Novice here, looking for investment property (no rentals) w/in 6-10 months.
Areas of interest in Central NY - West, South, and North-West of Syracuse, and East side Auburn.
First time home owner; to buy first flip property as my FIRST and PRIMARY residence, or buy a home to stay in personally, and wait 2-4 years to build more cash for purchase of secondary/tertiary properties on the side to be flipped?
What are major concerns for the decision; and how many started out flipping their primary residence and rehabbing while living there?
As a first time home buyer, and first time flipper, Fiancee and I expect a 2 year property to avoid Capital Tax Gain, and allow for time to DIY as much as we can comfortably do. This is if our primary residence is to become the flip.
Dual income no kids ~$110k/yr. Kid w/in 2-3 years of future.
I worry that by not wanting to be in the "thick" of Syracuse, and not going for rental properties, the probability of success is decreased 33.3%.
I am trying to be vague on our specifics so hopefully other uses may see the mindset.
Make sure you account for holding costs and you will probably have to go with an FHA 203k, also be aware the farther in the future your sell date is, the harder it is to predict value at that time. Also if you "kinda" know how to make a certain repair don't. Poor quality workmanship can really drive down the ARV on something, especially if it is important ie electrical, plumbing or obvious to the casual observer, ie crooked tile work.
I think you're better served doing a live-in flip. The section 121 exclusion thing is pretty powerful if you can force appreciation on a property while you're living in it. @Mindy Jensen did a podcast episode about this a few weeks ago (https://www.biggerpockets.com/renewsblog/biggerpockets-money-podcast-05-jump-starting-early-fi-plans-live-in-flipping-mindy-jensen/). She goes into the kinds of work you should (reasonably) do yourself vs. the things you should contract out. As @Aaron Klatt mentions, if you do bad work, it will affect the resale price of the property.
@Mike Cumbie , are you in Syracuse? (I don't know NY very well.)
In regards to Aaron and Tim's comments, I agree on not being afraid to admit I cannot do an adequate job at something. I have the problem of being a soon to be graduate (in May (2018)), with a B.S. in Civil Engineering w/ a job already signed up. I always want to dive into deeper water than I can handle, and feel that is my only way to learn well. Drywall, paint, tiling, trim, and that's about all I want to handle haha.
I need to establish a good set of contractors, I so far only have "family & friends," not bonded, so a potential liability... Realtor wise, only know of one. Have to start building relationships somewhere.
Additionally, I seem to be lacking in knowledge on when I 'need' a contractor/engineer/architect.
I.E. I rip down a wall and studs (non-load bearing wall), I have an electrician wire new setup, can I personally set up the studs and go crazy myself? Not sure if it is state dependent, I assume it is...
Mindy: Unfortunately Mike is West of Rochester, so about 2 hours away from Syracuse unfortunately.
Still open for any input you have Mike!
Thanks for the mention @Mindy Jensen
Hi @Tim McKallip , Glad to see a Western NY member running around. I am about 2 hours away so yeah I wouldn't be able to point you at anything specific. That being said you are welcome to use my public portal to look into the MLS for your area (NY agents have access to the whole state MLS). If you do find something you like or want to see, I recommend finding an agent in your area because honestly I don't want to drive to Syracuse and I don't know the specific areas well enough to be of any real help.
I am not a fan of fixing your primary residence up as a plan to flip. I am all about increasing the value of your own home, just not a fan of buying something that I... (or more likely my family) are living in that needs that much work. I feel that you need a place to relax. Living in a place that is in a constant state of repair never gives you the couple hours to rest and lay on the couch watching NCIS. You are always walking through sawdust and breathing in drywall while stepping on nails and tacks. You never disconnect. I know many on this site will disown me for this but buy a place you can easily afford that is "nice" or "decent". Invest in something you can make money on.
I know we have many places in our area that you can pick up for 20K and put in 25K and they are worth 75-90. I am guessing Syracuse does as well but don't quote me. Those make good starters. They are grinding and you are not going to make a killing, but you learn alot and the risk is not too bad. Once you build up you find more people to help and you can start to move up in value.
IMO the best way to meet people is to be active in something, volunteer fire, Legion, Elks etc. You meet people and you will be surprised on who you meet.
Just some thoughts and good luck!
Originally posted by @Mike Cumbie :
I don't want to drive to Syracuse...
I don't want to be here either..
@Tim McKallip , I am active in the cuse as well as a bunch of others here on the forum. I would suggest you look into finding a duplex or 3/4 family as your primary and first purchase. Live in the smallest unit and slowly fix up all the units as you have the money and vacancy. There are deals out there (not for $25k that I have seen) but getting harder to bump into. Have recently picked up a 4-plex in Marcellus and a duplex in Camillus which sounds to be in your desired area so keep looking. I don't know Auburn at all but prices seem way lower there than the west side of syracuse.
As to your concern about success rate, not sure where that number comes from but I have not had any more trouble renting units in the city or out so that feels like a red herring to me. I don't have anything in the near west or north side so maybe that's what you mean. I try to stick with good schools and nice houses. Your income is easily enough to get into a nice multi with an FHA loan for low money down.
Happy to answer any other questions you have, just hit me up!
@Will Chamberlin , thank you for input!
I am trying to start with flipping due to issues with characters treatment of rental properties. Additionally, the fiancée has only really agreed to flipping where our neighbors do not live on top, or directly on side of us. I know this limits my situation a lot. But if I get to rope her money in with mine, I feel I should make a sacrifice by letting her have some space... Even if it is a construction area haha!
When I own secondary properties I will be happy with rentals + multi families. Any area in particular you focus on for your multi families Syracuse wise?
@Tim McKallip , was just trying to point out that if you are want to make your first flip also your primary residence then going multi-family can ease your monthly nut and be more profitable in the long-term, even if selling is your end game. Bonus would be that you and the wife can live in the flip but not necessarily in a construction zone.
I am strictly buy and hold and like multis in the villages (Liverpool, Marcellus, Camillus). Even with the extra village tax, I like the walkability and village feel.
I agree with others here about the multi family being your first rental/live-in/flip strategy. That is how I got into it almost 20 years ago in Rochester & it has afforded multiple additional purchases & "practice" in this line of work, all while maintaining a regular full time job. Since my first double in 1999, I have gotten my NYS Associate Broker's License & acquired a few more doubles as rentals & done a few flips as well. If your wife only wants a SFH, a starter home that could be rented in a popular area once you are ready to move up is also a great option. Check the HUD & Fannie websites for first look initiatives for owner occupants to get something "flippable". I find that in SFH rentals, the tenants take better care of the unit and ultimately stay longer.
You'll want to get a rehab loan for a buy and live in and do the rehab on it in preparation for flipping it. You'll need a licensed contractor for that.
If NY has a homestead act and you do not homestead the property as a primary residence, then your property taxes will go up much faster than normal. IF you planned on staying for 2+ years it's common sense to make it a primary under those conditions.
@Nick Danaluk - The homestead aka STAR credit received in NY does not make your taxes go up faster. It simply does not give an owner the Homestead/STAR credits. Total true taxes I believe are the same & then personal situations apply (STAR, enhanced, military etc)
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