Hello I am 25 years old extremely new to real estate. My fiancé and I are b planning on getting married in June of 2016 and don't want to go down the apartment path or rent. So we decided we would like to get a duplex and rent out the other half of it.
What are the steps I should take to get the ball rolling and when should I start? We live in CA near the Sacramento area.
thank you to everyone who is reading this!
You probably want to have your team in place early. You need to find a lender who will finance you. You need to find a realtor-preferably someone who is investment minded. There is a big difference here.
If you plan on doing rehab to the place, it might be good to look into contractors. Have them in place so they can be on call quickly when you are going out looking for properties. In your area it might be better to buy a fixer upper, then turnkey. Also, look into learning how to analyze deals. Make sure you know how to run all the numbers when you start looking.
Just some early preliminary things that might help.
Welcome to BP @Nathan Galvan
Financing will be the biggest thing you want to get in line for a purchase like you outlined. After you you get a rough idea for not only how much you are pre-qualified for, but more importantly what you feel comfortable spending you then want to get a feel for your market and the type of purchase prices you can expect for the type of properties you want to look to purchase.
@Nathan Galvan If this is going to be an investment I would start learning all you can about the numbers side of REI, and start practicing what will make sense when it comes to calculating costs. The more familiar you get with the numbers the more solidified you should be in your decision making when that time comes. Like what @Michael Noto said above your finances will need to be in order and part of that will be what kind of loan you can get qualified for assuming that is the route you head down.
Like others have mentioned you'd want to get financing figured out first. Meet with a lender to go over down payment, closing cost, loan amount, and monthly cost. Once you know what you can afford then get an agent and start looking for what fits your budget and makes good financial sense.
I wanted to help with this question too but the answers above are right on so there is nothing more to add. Take these steps and if questions come up, come back and ask!
By the way, welcome to BP and REI!
I was in the exact same shoes as you about 8 months ago. I'm 24 and bought my duplex in December and am getting married in 5 days! So far it's been an awesome experience getting a duplex, living in one half, and renting out the other. As others have said, getting pre-approved is the first step. Then find a realtor.
The realtor I used for my purchase basically just linked me in on his MLS. I gave him parameters of what areas, budget, and type of home (duplexes). Every day I got emails from him with a couple new houses (or newly priced houses) to browse online. I would suggest doing this so you can get familiar looking at lots of houses and prices online and get a feel for your area. I would also suggest getting a book on landlording to get you ready for that next step.
The house I got was a foreclosure about 8 years old and pretty under market value. The bank had owned it for a while and they'd just dropped the price by $60,000 so it popped up on my radar. The house really only needed cosmetic things: carpet, paint, caulk.. ect. It also needed appliances and a few minor fixes, like broken toilet lids and leaky P traps. I'd never done any kind of handy housework before so it worked out perfectly that this place just needed minor stuff that I could easily learn to do to get a knack for that stuff.
If you can find something like this I would highly recommend it. My two cents are: look at as many properties as you can so you will recognize what is undervalued and overvalued and choose something that needs minor or moderate work (unless of course you're really handy already).
When I was looking people told me that 'you can't go wrong starting out with a duplex'. Well I wouldn't go that far. If you can shoot for getting something that you can pay the mortgage (principle and interest, not including tax/insurance) using the rental income, I think that's a really great benchmark. I am able to pay the mortgage with the rent and it's a wonderful blessing to be effectively mortgage free at 24 :)
@FranklinTarter do you have any recommendations on what type of landlord books I should be reading? Thank you for your comment. It was really nice!
A couple of books to get you started:
LANDLORDING ON AUTOPILOT - Mike Butler
BUY IT, RENT IT, PROFIT - Bryan M. Chavis
Excellent ideas all of them
The down payment is also part of the plan. How much do you have to put down? You will need a down payment plus the cost of financing (3 points?) Will you be able to afford 20% down or will you have to get a FHA 3.5% mortgage?
You are certainly on the right course.
You should start Now. Join a Real Estate Club and find a Real Estate Meet up Group to join. Read everything on BP. Get to know a real estate agent. Study Zillow for the area you want to live.
Keep us updated.
Hey @Nathan Galvan , good for you for thinking like an investor! You've received some great advice. What you are looking to do is called "house hacking". I don't know if it's made it's way to the dictionary yet...
@Brandon Turner wrote a great post on it not too long ago, definitely worth a read. You'll find his post here:
along with some great podcasts and other really informative posts from other members.
I'm an active investor & agent, and would be happy to connect you with an investor friendly agent in your area if you don't have one already.
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