New and stuck in analysis, looking for advice for how to start
Member since 2021 · 2 posts · 11 votes
New and stuck in analysis, looking for advice for how to start
Most Popular Reply
Nicholas L.Pro Member
Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ voteshello. I have good news and bad news for you. The bad news is that the market is genuinely terrible for new investors right now. That doesn't mean you should give up, it just means you should be cautious.
and the good news is that you don't have 'analysis paralysis.' that's a made up condition by the people selling the things to get you to buy the things. because they make money even if you buy a bad deal. and so, there's no reason to buy before you're ready.
(can you house hack? if you already have a primary residence, or your lifestyle doesn't permit it, that's fine. but i always have to ask because house hacking is such a great way to get started.)
OK. on to out of state. if you have limited capital, should you buy a random property thousands of miles away, just because you found BP and now have to do a deal? nope, nope, nope. again, the market is tough right now for just about every strategy, with prices and interest rates high. and for LTRs - there isn't any cash flow initially. none.
the first few years of ownership of an LTR will be INvesting - as in, you putting your hard-earned money into the property. you may know this from having a primary residence, but even purchasing itself is expensive as you have to pay a bunch of closing costs out of your own pocket.
so, i vote for building initial capital and also trying to stay closer to home even if it's a couple hours away.
how out of state investing can go if not done properly:
https://www.biggerpockets.com/forums/48/topics/1242392-rough...
https://www.biggerpockets.com/forums/48/topics/1137397-balti...
https://www.biggerpockets.com/forums/432/topics/1231840-sell...
https://www.biggerpockets.com/forums/311/topics/840134-memph...
https://www.biggerpockets.com/forums/963/topics/1195280-expe...
hope this helps. i'm happy to dialogue further / answer any questions you have. i've done a bit of everything at this point and i'm on here to help new investors not lose money.
43 Replies
- 11moRicardo R.Pro MemberProperty Manager · Michigan Ctr, MI · Member since 2016 · 661 posts · 581 votes
Hey Benjamin,
Totally get where you’re at — you’ve done all the homework, and now it’s that “how do I actually start” moment that trips up almost everyone. Here’s the thing: being a high-earning W2 puts you in a great position long-term, but yeah, limited capital makes the first deal tricky.
1. High LTV isn’t automatically bad — but it limits flexibility.
Getting into something at 85–90% LTV can work if you’re buying in a stable, cash-flowing market and you’ve got strong income to cover bumps. The problem isn’t just the rate or payment — it’s the lack of buffer. You’ll feel squeezed by maintenance, vacancies, and turns if you don’t have extra reserves. High leverage amplifies everything — both good and bad.2. With low capital, lean toward “forced equity” strategies.
Look for house hacking, BRRRR-lite, or small value-add deals instead of turnkey properties. Even one you live in for a year (duplex, 3- or 4-plex, etc.) can get you FHA/VA/conventional financing with only 3.5–5% down. You'll learn the ropes, build equity faster, and still get leverage — just with training wheels on.3. Out-of-state investing is doable, but don’t skip the local reps.
Managing long-distance is hard when you haven’t owned rentals before. If you can, buy your first one close enough to drive to — even if it’s smaller. You’ll make a few rookie mistakes cheaper that way before scaling out of state.4. Don’t rush — the goal is staying in the game.
Waiting 6–12 months to stack more cash and line up a cleaner 20–25% down payment isn’t “wasting time.” It’s setting up a safer launch pad. Use that time to network with lenders, agents, and PMs in your target markets.My Advice: you’re in the best position possible except for patience. Don’t force a deal just to “start.” Either house hack, partner up, or keep saving — the right first deal will teach you way more than a forced one ever could; Benjamin I really hope this helps you, I sent you a DM on BP... it's one of the reasons I do this, I hope you can assist, thank you.
- Rental Property Investor · Rocklin, CA · Member since 2018 · 42 posts · 9 votes11mo
@Ricardo R. solid advice here
- 11moCamren BerryPro MemberAZ · Member since 2021 · 86 posts · 14 votes
I sent you a message. I have a method that will help you without putting money down to purchase
- 11moDan H.Pro MemberInvestor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
Quote from @Camren Berry:
I sent you a message. I have a method that will help you without putting money down to purchase
I am leery when someone states they have a solution but are unwilling to post it in the forum for the various experts to see.
- 11moJimmy LieuBusiness MemberReal Estate Agent · Columbus, OH · Member since 2019 · 3k+ posts · 2k+ votes
Quote from @Benjamin Dolly:
I'm a 37-year-old high-earning W2 software engineer looking to get into real estate by investing in LTR single or multi-family homes, probably out of state. I've read all the books, listened to the podcast, gone to meetups, and am studying for my RE license. My sticking point is that I only have a small amount of capital from savings to get started, which would put me in high LTV financing or high-interest non-conventional financing.
Is it worth getting into a property with over 80% LTV and high leverage, or would that suck the upside (cashflow) out of a deal for too many years?
Are there other strategies that would make more financial sense with a little money down, or is it better to wait and build that initial capital?Hey Benjamin, welcome to BiggerPockets! With high LTV financing, the biggest trade-off is between getting in the game now versus giving up some cash flow in the short term. It's definitely doable to start with higher leverage if the deal still makes sense on paper and you have reserves, but you'll want to make sure you're buying in a market with strong fundamentals so appreciation and rent growth can help you over time. Personally, I'd take a look at Columbus, Ohio. I moved here from Portland in 2020 and now own 10+ rentals, and it's one of the few markets where you can still find homes in the $120–180K range that hit the 1% rule and cash flow from day one. The macro picture here is really strong—steady population and job growth, and huge companies like Intel, Amazon, Google, Honda, Microsoft, LG, and Facebook investing heavily. If you use your capital strategically (maybe even house hack or partner on your first few deals), you can build equity while keeping your risk manageable. Getting started sooner, even with higher leverage, often beats waiting years to save more, as long as the numbers work and you're disciplined about cash reserves. Happy to connect and answer any questions you have!
Jimmy Lieu, Red 1 Realty4.9120 Reviews - 11moNicholas L.Pro MemberFlipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
hello. I have good news and bad news for you. The bad news is that the market is genuinely terrible for new investors right now. That doesn't mean you should give up, it just means you should be cautious.
and the good news is that you don't have 'analysis paralysis.' that's a made up condition by the people selling the things to get you to buy the things. because they make money even if you buy a bad deal. and so, there's no reason to buy before you're ready.
(can you house hack? if you already have a primary residence, or your lifestyle doesn't permit it, that's fine. but i always have to ask because house hacking is such a great way to get started.)
OK. on to out of state. if you have limited capital, should you buy a random property thousands of miles away, just because you found BP and now have to do a deal? nope, nope, nope. again, the market is tough right now for just about every strategy, with prices and interest rates high. and for LTRs - there isn't any cash flow initially. none.
the first few years of ownership of an LTR will be INvesting - as in, you putting your hard-earned money into the property. you may know this from having a primary residence, but even purchasing itself is expensive as you have to pay a bunch of closing costs out of your own pocket.
so, i vote for building initial capital and also trying to stay closer to home even if it's a couple hours away.
how out of state investing can go if not done properly:
https://www.biggerpockets.com/forums/48/topics/1242392-rough...
https://www.biggerpockets.com/forums/48/topics/1137397-balti...
https://www.biggerpockets.com/forums/432/topics/1231840-sell...
https://www.biggerpockets.com/forums/311/topics/840134-memph...
https://www.biggerpockets.com/forums/963/topics/1195280-expe...
hope this helps. i'm happy to dialogue further / answer any questions you have. i've done a bit of everything at this point and i'm on here to help new investors not lose money.
- Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes11mo
Quote from @Nicholas L.:
hello. I have good news and bad news for you. The bad news is that the market is genuinely terrible for new investors right now. That doesn't mean you should give up, it just means you should be cautious.
and the good news is that you don't have 'analysis paralysis.' that's a made up condition by the people selling the things to get you to buy the things. because they make money even if you buy a bad deal. and so, there's no reason to buy before you're ready.
(can you house hack? if you already have a primary residence, or your lifestyle doesn't permit it, that's fine. but i always have to ask because house hacking is such a great way to get started.)
OK. on to out of state. if you have limited capital, should you buy a random property thousands of miles away, just because you found BP and now have to do a deal? nope, nope, nope. again, the market is tough right now for just about every strategy, with prices and interest rates high. and for LTRs - there isn't any cash flow initially. none.
the first few years of ownership of an LTR will be INvesting - as in, you putting your hard-earned money into the property. you may know this from having a primary residence, but even purchasing itself is expensive as you have to pay a bunch of closing costs out of your own pocket.
so, i vote for building initial capital and also trying to stay closer to home even if it's a couple hours away.
how out of state investing can go if not done properly:
https://www.biggerpockets.com/forums/48/topics/1242392-rough...
https://www.biggerpockets.com/forums/48/topics/1137397-balti...
https://www.biggerpockets.com/forums/432/topics/1231840-sell...
https://www.biggerpockets.com/forums/311/topics/840134-memph...
https://www.biggerpockets.com/forums/963/topics/1195280-expe...
hope this helps. i'm happy to dialogue further / answer any questions you have. i've done a bit of everything at this point and i'm on here to help new investors not lose money.
As much as i agree with so much of what Nicholas put down here, there is 1 very big "but".... And Benjamin may just be a perfect instance for that "but".
While buying discounted cash-flow seems to be the dominant thought path of what real estate investing is on Bigger Pockets, I assure it is NOT all there is.
For high net worth, high income earners, buying quality investment real estate today, now, yes it can still make a heck of a lot of sense. Reason being, that income. The tax advantageous can be the magic offset that makes a quality buy today well worth it.
Now here is the key, notice I keep saying a QUALITY buy. No, that does NOT mean some BS cash-flow. I am talking "old school" QUALITY, as in a quality structure, in a quality area, of a quality market, minimum B+ and generally A quality.
Most playing in this segment of REI are buying new built, path of progress, AAA investing.
Why? Beside the mentioned tax advantageous, it has lowest operational expense ratios, highest quality tenancy pool, strongest appreciation profile, with lowest risk profile. It's old school INVESTING in the truest literal definition of the word.
I do a lot in this segment so I have seen it first hand, where a property that on paper is netting -$150mnth actually results in a profit of about $1,100mnth after tax implications are considered.
No, it's not for everyone. A person who does not have an income to benefit from such write-off's, sorry it's just the reality that it won't help them.
But that person with a CPA screaming "get more write-off's" it can make a world of difference.
And yes, there is legal ways to achieve accelerated depreciation with rental real estate. No, it's not some wonky work around, it's 100% legit, just some red-tape to it all and new-con buys make it so much easier hence why so many buy new-con when utilizing this strategy.
So it all depends on a person personal situation and picture of things.
Review Cost Segregation Study, that's the magic wand we can waive with the IRS to achieve accelerated depreciation. It's an item to discuss with your CPA to see how it would impact your tax picture, and that helps frame the budget that makes sense in your exact situation.
It can be a great way on how to make a -$100 mnth turn into a +$1,000mnth during those critical first 3'ish years, until appreciation has done it's thing and rent's and value are up.
Generally we benchmark for the operational side of things to be into net operating profit between yr3-5 at the very latest. If it takes more then 5yrs to be into net, that's too long and a no-go. Because we want to liquidate that property in yr7, to "rinse & repeat" via 1031 into another new inventory, resetting capex too 0, thus keeping in this beautiful zone we call "all but maintenance free".
Again, no, this is not a strategy for any and all. Yes, it is a strategy for those with good higher net incomes that are looking at truly investing, as in not needing any of the returns for spending $, for years.
Too many convolute investing with alternate income, they are not the same thing.
A last key aspect to the value of this right now is the very rapid erosion of purchase power in the dollar. Don't believe me, look at gold value. That's not the shinny metal getting worth more, it's your dollar getting worth LESS. So again, using a devaluing currency, to acquire appreciating assets of intrinsic value, smart math right there alone.
But if you chase BS spread-sheets and BS cash-flow #'s from BAD quality asset's, buying yourself a reoccurring operational expense.... That's not how this math game is won.
Quality is key.
Past years of deflated values and all but free-$ made it where mistakes didn't cut so deep. That world is GONE. We are back to more normal. Mistakes will hurt. Good investing is generally boring, dull, math and data heavy, and sloooowwwwww.
Hence the word; investing.
- Member since 2020 · 351 posts · 329 votes11mo
Quote from @James Hamling:
Quote from @Nicholas L.:
hello. I have good news and bad news for you. The bad news is that the market is genuinely terrible for new investors right now. That doesn't mean you should give up, it just means you should be cautious.
and the good news is that you don't have 'analysis paralysis.' that's a made up condition by the people selling the things to get you to buy the things. because they make money even if you buy a bad deal. and so, there's no reason to buy before you're ready.
(can you house hack? if you already have a primary residence, or your lifestyle doesn't permit it, that's fine. but i always have to ask because house hacking is such a great way to get started.)
OK. on to out of state. if you have limited capital, should you buy a random property thousands of miles away, just because you found BP and now have to do a deal? nope, nope, nope. again, the market is tough right now for just about every strategy, with prices and interest rates high. and for LTRs - there isn't any cash flow initially. none.
the first few years of ownership of an LTR will be INvesting - as in, you putting your hard-earned money into the property. you may know this from having a primary residence, but even purchasing itself is expensive as you have to pay a bunch of closing costs out of your own pocket.
so, i vote for building initial capital and also trying to stay closer to home even if it's a couple hours away.
how out of state investing can go if not done properly:
https://www.biggerpockets.com/forums/48/topics/1242392-rough...
https://www.biggerpockets.com/forums/48/topics/1137397-balti...
https://www.biggerpockets.com/forums/432/topics/1231840-sell...
https://www.biggerpockets.com/forums/311/topics/840134-memph...
https://www.biggerpockets.com/forums/963/topics/1195280-expe...
hope this helps. i'm happy to dialogue further / answer any questions you have. i've done a bit of everything at this point and i'm on here to help new investors not lose money.
As much as i agree with so much of what Nicholas put down here, there is 1 very big "but".... And Benjamin may just be a perfect instance for that "but".
While buying discounted cash-flow seems to be the dominant thought path of what real estate investing is on Bigger Pockets, I assure it is NOT all there is.
For high net worth, high income earners, buying quality investment real estate today, now, yes it can still make a heck of a lot of sense. Reason being, that income. The tax advantageous can be the magic offset that makes a quality buy today well worth it.
Now here is the key, notice I keep saying a QUALITY buy. No, that does NOT mean some BS cash-flow. I am talking "old school" QUALITY, as in a quality structure, in a quality area, of a quality market, minimum B+ and generally A quality.
Most playing in this segment of REI are buying new built, path of progress, AAA investing.
Why? Beside the mentioned tax advantageous, it has lowest operational expense ratios, highest quality tenancy pool, strongest appreciation profile, with lowest risk profile. It's old school INVESTING in the truest literal definition of the word.
I do a lot in this segment so I have seen it first hand, where a property that on paper is netting -$150mnth actually results in a profit of about $1,100mnth after tax implications are considered.
No, it's not for everyone. A person who does not have an income to benefit from such write-off's, sorry it's just the reality that it won't help them.
But that person with a CPA screaming "get more write-off's" it can make a world of difference.
And yes, there is legal ways to achieve accelerated depreciation with rental real estate. No, it's not some wonky work around, it's 100% legit, just some red-tape to it all and new-con buys make it so much easier hence why so many buy new-con when utilizing this strategy.
So it all depends on a person personal situation and picture of things.
Review Cost Segregation Study, that's the magic wand we can waive with the IRS to achieve accelerated depreciation. It's an item to discuss with your CPA to see how it would impact your tax picture, and that helps frame the budget that makes sense in your exact situation.
It can be a great way on how to make a -$100 mnth turn into a +$1,000mnth during those critical first 3'ish years, until appreciation has done it's thing and rent's and value are up.
Generally we benchmark for the operational side of things to be into net operating profit between yr3-5 at the very latest. If it takes more then 5yrs to be into net, that's too long and a no-go. Because we want to liquidate that property in yr7, to "rinse & repeat" via 1031 into another new inventory, resetting capex too 0, thus keeping in this beautiful zone we call "all but maintenance free".
Again, no, this is not a strategy for any and all. Yes, it is a strategy for those with good higher net incomes that are looking at truly investing, as in not needing any of the returns for spending $, for years.
Too many convolute investing with alternate income, they are not the same thing.
A last key aspect to the value of this right now is the very rapid erosion of purchase power in the dollar. Don't believe me, look at gold value. That's not the shinny metal getting worth more, it's your dollar getting worth LESS. So again, using a devaluing currency, to acquire appreciating assets of intrinsic value, smart math right there alone.
But if you chase BS spread-sheets and BS cash-flow #'s from BAD quality asset's, buying yourself a reoccurring operational expense.... That's not how this math game is won.
Quality is key.
Past years of deflated values and all but free-$ made it where mistakes didn't cut so deep. That world is GONE. We are back to more normal. Mistakes will hurt. Good investing is generally boring, dull, math and data heavy, and sloooowwwwww.
Hence the word; investing.
James, since I have a medium high paying job and am negative on my real estate (after depreciation) significantly more than allowed passive losses, what are some of the magic words I say to my CPA to help me realize some of these tax benefits?
- Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes11mo
Quote from @Peter W.:
Quote from @James Hamling:
Quote from @Nicholas L.:
hello. I have good news and bad news for you. The bad news is that the market is genuinely terrible for new investors right now. That doesn't mean you should give up, it just means you should be cautious.
and the good news is that you don't have 'analysis paralysis.' that's a made up condition by the people selling the things to get you to buy the things. because they make money even if you buy a bad deal. and so, there's no reason to buy before you're ready.
(can you house hack? if you already have a primary residence, or your lifestyle doesn't permit it, that's fine. but i always have to ask because house hacking is such a great way to get started.)
OK. on to out of state. if you have limited capital, should you buy a random property thousands of miles away, just because you found BP and now have to do a deal? nope, nope, nope. again, the market is tough right now for just about every strategy, with prices and interest rates high. and for LTRs - there isn't any cash flow initially. none.
the first few years of ownership of an LTR will be INvesting - as in, you putting your hard-earned money into the property. you may know this from having a primary residence, but even purchasing itself is expensive as you have to pay a bunch of closing costs out of your own pocket.
so, i vote for building initial capital and also trying to stay closer to home even if it's a couple hours away.
how out of state investing can go if not done properly:
https://www.biggerpockets.com/forums/48/topics/1242392-rough...
https://www.biggerpockets.com/forums/48/topics/1137397-balti...
https://www.biggerpockets.com/forums/432/topics/1231840-sell...
https://www.biggerpockets.com/forums/311/topics/840134-memph...
https://www.biggerpockets.com/forums/963/topics/1195280-expe...
hope this helps. i'm happy to dialogue further / answer any questions you have. i've done a bit of everything at this point and i'm on here to help new investors not lose money.
As much as i agree with so much of what Nicholas put down here, there is 1 very big "but".... And Benjamin may just be a perfect instance for that "but".
While buying discounted cash-flow seems to be the dominant thought path of what real estate investing is on Bigger Pockets, I assure it is NOT all there is.
For high net worth, high income earners, buying quality investment real estate today, now, yes it can still make a heck of a lot of sense. Reason being, that income. The tax advantageous can be the magic offset that makes a quality buy today well worth it.
Now here is the key, notice I keep saying a QUALITY buy. No, that does NOT mean some BS cash-flow. I am talking "old school" QUALITY, as in a quality structure, in a quality area, of a quality market, minimum B+ and generally A quality.
Most playing in this segment of REI are buying new built, path of progress, AAA investing.
Why? Beside the mentioned tax advantageous, it has lowest operational expense ratios, highest quality tenancy pool, strongest appreciation profile, with lowest risk profile. It's old school INVESTING in the truest literal definition of the word.
I do a lot in this segment so I have seen it first hand, where a property that on paper is netting -$150mnth actually results in a profit of about $1,100mnth after tax implications are considered.
No, it's not for everyone. A person who does not have an income to benefit from such write-off's, sorry it's just the reality that it won't help them.
But that person with a CPA screaming "get more write-off's" it can make a world of difference.
And yes, there is legal ways to achieve accelerated depreciation with rental real estate. No, it's not some wonky work around, it's 100% legit, just some red-tape to it all and new-con buys make it so much easier hence why so many buy new-con when utilizing this strategy.
So it all depends on a person personal situation and picture of things.
Review Cost Segregation Study, that's the magic wand we can waive with the IRS to achieve accelerated depreciation. It's an item to discuss with your CPA to see how it would impact your tax picture, and that helps frame the budget that makes sense in your exact situation.
It can be a great way on how to make a -$100 mnth turn into a +$1,000mnth during those critical first 3'ish years, until appreciation has done it's thing and rent's and value are up.
Generally we benchmark for the operational side of things to be into net operating profit between yr3-5 at the very latest. If it takes more then 5yrs to be into net, that's too long and a no-go. Because we want to liquidate that property in yr7, to "rinse & repeat" via 1031 into another new inventory, resetting capex too 0, thus keeping in this beautiful zone we call "all but maintenance free".
Again, no, this is not a strategy for any and all. Yes, it is a strategy for those with good higher net incomes that are looking at truly investing, as in not needing any of the returns for spending $, for years.
Too many convolute investing with alternate income, they are not the same thing.
A last key aspect to the value of this right now is the very rapid erosion of purchase power in the dollar. Don't believe me, look at gold value. That's not the shinny metal getting worth more, it's your dollar getting worth LESS. So again, using a devaluing currency, to acquire appreciating assets of intrinsic value, smart math right there alone.
But if you chase BS spread-sheets and BS cash-flow #'s from BAD quality asset's, buying yourself a reoccurring operational expense.... That's not how this math game is won.
Quality is key.
Past years of deflated values and all but free-$ made it where mistakes didn't cut so deep. That world is GONE. We are back to more normal. Mistakes will hurt. Good investing is generally boring, dull, math and data heavy, and sloooowwwwww.
Hence the word; investing.
James, since I have a medium high paying job and am negative on my real estate (after depreciation) significantly more than allowed passive losses, what are some of the magic words I say to my CPA to help me realize some of these tax benefits?
It sounds like your saying your already with more write-offs than income to write-off????
That's an income problem, not a write-off problem.
- Member since 2020 · 351 posts · 329 votes11moMy understanding of the tax code is that my real estate losses are passive and therefore only allowable of between $25k and $0, (in my case it's like $2k), but I have about 20k in paper losses after repairs and depreciation, so I would like use the whole 20k loss against my W2 income rather than just the $2k--which you seem to imply is possible. So the question is if there is a workaround and how do I find a CPA who can help me take advantage of--if I have more writeoffs than allowable and cannot get REPS status because 1. I don't spend that much time and 2. I have a 40hr work week.
Quote from @James Hamling:
Quote from @Peter W.:
Quote from @James Hamling:
Quote from @Nicholas L.:
hello. I have good news and bad news for you. The bad news is that the market is genuinely terrible for new investors right now. That doesn't mean you should give up, it just means you should be cautious.
and the good news is that you don't have 'analysis paralysis.' that's a made up condition by the people selling the things to get you to buy the things. because they make money even if you buy a bad deal. and so, there's no reason to buy before you're ready.
(can you house hack? if you already have a primary residence, or your lifestyle doesn't permit it, that's fine. but i always have to ask because house hacking is such a great way to get started.)
OK. on to out of state. if you have limited capital, should you buy a random property thousands of miles away, just because you found BP and now have to do a deal? nope, nope, nope. again, the market is tough right now for just about every strategy, with prices and interest rates high. and for LTRs - there isn't any cash flow initially. none.
the first few years of ownership of an LTR will be INvesting - as in, you putting your hard-earned money into the property. you may know this from having a primary residence, but even purchasing itself is expensive as you have to pay a bunch of closing costs out of your own pocket.
so, i vote for building initial capital and also trying to stay closer to home even if it's a couple hours away.
how out of state investing can go if not done properly:
https://www.biggerpockets.com/forums/48/topics/1242392-rough...
https://www.biggerpockets.com/forums/48/topics/1137397-balti...
https://www.biggerpockets.com/forums/432/topics/1231840-sell...
https://www.biggerpockets.com/forums/311/topics/840134-memph...
https://www.biggerpockets.com/forums/963/topics/1195280-expe...
hope this helps. i'm happy to dialogue further / answer any questions you have. i've done a bit of everything at this point and i'm on here to help new investors not lose money.
As much as i agree with so much of what Nicholas put down here, there is 1 very big "but".... And Benjamin may just be a perfect instance for that "but".
While buying discounted cash-flow seems to be the dominant thought path of what real estate investing is on Bigger Pockets, I assure it is NOT all there is.
For high net worth, high income earners, buying quality investment real estate today, now, yes it can still make a heck of a lot of sense. Reason being, that income. The tax advantageous can be the magic offset that makes a quality buy today well worth it.
Now here is the key, notice I keep saying a QUALITY buy. No, that does NOT mean some BS cash-flow. I am talking "old school" QUALITY, as in a quality structure, in a quality area, of a quality market, minimum B+ and generally A quality.
Most playing in this segment of REI are buying new built, path of progress, AAA investing.
Why? Beside the mentioned tax advantageous, it has lowest operational expense ratios, highest quality tenancy pool, strongest appreciation profile, with lowest risk profile. It's old school INVESTING in the truest literal definition of the word.
I do a lot in this segment so I have seen it first hand, where a property that on paper is netting -$150mnth actually results in a profit of about $1,100mnth after tax implications are considered.
No, it's not for everyone. A person who does not have an income to benefit from such write-off's, sorry it's just the reality that it won't help them.
But that person with a CPA screaming "get more write-off's" it can make a world of difference.
And yes, there is legal ways to achieve accelerated depreciation with rental real estate. No, it's not some wonky work around, it's 100% legit, just some red-tape to it all and new-con buys make it so much easier hence why so many buy new-con when utilizing this strategy.
So it all depends on a person personal situation and picture of things.
Review Cost Segregation Study, that's the magic wand we can waive with the IRS to achieve accelerated depreciation. It's an item to discuss with your CPA to see how it would impact your tax picture, and that helps frame the budget that makes sense in your exact situation.
It can be a great way on how to make a -$100 mnth turn into a +$1,000mnth during those critical first 3'ish years, until appreciation has done it's thing and rent's and value are up.
Generally we benchmark for the operational side of things to be into net operating profit between yr3-5 at the very latest. If it takes more then 5yrs to be into net, that's too long and a no-go. Because we want to liquidate that property in yr7, to "rinse & repeat" via 1031 into another new inventory, resetting capex too 0, thus keeping in this beautiful zone we call "all but maintenance free".
Again, no, this is not a strategy for any and all. Yes, it is a strategy for those with good higher net incomes that are looking at truly investing, as in not needing any of the returns for spending $, for years.
Too many convolute investing with alternate income, they are not the same thing.
A last key aspect to the value of this right now is the very rapid erosion of purchase power in the dollar. Don't believe me, look at gold value. That's not the shinny metal getting worth more, it's your dollar getting worth LESS. So again, using a devaluing currency, to acquire appreciating assets of intrinsic value, smart math right there alone.
But if you chase BS spread-sheets and BS cash-flow #'s from BAD quality asset's, buying yourself a reoccurring operational expense.... That's not how this math game is won.
Quality is key.
Past years of deflated values and all but free-$ made it where mistakes didn't cut so deep. That world is GONE. We are back to more normal. Mistakes will hurt. Good investing is generally boring, dull, math and data heavy, and sloooowwwwww.
Hence the word; investing.
James, since I have a medium high paying job and am negative on my real estate (after depreciation) significantly more than allowed passive losses, what are some of the magic words I say to my CPA to help me realize some of these tax benefits?
It sounds like your saying your already with more write-offs than income to write-off????
That's an income problem, not a write-off problem.
- Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes11mo
Quote from @Peter W.:
My understanding of the tax code is that my real estate losses are passive and therefore only allowable of between $25k and $0, (in my case it's like $2k), but I have about 20k in paper losses after repairs and depreciation, so I would like use the whole 20k loss against my W2 income rather than just the $2k--which you seem to imply is possible. So the question is if there is a workaround and how do I find a CPA who can help me take advantage of--if I have more writeoffs than allowable and cannot get REPS status because 1. I don't spend that much time and 2. I have a 40hr work week.Quote from @James Hamling:
Quote from @Peter W.:
Quote from @James Hamling:
Quote from @Nicholas L.:
hello. I have good news and bad news for you. The bad news is that the market is genuinely terrible for new investors right now. That doesn't mean you should give up, it just means you should be cautious.
and the good news is that you don't have 'analysis paralysis.' that's a made up condition by the people selling the things to get you to buy the things. because they make money even if you buy a bad deal. and so, there's no reason to buy before you're ready.
(can you house hack? if you already have a primary residence, or your lifestyle doesn't permit it, that's fine. but i always have to ask because house hacking is such a great way to get started.)
OK. on to out of state. if you have limited capital, should you buy a random property thousands of miles away, just because you found BP and now have to do a deal? nope, nope, nope. again, the market is tough right now for just about every strategy, with prices and interest rates high. and for LTRs - there isn't any cash flow initially. none.
the first few years of ownership of an LTR will be INvesting - as in, you putting your hard-earned money into the property. you may know this from having a primary residence, but even purchasing itself is expensive as you have to pay a bunch of closing costs out of your own pocket.
so, i vote for building initial capital and also trying to stay closer to home even if it's a couple hours away.
how out of state investing can go if not done properly:
https://www.biggerpockets.com/forums/48/topics/1242392-rough...
https://www.biggerpockets.com/forums/48/topics/1137397-balti...
https://www.biggerpockets.com/forums/432/topics/1231840-sell...
https://www.biggerpockets.com/forums/311/topics/840134-memph...
https://www.biggerpockets.com/forums/963/topics/1195280-expe...
hope this helps. i'm happy to dialogue further / answer any questions you have. i've done a bit of everything at this point and i'm on here to help new investors not lose money.
As much as i agree with so much of what Nicholas put down here, there is 1 very big "but".... And Benjamin may just be a perfect instance for that "but".
While buying discounted cash-flow seems to be the dominant thought path of what real estate investing is on Bigger Pockets, I assure it is NOT all there is.
For high net worth, high income earners, buying quality investment real estate today, now, yes it can still make a heck of a lot of sense. Reason being, that income. The tax advantageous can be the magic offset that makes a quality buy today well worth it.
Now here is the key, notice I keep saying a QUALITY buy. No, that does NOT mean some BS cash-flow. I am talking "old school" QUALITY, as in a quality structure, in a quality area, of a quality market, minimum B+ and generally A quality.
Most playing in this segment of REI are buying new built, path of progress, AAA investing.
Why? Beside the mentioned tax advantageous, it has lowest operational expense ratios, highest quality tenancy pool, strongest appreciation profile, with lowest risk profile. It's old school INVESTING in the truest literal definition of the word.
I do a lot in this segment so I have seen it first hand, where a property that on paper is netting -$150mnth actually results in a profit of about $1,100mnth after tax implications are considered.
No, it's not for everyone. A person who does not have an income to benefit from such write-off's, sorry it's just the reality that it won't help them.
But that person with a CPA screaming "get more write-off's" it can make a world of difference.
And yes, there is legal ways to achieve accelerated depreciation with rental real estate. No, it's not some wonky work around, it's 100% legit, just some red-tape to it all and new-con buys make it so much easier hence why so many buy new-con when utilizing this strategy.
So it all depends on a person personal situation and picture of things.
Review Cost Segregation Study, that's the magic wand we can waive with the IRS to achieve accelerated depreciation. It's an item to discuss with your CPA to see how it would impact your tax picture, and that helps frame the budget that makes sense in your exact situation.
It can be a great way on how to make a -$100 mnth turn into a +$1,000mnth during those critical first 3'ish years, until appreciation has done it's thing and rent's and value are up.
Generally we benchmark for the operational side of things to be into net operating profit between yr3-5 at the very latest. If it takes more then 5yrs to be into net, that's too long and a no-go. Because we want to liquidate that property in yr7, to "rinse & repeat" via 1031 into another new inventory, resetting capex too 0, thus keeping in this beautiful zone we call "all but maintenance free".
Again, no, this is not a strategy for any and all. Yes, it is a strategy for those with good higher net incomes that are looking at truly investing, as in not needing any of the returns for spending $, for years.
Too many convolute investing with alternate income, they are not the same thing.
A last key aspect to the value of this right now is the very rapid erosion of purchase power in the dollar. Don't believe me, look at gold value. That's not the shinny metal getting worth more, it's your dollar getting worth LESS. So again, using a devaluing currency, to acquire appreciating assets of intrinsic value, smart math right there alone.
But if you chase BS spread-sheets and BS cash-flow #'s from BAD quality asset's, buying yourself a reoccurring operational expense.... That's not how this math game is won.
Quality is key.
Past years of deflated values and all but free-$ made it where mistakes didn't cut so deep. That world is GONE. We are back to more normal. Mistakes will hurt. Good investing is generally boring, dull, math and data heavy, and sloooowwwwww.
Hence the word; investing.
James, since I have a medium high paying job and am negative on my real estate (after depreciation) significantly more than allowed passive losses, what are some of the magic words I say to my CPA to help me realize some of these tax benefits?
It sounds like your saying your already with more write-offs than income to write-off????
That's an income problem, not a write-off problem.
It comes back to having a good CPA, who knows this world of investment real estate.
For example, there going to know the difference it makes for what way you hold and invest in real estate. There going to know at what point you should maybe get a trust in place, and shift the real estate into a LLC owned by a trust and taxed individually vs on you personally. Or or or.....
There is so many details to a persons specific instance, it would be an entire encyclopedia to get into the weeds of all the details for every potential instance.
It comes back to needing a CPA who knows all of this. And they either will, or won't, and that's how you find out, you ask. If they say they just push basic paper and deal in basic fillings, ok, they can't advise on any of it then.
I have had those CPA's before, and honestly I have found them to be the most arrogant of their own self importance. The best CPA's I have found, who really know ALL the stuff, the most humble. Kind of a funny opposites world. But you find out via asking the questions.
Important part is YES, a person can use accelerated depreciation on investment property. Too many incorrectly state a person is just locked into a multi-decades schedule, that isn't true.
And how one holds property can change things a lot as well.
All of my multi-millionaire clients, 100%, have trusts. It's a universal. And the vast majority of my millionaire clients do as well.
100% of them who discover the details of trusts, do engage in getting trust in place.
Maybe your at that stage, maybe not, I am not a CPA looking at your details so I wouldn't know. It's worth a conversation with a good CPA to find out.
- Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes11moHe says he's "New and stuck in analysis, looking for advice for how to start"
Quote from @Nicholas L.:
hello. I have good news and bad news for you. The bad news is that the market is genuinely terrible for new investors right now. That doesn't mean you should give up, it just means you should be cautious.
and the good news is that you don't have 'analysis paralysis.' that's a made up condition by the people selling the things to get you to buy the things. because they make money even if you buy a bad deal. and so, there's no reason to buy before you're ready.
(can you house hack? if you already have a primary residence, or your lifestyle doesn't permit it, that's fine. but i always have to ask because house hacking is such a great way to get started.)
OK. on to out of state. if you have limited capital, should you buy a random property thousands of miles away, just because you found BP and now have to do a deal? nope, nope, nope. again, the market is tough right now for just about every strategy, with prices and interest rates high. and for LTRs - there isn't any cash flow initially. none.
the first few years of ownership of an LTR will be INvesting - as in, you putting your hard-earned money into the property. you may know this from having a primary residence, but even purchasing itself is expensive as you have to pay a bunch of closing costs out of your own pocket.
so, i vote for building initial capital and also trying to stay closer to home even if it's a couple hours away.
how out of state investing can go if not done properly:
https://www.biggerpockets.com/forums/48/topics/1242392-rough...
https://www.biggerpockets.com/forums/48/topics/1137397-balti...
https://www.biggerpockets.com/forums/432/topics/1231840-sell...
https://www.biggerpockets.com/forums/311/topics/840134-memph...
https://www.biggerpockets.com/forums/963/topics/1195280-expe...
hope this helps. i'm happy to dialogue further / answer any questions you have. i've done a bit of everything at this point and i'm on here to help new investors not lose money.
since he hasn't responded to all the helpful information, in well over a week, and a long weekend, I'd take his word for it for his condition. It's an internal problem only he can solve.
- Member since 2020 · 351 posts · 329 votes11mo
The higher the loan to value (with some caveats on interest rates) the better you will do. The downside is that likely (given today's market) you'll be paying out of pocket for a lot of your repairs, you'll have additional mortgage insurance, higher interest rates, and conventional loans will only let you go 85% LTV on investment properties and most banks will want 80-75% LTV. Run the numbers, if your conservative rate of return is higher than your interest rate (and mortgage insurance).
This leaves "creative financing" as the best way to get high LTV above 80% and certainly above 85%. Which is something I know nothing about.
Finally, I would recommend staying near home in Philadelphia area. While the price to entry is "high", it's a Tier 1 city which means you'll get better risk adjusted returns than other areas and you're are a local which means you'll know the neighborhood rather than trusting a hopefully trustworthy real estate agent or having to figure it out via google. And Philadelphia is really affordable for a big city. I was looking in the Ridley Park area because I was considering taking a job at Boeing and it's about as affordable as B neighborhoods in the midwest (unless the town is shrinking).
- Investor · Toledo-MetroDetroit-Dallas · Member since 2022 · 122 posts · 71 votes11mo
@Benjamin Dolly, I say continue to save up and have as little leverage as possible. The thing is, with that much leverage, you'll barely see any cash flow, even if you scale to a bunch of properties. If you look at out-of-state investment properties, specifically in the Midwest or the South, you can still achieve solid returns with less capital to start. I'm talking smaller properties around 100k that pass the 1% rule, or at least get close to it!
- 11moCamren BerryPro MemberAZ · Member since 2021 · 86 posts · 14 votes
Bigger pockets blocks my posts if I explain my strategy. It's because it's something my company does,rather then a broad strategy. the only way I can explain is is through direct messages
- Member since 2025 · 36 posts · 6 votes11mo
Hey Benjamin, just sent you a message!
- Specialist · Member since 2025 · 483 posts · 270 votes11mo
High leverage isn't the issue—bad deals are. If you go over 80% LTV, stress test: conservative rents, full expenses, a rate buffer, and 3–6 months of reserves. With limited capital, focus on turnkey or light-value LTRs with conventional/DSCR, BRRRR lite with modest value-add and a 6–12 month refi, house hacking a small multi, or pairing savings with private money or seller terms to lower cash to close. If none pencil, keep stacking cash, build your core four, raise private money, and run numbers weekly. Only move when a deal survives the stress test. What market and buy box are you looking at?
- 11moRemington LymanBusiness MemberReal Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
Quote from @Benjamin Dolly:
I'm a 37-year-old high-earning W2 software engineer looking to get into real estate by investing in LTR single or multi-family homes, probably out of state. I've read all the books, listened to the podcast, gone to meetups, and am studying for my RE license. My sticking point is that I only have a small amount of capital from savings to get started, which would put me in high LTV financing or high-interest non-conventional financing.
Is it worth getting into a property with over 80% LTV and high leverage, or would that suck the upside (cashflow) out of a deal for too many years?
Are there other strategies that would make more financial sense with a little money down, or is it better to wait and build that initial capital?It depends on your strategy. If you are going to use the money to invest in other deals, then yes. If you need the monthly cash flow and have a lot of capital, then you might want to pay down the principal as quickly as possible. Two different strategies for two different risk tolerances
- Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes11mo.
Quote from @Benjamin Dolly:
I'm a 37-year-old high-earning W2 software engineer looking to get into real estate by investing in LTR single or multi-family homes, probably out of state. I've read all the books, listened to the podcast, gone to meetups, and am studying for my RE license. My sticking point is that I only have a small amount of capital from savings to get started, which would put me in high LTV financing or high-interest non-conventional financing.
Is it worth getting into a property with over 80% LTV and high leverage, or would that suck the upside (cashflow) out of a deal for too many years?
Are there other strategies that would make more financial sense with a little money down, or is it better to wait and build that initial capital?
Your question "Are there other strategies that would make more financial sense with a little money down"
We teach Creative Financing so, our bias is of course "Yes".
On any particular deal you have to run the numbers, but we have a $420,000 property in Phoenix as a Wrap so the interest rate is 4.25% with 10% down, no lender fees and it cash flows.
When you are new, looking for lenders & considering Fix & Flip, BRRRR, or rentals, as a buyer, I’d ask the owner/seller to be one of my private lenders with creative financing. This works well in Southern California (CA), AZ, WA, TX and is a nice addition to your bag of tricks in every state, if you are aware of how it works. - Real Estate Consultant · Ann Arbor, MI · Member since 2022 · 462 posts · 251 votes11mo
Hi Benjamin from Philadelphia, Pennsylvania-
Great Question! You are a new investor and a high-earning W2 professional.
You are looking to get started with long-term rentals out-of-state. You are just starting out so don't have a great deal to put down and wonder how best to begin.
I would look at a market like Lansing, Michigan where you can get a duplex for about $150,000 plus or minus. This gives you at least one rent check coming in, hopefully, if you have a vacancy. If you bought a value-add property, you could fix it up when the units become vacant-increasing the rents and the property value. Then, you can refinance out your downpayment and go shop again in a short period of time.
Consider looking into short-term rentals at some point because if you spend 500 hours materially participating in the management of the property you may be able to significantly reduce your W-2 or active income.
To Your Success!
- Real Estate Agent · Chicago, IL · Member since 2017 · 2k+ posts · 2k+ votes11mo
Just buy in a good area and be patient. Don’t over obsess on numbers and definitely don’t go out of state to a cheap market as numbers on paper look better there. I always recommend clients house hack a 3 or 4 unit not sure if your budget allows that but it’s a winning strategy as rents go up each year and mortgage stays the same + saves you money while live in a unit.
- 11moEric FernwoodBusiness MemberRealtor · Las Vegas, NV · Member since 2014 · 994 posts · 1k+ votes
Hello @Benjamin Dolly,
From your post, I gathered two main questions:
- Limited capital
- How to get started — I won’t focus on this one, since I don’t believe it’s the biggest challenge right now.
Limited Capital
Operating with limited funds can be risky. In my opinion, you need to have three different “buckets” of funds:
- Emergency funds: Cash reserves you can access immediately if something unexpected happens. I keep six months of expenses in reserve.
- Real estate investment funds: Money set aside specifically for property purchases and improvements. Real estate is not liquid, so you can’t access these funds quickly.
- Liquid assets: Stocks or similar investments that can be converted to cash quickly if needed.
You mentioned being able to afford a 20% down payment, but that’s only part of the total cost. Here’s an example based on a $400,000 property in Las Vegas, which you can scale to other price points:
- Down payment: 20% × $400,000 = $80,000
- Closing costs: 3% × $400,000 = $12,000 (including points buy downs)
- Renovation costs: $20,000 (typical for the types of properties we target)
- Total cash needed: $112,000
So in this case, you’d need about $112,000 in total, not just the $80,000 for the down payment.
If the property doesn’t rent immediately, you’ll need to cover mortgage payments and expenses until it does. Also, will a 20% down payment still produce positive cash flow—if not, you’ll have to fund the difference until rent increases. And don’t forget about unexpected repairs, such as replacing a water heater or other major systems.
When my business partner and I started, we set one clear rule: “No one gets hurt on our watch.” We’ve turned down clients who wanted to buy high-risk properties or who didn’t have enough financial cushion to invest safely. Unless I’ve misunderstood your situation, I wouldn’t recommend investing until you have accumulated sufficient funds.
FERNWOOD Team, KW VIP Realty520 Reviews - 11moShuff MauldinPro MemberInvestor · MS AL TN, GA · Member since 2019 · 70 posts · 45 votes
I would personally find a partner with cash for the first one and give up equity. It will help your sleep and you get your feet wet.
- 11moNicholas L.Pro MemberFlipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
agree with you 100%. i think i've said this in other threads, but the problem in most cases is that new investors are undercapitalized, and so they need that illusory "$200 a month" in cash flow, or they won't be able to support a portfolio, and they end up having to sell. you've seen the posts just like i have - new investor buys a property, which may even be in a great area, and they need to replace the furnace in year 2, and somehow that ruins everything for them.
if I can BRRRR something and get all my capital back, then exactly to your point, i'm not particularly worried about whether my monthly "cash flow" is -$118, or $0, or +$72. i get all the other benefits of ownership. i'm focused now on minimizing my net outlay into each property rather than "cash flow."
- Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes11mo
Quote from @Nicholas L.:
agree with you 100%. i think i've said this in other threads, but the problem in most cases is that new investors are undercapitalized, and so they need that illusory "$200 a month" in cash flow, or they won't be able to support a portfolio, and they end up having to sell. you've seen the posts just like i have - new investor buys a property, which may even be in a great area, and they need to replace the furnace in year 2, and somehow that ruins everything for them.
if I can BRRRR something and get all my capital back, then exactly to your point, i'm not particularly worried about whether my monthly "cash flow" is -$118, or $0, or +$72. i get all the other benefits of ownership. i'm focused now on minimizing my net outlay into each property rather than "cash flow."
I agree. Cash flow is overrated, not to call it misguided, especially for someone who is a high-income earner. Here is the question: what will make a bigger difference in your life? $200 in cash flow or ongoing headaches with repairs and nightmare tenants?
If you run any example property through the BP rental calculator, you'll see that cash flow is actually one of the smaller components, second to equity. So might as well optimize your investment for that. This usually means desirable property in a good neighborhood and high rental revenue. Depending on down payment, you'll be break even or maybe -$200 for a couple years, but that is well offset with your equity gains.
If you want cash flow, making money online is so much easier than REI
- 11moTodd AndersonPro MemberReal Estate Agent · Cape Coral, FL · Member since 2023 · 392 posts · 175 votes
Welcome to the BP community. You will be able gain knowledge hear and get a number of different answers to each question.
I have worked with a number of investors in your position this year alone, this being your first investment and the apprehension to getting started. Although the market is changing, it is always changing. Things that worked 5 years ago seldum work as well now. The one thing that REI has taught me is that investment styles need to keep changing. This is for a number of reasons not just the market.
In today's market many investors are finding that new homes are, for the first time in many years, selling for less than existing homes. The investors that I am talking with right now are looking to maximise on incentives that builders are offering on New Construction. There are many ways to structures these deals and many have rates that can't be touched on the existing market.
As far as markets go, we now live in a world that makes finding a great investment market is easier than ever. I have worked with investors form all areas in the world, that with today's technology can research a markets, meet with builders, lenders, Property Managers, and Inspectors inspectors, without leaving their office. I have been able to supply quality boots on the ground to help in this process.
For an investor with a high W2 job there is so many ways that REI can be a major benefit to growing generational wealth. The best time to invest was yesterday.
Let me know if I can answer any specific questions for you.
Best of luck
- Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes11moHmmm, still only 1 post, maybe the OP is on his AI break? Oh, do AI get breaks? Maybe not.
Quote from @Benjamin Dolly:
I'm a 37-year-old high-earning W2 software engineer looking to get into real estate by investing in LTR single or multi-family homes, probably out of state. I've read all the books, listened to the podcast, gone to meetups, and am studying for my RE license. My sticking point is that I only have a small amount of capital from savings to get started, which would put me in high LTV financing or high-interest non-conventional financing.
Is it worth getting into a property with over 80% LTV and high leverage, or would that suck the upside (cashflow) out of a deal for too many years?
Are there other strategies that would make more financial sense with a little money down, or is it better to wait and build that initial capital?- Investor · Toledo-MetroDetroit-Dallas · Member since 2022 · 122 posts · 71 votes11mo
Quote from @Ken M.:
Hmmm, still only 1 post, maybe the OP is on his AI break? Oh, do AI get breaks? Maybe not.Quote from @Benjamin Dolly:
I'm a 37-year-old high-earning W2 software engineer looking to get into real estate by investing in LTR single or multi-family homes, probably out of state. I've read all the books, listened to the podcast, gone to meetups, and am studying for my RE license. My sticking point is that I only have a small amount of capital from savings to get started, which would put me in high LTV financing or high-interest non-conventional financing.
Is it worth getting into a property with over 80% LTV and high leverage, or would that suck the upside (cashflow) out of a deal for too many years?
Are there other strategies that would make more financial sense with a little money down, or is it better to wait and build that initial capital?@Ken M., haha AI does ask for breaks, if you don't have the paid version it'll say you hit the limit for today
- Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes11mo
Quote from @Moe Sidd:
Quote from @Ken M.:
Hmmm, still only 1 post, maybe the OP is on his AI break? Oh, do AI get breaks? Maybe not.Quote from @Benjamin Dolly:
I'm a 37-year-old high-earning W2 software engineer looking to get into real estate by investing in LTR single or multi-family homes, probably out of state. I've read all the books, listened to the podcast, gone to meetups, and am studying for my RE license. My sticking point is that I only have a small amount of capital from savings to get started, which would put me in high LTV financing or high-interest non-conventional financing.
Is it worth getting into a property with over 80% LTV and high leverage, or would that suck the upside (cashflow) out of a deal for too many years?
Are there other strategies that would make more financial sense with a little money down, or is it better to wait and build that initial capital?@Ken M., haha AI does ask for breaks, if you don't have the paid version it'll say you hit the limit for today
Well, that sucks. Here I just read that someone is feeding false information into AI and it's giving out bad information as valid. What's a guy to, learn real estate the old way as a tried & true investor or pay for the AI thing, skip getting all the experience and take your chances? Hmmph.
- Member since 2021 · 2 posts · 11 votes11mo
Quote from @Ken M.:
Hmmm, still only 1 post, maybe the OP is on his AI break? Oh, do AI get breaks? Maybe not.Quote from @Benjamin Dolly:
I'm a 37-year-old high-earning W2 software engineer looking to get into real estate by investing in LTR single or multi-family homes, probably out of state. I've read all the books, listened to the podcast, gone to meetups, and am studying for my RE license. My sticking point is that I only have a small amount of capital from savings to get started, which would put me in high LTV financing or high-interest non-conventional financing.
Is it worth getting into a property with over 80% LTV and high leverage, or would that suck the upside (cashflow) out of a deal for too many years?
Are there other strategies that would make more financial sense with a little money down, or is it better to wait and build that initial capital?As stated, I work a 9-5 tech job, thus I am not on the forum every day. Constructive feedback and advice are appreciated.
- Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes11moIf you are looking for investments that don't take time & attentio0n, you probably want to consider large apartments or commercial.
Quote from @Benjamin Dolly:
Quote from @Ken M.:
Hmmm, still only 1 post, maybe the OP is on his AI break? Oh, do AI get breaks? Maybe not.Quote from @Benjamin Dolly:
I'm a 37-year-old high-earning W2 software engineer looking to get into real estate by investing in LTR single or multi-family homes, probably out of state. I've read all the books, listened to the podcast, gone to meetups, and am studying for my RE license. My sticking point is that I only have a small amount of capital from savings to get started, which would put me in high LTV financing or high-interest non-conventional financing.
Is it worth getting into a property with over 80% LTV and high leverage, or would that suck the upside (cashflow) out of a deal for too many years?
Are there other strategies that would make more financial sense with a little money down, or is it better to wait and build that initial capital?As stated, I work a 9-5 tech job, thus I am not on the forum every day. Constructive feedback and advice are appreciated.
- Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes11moYour comment "Are there other strategies that would make more financial sense with a little money down, or is it better to wait and build that initial capital?"
Quote from @Benjamin Dolly:
Quote from @Ken M.:
Hmmm, still only 1 post, maybe the OP is on his AI break? Oh, do AI get breaks? Maybe not.Quote from @Benjamin Dolly:
I'm a 37-year-old high-earning W2 software engineer looking to get into real estate by investing in LTR single or multi-family homes, probably out of state. I've read all the books, listened to the podcast, gone to meetups, and am studying for my RE license. My sticking point is that I only have a small amount of capital from savings to get started, which would put me in high LTV financing or high-interest non-conventional financing.
Is it worth getting into a property with over 80% LTV and high leverage, or would that suck the upside (cashflow) out of a deal for too many years?
Are there other strategies that would make more financial sense with a little money down, or is it better to wait and build that initial capital?As stated, I work a 9-5 tech job, thus I am not on the forum every day. Constructive feedback and advice are appreciated.
You should wait.
It's been a week, we are in a three day weekend and you haven't found time to respond to the various good ideas people have left for you.
- 11moAshish AcharyaBusiness MemberCPA, CFP®, PFS · FL · Member since 2017 · 5k+ posts · 3k+ votes
If a loan above 80 percent loan to value leaves you with thin or negative cash flow after real reserves, you should wait or change the deal.
Tax breaks will not rescue weak math. As a high earning W2 earner, long term rental losses are usually passive and get suspended once income passes roughly 150,000, so you rarely cut this year’s W2 tax.
You can buy now only if the property supports about a 1.2 debt service coverage after honest reserves or you have a clear plan to hit that within 12 months. You can house hack a 2 to 4 unit to use lower down payments and better rates while depreciating the rental portion. You can do light value add to raise net operating income, then refinance to drop mortgage insurance and reduce effective loan to value. You can bring in a capital partner so the deal closes at 20 to 25 percent down.
If you need current year tax offsets, you can do 1 short term rental with material participation, knowing it is an non-passive business with right participation.
In your shoes, you can either house hack and refinance within 12 to 18 months, or partner on a simple cash flowing duplex that already meets coverage on day 1.
If neither is available, you can wait and keep saving.
This post does not create a CPA-client relationship. The information contained in this post is not to be relied upon. Readers are advised to seek professional advice.
INVESTOR FRIENDLY CPA®5241 Reviews - 11moJoseph ScoreseBusiness MemberBanker · Philadelphia · Member since 2009 · 2k+ posts · 631 votes
Hi Benjamin, welcome — and great question. You’re asking what every analytical high earner should ask before jumping in: how much leverage is too much when starting out?Here’s a balanced way to think about it:💡 1. The Core Trade-Off: Leverage vs. LiquidityHigh leverage (80–90% LTV) amplifies both your upside and your risk.
- Pros: You preserve cash, control an appreciating asset sooner, and benefit from inflation-hedged debt.
- Cons: Cash flow gets razor thin — even a small vacancy, repair, or tax increase can turn positive cash flow negative.
If your job is stable and your savings habits are strong (which is common for engineers), high leverage isn’t inherently bad. It just means your first deal should be boring, predictable, and well-underwritten — not speculative.🧭 2. When High LTV Might Still Make SenseYou can justify >80% leverage if the deal itself compensates for it:
- You’re buying below market value (instant equity).
- You have a clear value-add plan (light rehab, re-tenanting, rent optimization).
- You can refinance within 12–18 months after increasing NOI.
- You maintain strong reserves (6–12 months of expenses).
Otherwise, that thin spread between rent and debt service can trap you.🏗️ 3. Alternative Entry Strategies with Less CapitalIf you want to move forward now rather than wait years to save:
- House hack: Buy a 2–4 unit with low down payment (5% conventional or 3.5% FHA), live in one, rent others. Strong ROI, low risk.
- Partnership / Joint Venture: Bring your high W2 income and reliability as the financing partner, while another investor brings capital or operational experience.
- BRRRR (Buy–Rehab–Rent–Refi–Repeat): Requires sweat equity and management but allows you to recycle capital.
- Out-of-state turnkey or DSCR: Can work if you choose a landlord-friendly market and conservative leverage (70–75%).
📊 4. If You Decide to WaitUse the waiting period intentionally:
- Keep saving aggressively (engineer income = fast runway).
- Build your team (agent, lender, PM, contractor).
- Start analyzing deals weekly to sharpen your numbers.
- Consider partnering on a smaller portion of someone else’s deal to learn firsthand.
🔍 5. The Smart Middle GroundYou don’t have to choose between doing nothing and over-leveraging.
A manageable LTV (75–80%) on a cash-flow-positive property in a landlord-friendly market is a great first step. Focus on:
- Simple deal structure
- Solid rent growth potential
- Conservative underwriting
You’re in a perfect position — strong income, analytical mindset, and early discipline. Real estate rewards consistency more than timing.
- 11moStuart UdisPro MemberAttorney · Philadelphia · Member since 2018 · 2k+ posts · 3k+ votes
Consider an FHA purchase. It's a great way to buy your first property with limited down payment proceeds due to the leverage. When you start playing the game of getting creative with financing or relying on expensive and high leverage debt that's geared towards strictly investment purchases new investors often get themselves in trouble. A good property with FHA financing is a great way to jumpstart your real estate journey.
- 11moHenry ClarkPro MemberDeveloper · Member since 2020 · 4k+ posts · 4k+ votes
OP
First make sure you have your personal finances in order. 37 high earner and little money to invest don’t compute. I would expect you to have at least $200,000 in non 401k cash or equity and $1mm in 401k. RE won’t help any finance flaws, it will make it worse.
Your greatest first investment will always be your personal housing and family situation. No need to answer:
What is your current monthly housing cost?
Renting or own?
Equity?
How long have you lived there?
What market?
Family situation?
Etc
Depending on your personal situation you will make 10x more money using your housing as an investment than investing in say 10 rental units. With only say 2% of the headache.
Find a local RE meeting. Find 2 or 3 people and tell them your personal financial and family life, then ask for ideas. Don't buy out of state. Learn local first. - 11moAlan AsriantsBusiness MemberReal Estate Agent · Philadelphia, PA · Member since 2019 · 1k+ posts · 1k+ votes
Hey Benjamin, if you havent already bought your primary, or even if you have, Houshacking is one of the best strategies for low downpayment options. If you don't own your home, this would be a great way to get started in RE investing while getting a roof over your head. Options start as low as 3.5% with FHA and 5% down with conventional loan programs.
Its really enticing to try to buy out of state and purchase cheap properties, but there is usually a lot of drawbacks with doing so.
Investing in RE is not for the faint of heart and is already difficult in your current city - doing this in an area you barely know is even riskier - even if the property is cheaper.
Buying a more expensive property doesnt make it necessarily riskier, while buying cheaper properties can make the risk go up - sometimes tremendously.
The best location to buy is the one you know best. If you wouldn't live there, don't invest there!
Buying a househack in a good location allows you to build slow and steady growth that will be prosperous 5-10 years from now. Rents will rise, equity will grow, opportunities for refi will arise, etc.
Reach out anytime if you are looking to connect and chat about how to get started.
Alan Asriants - New Century Real Estate 590 Reviews - Member since 2023 · 19 posts · 9 votes11mo
You’re on the right path @Benjamin Dolly. Of course there are many options out there for real estate. Wholesaling, whether it be single family, multifamily, commercial(most effective way to wholesale) you don’t use your own money to move the “property contracts” in legal states, plus you don’t even need to have a realtors license. This is the beauty of working on this journey. Wholesalers love to partner up with realtors, agents, brokers because we make our fee off this and the realtors can make double commission. This way you can stash money up while not using your own money. Another way, private money investing!(you just have to know who to invest to) Neither one of these are headaches. We want to work smarter; not harder! If you have any questions, I’m here for you!
- 11moKerlous TadresBusiness MemberRealtor · Columbus, OH · Member since 2023 · 1k+ posts · 1k+ votesHey Ben, if you have a high-earning W2 job, I would try to start with a house-hack duplex. With the savings you have, that will be the best way for you to get going in terms of real estate investing. For real estate sales-wise, I would continue to go to those meetings and continue to network and also find a great brokerage that can help you grow your business
Quote from @Benjamin Dolly:
I'm a 37-year-old high-earning W2 software engineer looking to get into real estate by investing in LTR single or multi-family homes, probably out of state. I've read all the books, listened to the podcast, gone to meetups, and am studying for my RE license. My sticking point is that I only have a small amount of capital from savings to get started, which would put me in high LTV financing or high-interest non-conventional financing.
Is it worth getting into a property with over 80% LTV and high leverage, or would that suck the upside (cashflow) out of a deal for too many years?
Are there other strategies that would make more financial sense with a little money down, or is it better to wait and build that initial capital?
Kerlous Tadres | Reafco Real Estate540 Reviews
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