New to real estate investing, looking to learn

Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes

2y

can you start with a house hack? that is the best way to start. not everyone's family situation or lifestyle permits, but if you can, you should.

now - on to cash flow. to summarize: there is no cash flow anywhere right now on a vanilla long term rental. Not in Connecticut, not in Cleveland, not in California. true cash flow is only going to come either (1) after many years of ownership, when the property is stable and rents have gone up; or (2) with a completely different, probably tougher strategy or niche.

think about a down payment, closing costs, light repairs, rent ready costs, commission to the property management company, then you fix a dishwasher, then in year 2 the furnace goes. then when it's finally rented, in that first month your rent is $14 more than your expenses. is that cash flow? what about all the costs it took to buy and put into service?

i say this not to discourage you from investing, but to help set your expectations properly. the benefits of long term rentals are... all of them together. the leverage of buying with debt, the mortgage paydown, the potential for appreciation, the potential tax benefits.

a good market is one you can be successful in. so if you're in Connecticut, invest in Connecticut. i own a property in Stamford, and I hope to start investing there more in 2025 or 2026. i like northern fairfield county.

4 Reply

Marcus E. Turner

Real Estate Consultant · Globally · Member since 2019 · 54 posts · 37 votes

2y

Welcome to the BP forums! It's great to see you taking the first steps into real estate investing. Focusing on Connecticut for your initial investment is a solid choice, especially since you’re familiar with the area. It’s common to feel overwhelmed by the various metrics and data available. To identify a "good" market, consider factors like rental yield, local job growth, and demographic trends. While it may seem challenging to find a balance between economic growth and affordability, start by researching neighborhoods with potential for cash flow. Remember, perfection isn’t necessary; taking action is key. Good luck!

1 Reply

Jon D.

OP

Member since 2024 · 5 posts · 0 votes

2y

Quote from @Nicholas L.:

can you start with a house hack? that is the best way to start. not everyone's family situation or lifestyle permits, but if you can, you should.

now - on to cash flow. to summarize: there is no cash flow anywhere right now on a vanilla long term rental. Not in Connecticut, not in Cleveland, not in California. true cash flow is only going to come either (1) after many years of ownership, when the property is stable and rents have gone up; or (2) with a completely different, probably tougher strategy or niche.

think about a down payment, closing costs, light repairs, rent ready costs, commission to the property management company, then you fix a dishwasher, then in year 2 the furnace goes. then when it's finally rented, in that first month your rent is $14 more than your expenses. is that cash flow? what about all the costs it took to buy and put into service?

i say this not to discourage you from investing, but to help set your expectations properly. the benefits of long term rentals are... all of them together. the leverage of buying with debt, the mortgage paydown, the potential for appreciation, the potential tax benefits.

a good market is one you can be successful in. so if you're in Connecticut, invest in Connecticut. i own a property in Stamford, and I hope to start investing there more in 2025 or 2026. i like northern fairfield county.

I appreciate the quick response.

House hacking is pretty much on my "off-limits" list. I know that it is generally good advice and I would learn a lot by doing it, but I am firm with my desire to be a passive investor with respect to managing tenants. I already know that I want to use a property manager and I do not want to deal with tenants in any regard. It's not my thing.

I also was not specific enough with what I was looking for. I would consider doing vanilla long-term rentals, but I think I want to do the BRRRR method, as scaling will be a challenge for me without it, I feel. BRRRR is something I'm learning about as well - I recently purchased David Greene's book on it and will read it once I'm done with his book on long-distance investing. I am also targeting small multi-family properties starting out.

I understand your point on the costs associated with purchasing, renovating, and maintaining properties. It is expensive, but if I find the right deals, the income should generally exceed expenses.

And I can assure you, I have made up my mind to remain determined. I won't allow myself to be discouraged.

Thank you for your advice.

0 Reply

Jon D.

OP

Member since 2024 · 5 posts · 0 votes

2y

Quote from @Marcus E. Turner:

Welcome to the BP forums! It's great to see you taking the first steps into real estate investing. Focusing on Connecticut for your initial investment is a solid choice, especially since you’re familiar with the area. It’s common to feel overwhelmed by the various metrics and data available. To identify a "good" market, consider factors like rental yield, local job growth, and demographic trends. While it may seem challenging to find a balance between economic growth and affordability, start by researching neighborhoods with potential for cash flow. Remember, perfection isn’t necessary; taking action is key. Good luck!

Thank you for your response.
I know that I need to take action on something, but I don't want to act hastily. I think the advice you have given is the kind of guidance I've been looking for. I will try to tone down the perfectionist in me, and I will start researching the areas in CT that have the right cash flow, and work from there.

0 Reply

William CollinsPro Member

Investor · Rocky Hill, CT · Member since 2013 · 373 posts · 299 votes

2y

Jon

In Connecticut you really want to stick to C plus to b neighborhoods. Start running calculations on your numbers and you will see some areas which can work. Do you have to say that your analysis of house hacking fails to consider where you become a tenant in one of the units that has additional units that you rent to other occupants? For example, in the town of Manchester there is currently a quadplex for sale on Bissell St. This property is one that I have been considering buying. A 2 bedroom unit in the town of Manchester with parking is currently renting for between $1250 to $1500. This is per unit. Let us assume that you bought the fourplex and lived in one of the four units. You would then be able to rent out the remaining units for $3750 at the minimum up to $4500 at the Maxwell. You could pay for a property manager to manage the property while you are the owner. Please have the type of properties that you need to start looking at. Making some assumptions on this quadplex it would finance approximately $3000 per month including insurance and taxes.

1 Reply

Drew SygitBusiness Member

Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes

2y

@Jon D. recommend you speak with @Samuel Eddinger

[email protected]248-209-6824

Logical Property Management4.9458 Reviews

Website View Page

1 Reply

Nicholas L.Pro Member

Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes

2y

just a couple things:

-you can house hack and not deal with tenants directly as @William Collins notes. you just hire a property manager. it will cost more, but that's the trade off. (important caveat: note i didn't say 'passive,' since it's not always passive no matter what you do. and you have to manage your PM. if you want to be totally passive... buy an index fund and don't buy rentals.)

-if you BRRRR, the income likely will not exceed expenses. think about it - you're trying to boost the ARV and then borrow as much as you can, which increases the mortgage payment on the refi. the less you borrow, the lower your payment... but the less of your capital you get back. the book was written in a different environment - when prices and rates were lower. i will still BRRRR if I can get most of my capital back and break even. but i'm not trying to cash flow - that's not where the benefits are (see my first post.)

2 Reply

Jon D.

OP

Member since 2024 · 5 posts · 0 votes

2y

Quote from @William Collins:

Jon

In Connecticut you really want to stick to C plus to b neighborhoods. Start running calculations on your numbers and you will see some areas which can work. Do you have to say that your analysis of house hacking fails to consider where you become a tenant in one of the units that has additional units that you rent to other occupants? For example, in the town of Manchester there is currently a quadplex for sale on Bissell St. This property is one that I have been considering buying. A 2 bedroom unit in the town of Manchester with parking is currently renting for between $1250 to $1500. This is per unit. Let us assume that you bought the fourplex and lived in one of the four units. You would then be able to rent out the remaining units for $3750 at the minimum up to $4500 at the Maxwell. You could pay for a property manager to manage the property while you are the owner. Please have the type of properties that you need to start looking at. Making some assumptions on this quadplex it would finance approximately $3000 per month including insurance and taxes.

I appreciate your feedback - I am curious though, what are some of your assumptions here?

I think one of the ways I may be convincing myself not to invest is by using too low of a down payment. I've been assuming 20% down - are you using 30% down? I looked at that quadplex you mentioned and I couldn't get that 3,000 mortgage without a 30% down payment. Also, I am assuming a 7% interest rate. Just curious what numbers you're using for that. I tend to be on the conservative end of estimations, as I'd rather plan for the worst so the deal can only be better.

0 Reply

Jon D.

OP

Member since 2024 · 5 posts · 0 votes

2y

Quote from @Drew Sygit:

I appreciate this - will keep him in mind when I finally decide to buy something.

0 Reply

Drew SygitBusiness Member

Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes

2y

Quote from @Jon D.:

Quote from @Drew Sygit:

@Jon D. recommend you speak with @Samuel Eddinger

I appreciate this - will keep him in mind when I finally decide to buy something.

GET HIM INVOLVED on anything you purchase!

[email protected]248-209-6824

Logical Property Management4.9458 Reviews

Website View Page

1 Reply

William CollinsPro Member

Investor · Rocky Hill, CT · Member since 2013 · 373 posts · 299 votes

2y

Though I self manage, @Samuel Eddinger is someone I find knowledgable and would be my first choice of management.

149 Bissell St Manchester, CT 06040 under contract now $495,000

MLS# 240386
Owner occupied bought at list rate:

Your calculation: https://www.mortgagecalculator.org/?q=f8z5B-7KW

Mortgage Details

Home value:	$495,000
Down payment:	20.00%
Loan amount:	$396,000
Interest rate:	6.10%
Loan term:	30 years
Start date:	Aug, 2024
Property tax:	$6,000.00
PMI:	0.50%
Yearly Home Insurance:	$3,000
Monthly HOA Fee:	$0

BalancePaymentsTaxes & FeesInterestPrincipalBalance20242029203420392044204920540150k300k450k015k30k45k

Mortgage Repayment Summary

$3,149.74 Monthly Payment	PMI not required
$99,000.00 Down payment amount	20.00% Down payment %
Jul, 2054 Loan pay-off date	$467,906.17 Total Interest Paid
$500.00 Monthly Tax Paid	$180,000.00 Total Tax Paid
$250.00 Monthly Home Insurance	$90,000.00 Total Home Insurance
$37,796.87 Annual Payment Amount	$1,133,906.17 Total of 360 Payments

0 Reply

Evan HoppleBusiness Member

Real Estate Agent · Columbus Cleveland Dayton, OH · Member since 2023 · 284 posts · 420 votes

2y

Quote from @Jon D.:

Hello BP forums!

First post here and I am completely new to real estate investing.

I live in Connecticut and I have settled on wanting my first investment to be in Connecticut. This is currently the only thing I am actually decisive about.

I think I'm struggling with analysis paralysis combined with generally being overwhelmed by all of the different metrics and data to look at.

Specifically, I'm currently trying to narrow my market within Connecticut, but I am getting stuck on how to determine a "good" market. My goals are cash flow primarily. I keep hearing that it makes sense to focus on markets that have strong economic and population growth, but there's really no overlap between population growth, economic growth, low prices, and low taxes.

So my question really is, what's the best way to get out of this? Is Connecticut just a bad market? Am I being too much of a perfectionist? How does one go about determining what a "good" market is to start out?

Thanks for any help on this.

There is no perfect market that's going to meet all of your criteria. Figure out where you can give and take and then invest in the market that fits those metrics the closest. I know nothing about the Connecticut market but that might mean you look elsewhere

[email protected]614-924-8151

Reafco Real Estate

View Page

1 Reply

Damien DavisPro Member

Member since 2024 · 30 posts · 13 votes

2y

Quote from @William Collins:

Jon

In Connecticut you really want to stick to C plus to b neighborhoods. Start running calculations on your numbers and you will see some areas which can work. Do you have to say that your analysis of house hacking fails to consider where you become a tenant in one of the units that has additional units that you rent to other occupants? For example, in the town of Manchester there is currently a quadplex for sale on Bissell St. This property is one that I have been considering buying. A 2 bedroom unit in the town of Manchester with parking is currently renting for between $1250 to $1500. This is per unit. Let us assume that you bought the fourplex and lived in one of the four units. You would then be able to rent out the remaining units for $3750 at the minimum up to $4500 at the Maxwell. You could pay for a property manager to manage the property while you are the owner. Please have the type of properties that you need to start looking at. Making some assumptions on this quadplex it would finance approximately $3000 per month including insurance and taxes.

You mind sending me that listing lol ? I am dying to find a quadplex in a nearby neighborhood. You’re right though. I’m a rookie investor and I househacked my first deal and went through the tough times with self managing but it’s the education I feel is necessary for the future deals. Now, if I wanted to find a property management group, my experience with self managing will allow me to make a better choice because I know how I want things done. Don’t knock it till you try it!

0 Reply

Samuel Eddinger

Meriden, CT · Member since 2018 · 699 posts · 500 votes

2y

@Jon D. - happy to connect. DM if interested.

Thanks for the love @William Collins & @Drew Sygit!

1 Reply

Donato Callahan

Member since 2023 · 14 posts · 6 votes

2y

Quote from @Jon D.:

Hello BP forums!

First post here and I am completely new to real estate investing.

I live in Connecticut and I have settled on wanting my first investment to be in Connecticut. This is currently the only thing I am actually decisive about.

I think I'm struggling with analysis paralysis combined with generally being overwhelmed by all of the different metrics and data to look at.

Specifically, I'm currently trying to narrow my market within Connecticut, but I am getting stuck on how to determine a "good" market. My goals are cash flow primarily. I keep hearing that it makes sense to focus on markets that have strong economic and population growth, but there's really no overlap between population growth, economic growth, low prices, and low taxes.

So my question really is, what's the best way to get out of this? Is Connecticut just a bad market? Am I being too much of a perfectionist? How does one go about determining what a "good" market is to start out?

Thanks for any help on this.

Jon, I think you'll have better luck outside of Connecticut. I made a video explaining how to find good areas and good properties to help you out. LMK what you think

https://www.loom.com/share/79170bf16882465e8fca26369a1fa1a7?...

0 Reply

New to real estate investing, looking to learn

New to real estate investing, looking to learn

Most Popular Reply

15 Replies

Mortgage Details

Mortgage Repayment Summary

$3,149.74

PMI

$99,000.00

20.00%

Jul, 2054

$467,906.17

$500.00

$180,000.00

$250.00

$90,000.00

$37,796.87

$1,133,906.17