helps! Keep posting on the forums if you have any questions!
Quote from @Jevon Shaw:
Congrats on making that move! I’m sure you already know this but house hacking vs using that money as a pure investment can yield dramatically different results. Just depends on how uncomfortable you’re willing to be.
You also may not need a PM when just starting out, but a good one will make things easier. If cash flow is low you may want to reconsider especially if you have >4 (or whatever arbitrary number) units
Absolutely, I believe HH is the way to go at least that way it'll be easier to get a profit and low barrier of entry by putting a 3.5-5% down as mentioned by @scottcrowley. Thank you all for the input!