Are you currently renting? You may want to consider buying a duplex and living in half and renting out the other unit. That way you are transforming what you are currently paying in rent into equity, and getting some experience investing.
There are also tax benefits to this.
Hey Brian! Thanks for the reply! Right now I’m crashing at the parents house to save money! I’ve heard that buying a duplex is the best way to get involved. How do you determine if my market is trending up? Deals are dried up? Not sure how to recognize if something is a deal or not.
I am far from an expert at market analysis so hopefully someone else will help with that, but here are the things I would look at. How is the employment rate in your market, especially compared to itself historically? Are more people moving to the area or moving out? Also, what are the age demographics?
House hacking is great. It’s when you buy a multi family live in one unit and rent the others out. Low down payment and interest rate. Great way to start and build equity.
Thanks for the replies guys!!!!
@Anthony Reyes I am in a very similar situation, young, big saver. I went out and purchased a single family rental all cash because I felt that I needed to get my feet wet and learn a couple of things. I am not sure how realistic that is for you in your market. Otherwise, if you are able to qualify for a loan and get 3.5% down and you work a decent W2 job. Why just shoot for a duplex, why not go for a 3 or 4 unit, similar lending rules should apply. If you ever have any questions about beginning as a young investor feel free to reach out! I hope this helps!
As far as books go, there are a lot of good recommendations generally found at the end of the biggerpockets podcasts if you are at all into those!
Hey Tyler! Thanks for replying! If you don’t mind stating, how did you come about finding your deal and determining if it was a good deal or not? I figure that I’m at the point where I just need to get right into investing just to see what it’s like (biggest obstacle in my opinion).
@Austin Hey man good to know someone else is in the same position as me too! We can definitely keep in touch. I’m currently saving and increasing my knowledge on the real estate game. Im looking forward to it!
@Anthony Reyes , as someone above mentioned house hacking is a fantastic way to get started. I would recommend that you start with a 4 plex if possible. For whatever reason FHA believes that moving down on the unit count means moving up in the world, so they are more lenient with people in a fourplex downsizing to a duplex, but will not allow you to go from an SFR to a dourplex, for whatever reason.
So starting with a 4 plex will give you more flexibility when looking to move out to another property.
This is what a lender told me when I wanted to go from my current duplex to a fourplex.
Hope this helps
It sounds like you are just beginning to really learn about diving into real estate. I was in the same situation in June. In June, I knew I didn't know enough to begin pursuing a deal. I save a decent amount and I already had more than enough for a down payment on a property. I thought it was best to take 5-6 month and learn every day.
I watch tons of BiggerPockets podcasts on YouTube. I listened to Scott Trench's "Set For Life" for free using a trial membership of audiable.
I bought Brandon Turner's books on real estate investing.
I practice analyzing deals every day.
In June I set a date where I would begin the process of finding my first rental property. That date arrives next week and I will begin the mortgage approval process on that day.
I think it's important to develop a goal and work towards that goal every day. It's also important to follow through with your goal.
A lot of people set goals, but don't make them become a reality.
Only you know what the most realistic goal is for you. I recommend taking at least a few months to learn as much as you can.
I do lots of research. I look at home prices in my target area and compare that to rent prices for the same size houses. If you do this long enough you will get a sense of what a good deal is.
If I see a 1320 sf house that sells for $145-150k. That same house can rent for $1,400 a month. If I end up with a $800-900 payment, I will make about $500 a month. You would have $30k down + $3-5k in closing. Total cost $35k with an income of $6k a year. That's a little over 17% ROI. I always do the math and if it makes sense think about moving forward on it. You also have to look at schools, crime rates, etc...
I look for anything that will bring in at least 8-10% or better. I usually shoot for 15% or higher.
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