Starting out -- right direction?

Question

Hi all-

In the next 6-12 months, I'm looking at investing in real estate. I'm thinking of looking for a 2-unit home in need of rehab, rehab'g one unit while living in my current apartment, moving in and rehab'g unit #2. Rent unit #2 after completion, while I look for a single family home to rehab and eventually move into, then rent unit #1 as well. Go from there, hopefully acquiring more SFHs and maybe more multi-family homes, and maybe eventually getting into commercial stuff.

I don't have a lot of rehab skills, nor time to be doing a lot of work, as my regular work keeps me busy. My dad has some skills, but no time either. In the end, I'm probably going to end up paying someone else to do a lot of the rehab work. I know a few people in that line of work, but I certainly expect this to be a large part of my costs.

I'm in the Albany, NY area. I'd like to target young professional and young/small family tenants, but I'm open to college students as well (we have a lot of colleges around here). Obviously I understand I can't pick my tenants, but I'm talking in terms of picking my neighborhoods and properties, and setting rent.

Does this sound like the right direction to be headed in? Thanks in advance!

Jason Hanson · Answer

I would not start out doing a rehab with your first deal. Most people start out wholesaling which gives them quick cash and also boosts their self-confidence because they know the business actually works.

I have seen too many new investors get killed on their first rehab deal and leave the business because it put a sour taste in their mouth.

You don't want to be dealing with contractor nightmares, when you can wholesale and make 5-10k, deal after deal.

Jason Cummins · Answer

Sounds like you have a really good plan.  If I could have lived in my first investment property I would have went the same route.  Unfortunately I had bought a house before I really gotten into REI.  Goos strategy IMO though.

But this quote of yours, maybe I do not understand what you meant, but it seems wrong...

Ofcoarse you can pick your tenants, if you don't, you'll be in a world of trouble.  But maybe I am not understanding what you meant by this.

Andrew Badera · Answer

In this scenario, what sort of money should I expect to be spending on the property itself? Is it possible, in theory, to make this work with a $25k house (must be a neighborhood I'd feel comfortable walking in at night)? $50k? What's the lowest price point here where I can expect to minimize ancillary hassles and pitfalls, but not be paying through the nose on my very first investment?

Andrew Badera · Answer

I mean that in terms of, I can't guarantee all details of every aspect of a tenant and their family. I'll do everything I can in terms of location, rent, and screening to cant things toward bringing in qualified, young professional/young family tenants, but being new to this, I don't expect to get exactly what I'm looking for, every time. Maybe I buy in a neighborhood that's close to various colleges, but I end up with a non-student tenant with low income. Not what I'm looking for, but not something I can necessarily prevent, either.

Crystal C · Answer

Living in your first investment is really the best way to go in my opinion! That's how I started and I'm still slowly taking off. Good luck to you!

Starting out -- right direction?

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