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Prioritizing First 10 Properties for Out of State Real Estate Investing

Siddhant Pradhan
Posted Dec 8 2023, 23:04

I have been reading Long Distance Real Estate Investing - David Greene, and came across an interesting tidbit of information: Your first 10 (1-4, 5-10) property loans are Fanny Mae insured, after which your loan criteria become more unfavorable (variable rates, stricter credit score requirements etc.). Of course, I'm dumbing this down but it's focused on the gist here.

Now, I planned on going long term buy and hold in a student housing market with SFH around the $100-150k mark. This would be my first investment property. But after reading about the above, I am thinking, should I save up more and go for multi-family in the same/ similar market? Should I save up significantly more and invest in a bigger town? Are there other strategies I should apply?

As of right now, I work in tech, and house hacking is not an option since most opportunities are here, and hybrid/ WFO. Any insights and or pointers to resources would be greatly appreciated!

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Travis Biziorek#4 Market Trends & Data Contributor
  • Investor
  • Arroyo Grande, CA
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Travis Biziorek#4 Market Trends & Data Contributor
  • Investor
  • Arroyo Grande, CA
Replied Dec 10 2023, 08:10

Hey Siddhant, there are a lot of variables here.

The first big one is if you're married. Your spouse can also have 10 conventional mortgages as well. That makes 20 between the two of you. If you're married but your spouse does not work and is on your primary mortgage there are still ways to work around this.

Seem appropriate to say I am NOT a lender but I do have a fair bit of knowledge on this as my wife and I own 12-doors in Detroit but live in CA.

Beyond the fact that you could have 20 conventional mortgages between you and a spouse, how you should proceed is dependent on your goals.

Would 10 SFH's be "enough" to reach your goals? I don't know.

Finally, you're likely overthinking this. I would do whatever makes the most sense today and what can get you moving. If that's SFH's, great. If it's MFH's, that's fine too. The important part is to start executing.

You can always have 10 conventional mortgages and then start doing DSCR stuff. That's a great problem to have. It's a far better problem than analysis paralysis.

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Siddhant Pradhan
Replied Dec 14 2023, 07:16
Quote from @Travis Biziorek:

Hey Siddhant, there are a lot of variables here.

The first big one is if you're married. Your spouse can also have 10 conventional mortgages as well. That makes 20 between the two of you. If you're married but your spouse does not work and is on your primary mortgage there are still ways to work around this.

Seem appropriate to say I am NOT a lender but I do have a fair bit of knowledge on this as my wife and I own 12-doors in Detroit but live in CA.

Beyond the fact that you could have 20 conventional mortgages between you and a spouse, how you should proceed is dependent on your goals.

Would 10 SFH's be "enough" to reach your goals? I don't know.

Finally, you're likely overthinking this. I would do whatever makes the most sense today and what can get you moving. If that's SFH's, great. If it's MFH's, that's fine too. The important part is to start executing.

You can always have 10 conventional mortgages and then start doing DSCR stuff. That's a great problem to have. It's a far better problem than analysis paralysis.


Thank you so much for your answer Travis. I am single, and really trying to piece together all the tiny things right now. My ultimate goal is to have $10,000/month cashflow in about 10 years time with "low-effort" REI to afford a mortgage in CA :)

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Joshua Christensen#5 Multi-Family and Apartment Investing Contributor
  • Real Estate Broker
  • Albuquerque, NM
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Joshua Christensen#5 Multi-Family and Apartment Investing Contributor
  • Real Estate Broker
  • Albuquerque, NM
Replied Dec 15 2023, 12:42
Quote from @Siddhant Pradhan:
Quote from @Travis Biziorek:

Hey Siddhant, there are a lot of variables here.

The first big one is if you're married. Your spouse can also have 10 conventional mortgages as well. That makes 20 between the two of you. If you're married but your spouse does not work and is on your primary mortgage there are still ways to work around this.

Seem appropriate to say I am NOT a lender but I do have a fair bit of knowledge on this as my wife and I own 12-doors in Detroit but live in CA.

Beyond the fact that you could have 20 conventional mortgages between you and a spouse, how you should proceed is dependent on your goals.

Would 10 SFH's be "enough" to reach your goals? I don't know.

Finally, you're likely overthinking this. I would do whatever makes the most sense today and what can get you moving. If that's SFH's, great. If it's MFH's, that's fine too. The important part is to start executing.

You can always have 10 conventional mortgages and then start doing DSCR stuff. That's a great problem to have. It's a far better problem than analysis paralysis.


Thank you so much for your answer Travis. I am single, and really trying to piece together all the tiny things right now. My ultimate goal is to have $10,000/month cashflow in about 10 years time with "low-effort" REI to afford a mortgage in CA :)

 Good afternoon @Siddhant Pradhan,

Congratulations on jumping in. I'm a big fan of owner financing deals. DSCR loans often require some level of experience when you do them. With owner financing, you can usually put a smaller down payment down (15% or so) to get in, then drive the value through improvements or rent increases to market.

I always look for light to improvements and mostly rent increases with month to month leases or vacancies to get the best deals that I can move the rents faster. Once you get the majority of the rents to market value, you can refinance out to a DSCR commercial loan that never falls under the fannie mae rules. They are fantastic.

I recently did a 16 unit this way and we couldn't be happier with the results less than 60 days in.  More than likely, we'll be able to refi around the 12 month mark to get the seller out of it.  

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Mike Paolucci
  • Real Estate Agent
  • Columbus, Oh
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Mike Paolucci
  • Real Estate Agent
  • Columbus, Oh
Replied Feb 28 2024, 13:17

Hi @Siddhant Pradhan. I'm originally from San Francisco and ran into the same issue. I would recommend checking out of state markets where numbers and landlord laws make sense. I ended up investing in Columbus and have been pretty happy in my decision. 

Single family investments are an awesome way to start. My first investment was a 3/1 single family in Columbus, and was probably (in my opinion) the best decision I could have made as an rookie out of state investor. It allowed me to learn what owning property was like, while getting some positive cashflow. 

Pros to SF homes:
1. Less wear and tear on the property = less of a financial burden while learning what it's like. 
2. Single family homes are very desirable for renters from my experience. I've been able to fill my vacancies relatively quickly compared to my duplexes in the same neighborhoods. 
3. Depending on how it appreciates over the next couple of years, you can always 1031 into a multi-family property relatively easily. 

Cons
1. You don't have multiple income streams like you would with multi-family 

The key is having the right local teams in place. With the right property manager, a little TLC and preventative maintenance, it'll be a cash cow for you. 

Let me know if you have any questions and good luck on your investment journey! 

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Remington Lyman
  • Real Estate Agent
  • Columbus, OH
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Remington Lyman
  • Real Estate Agent
  • Columbus, OH
Replied Feb 29 2024, 04:59
Quote from @Siddhant Pradhan:

I have been reading Long Distance Real Estate Investing - David Greene, and came across an interesting tidbit of information: Your first 10 (1-4, 5-10) property loans are Fanny Mae insured, after which your loan criteria become more unfavorable (variable rates, stricter credit score requirements etc.). Of course, I'm dumbing this down but it's focused on the gist here.

Now, I planned on going long term buy and hold in a student housing market with SFH around the $100-150k mark. This would be my first investment property. But after reading about the above, I am thinking, should I save up more and go for multi-family in the same/ similar market? Should I save up significantly more and invest in a bigger town? Are there other strategies I should apply?

As of right now, I work in tech, and house hacking is not an option since most opportunities are here, and hybrid/ WFO. Any insights and or pointers to resources would be greatly appreciated!


 I think single families are the way to go when you enter a new market. They are easier deals to manage. Once you get acclimated to a new market and have a solid team in place you should then move onto multifamily if you still desire to do so

  • Real Estate Agent Ohio (#2019003078)

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