I've been living in the east St. Paul MN suburbs since Aug in my first house and love the area. We got a great deal on it, and I'm really excited with how everything turned out. Now I'm starting to see what equity is, tax benefits, and I started thinking...
I work at the corporate campus at 3M here in Maplewood and have made friends with a lot of out-of-town young professionals (23-28 y/o) and see a huge gap in available, nice, rentable housing options. I have looked with my REA at properties surrounding the corp campus that go for SFR, so why pay $200k??). But being as I just bought my home and an engagement ring for my fiance, I would only have around $1500 to invest and am pretty cash poor. Plus, most of my savings is going toward a honeymoon and wedding expenses for next year.
Question is, is there a way for me to get started? Or should I wait until my "financial storm" blows over and start investing in a few years? I know the power of leverage RE brings and love the idea of starting with a partnership. I feel as though I have a great market to start in with an awesome target audience (I even know some HR people and could have an in finding great tenants). In my initial searches I have already found four potential townhomes that would be a great fit for my criteria and have run some initial numbers on them with a spreadsheet I created.
I am looking forward to any suggestions, comments, or ideas you guys may have. There is a ton of experience on this site and I would love to hear how to avoid mistakes or prevent something I can't handle right now. Or maybe there is a way to start using the power of this site. I personally feel as though I could bring a lot to the table, even if it isn't money (find properties, rent them with great tenants, manage them, etc).
Welcome to Biggerpocket!
I personally am in the same boat as you are so I I cannot offer any advice. We have simply worked hard to increase our revenue or decrease our expenses so we have more investing income. If you are in the position , you could capitalize on this market through renting out rooms in your house. This would help raise capital. I also recommend you looking into HoA's and town house covendents. We have HOA's and while they make sense I personally would never invest in them again if I could get away with it.
If I had $1,500 and my surplus income was going to other things I would wait until my situation changed. I would want 3-6 months worth of expenses in the bank and an adequate down payment so my cash flow from the investment would be positive.
I have one SFR and one condo. The rents are the same, but you have to consider condo association fees (and your lack of control in when those are increased and by how much) into account when you are analyzing the numbers. For us, it still made sense but that is not always the case. Townhomes can also have association fees. So just do your due diligence.
As far as your financial storm, I would try to spend way less on a wedding than perhaps you're planning, so that you can save for another home. But I got married in jeans in a public park (and that was exactly what I wanted) :) So I may not be the best to advise on this.
An alternative if you're willing to consider it, is to move into the new property so you can get owner-occupied loan terms, which come with much less down payment requirements, and you can rent out your current home.
No I have a fully stocked "emergency fund" so that part is fine. I just have $1500 extra to invest and I don't feel like putting it into the stock market, as I have funds in there as well. And yeah my spread sheet does have HOA fees in there, as most have them and they range from $150-250 a month. Cash flows on these properties are estimated at $200-250 a month positive even with that fee in there.
Free eBook from BiggerPockets!
Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!
- Actionable advice for getting started,
- Discover the 10 Most Lucrative Real Estate Niches,
- Learn how to get started with or without money,
- Explore Real-Life Strategies for Building Wealth,
- And a LOT more.
Sign up below to download the eBook for FREE today!
We hate spam just as much as you
Join the Largest Real Estate Investing Community
Basic membership is free, forever.