Best advice for new investors on their first purchase
Dallas, TX · Member since 2018 · 5 posts · 2 votes
If I had to go back to 1996 when I started, I would do the same thing - get a small multifamily and live in one of the units.
One thing I'd change is that I'd operate on of the units as a short-term rental/corporate rental.
The technology wasn't around then, but it sure is available now.
Getting a rental is great, but operating it as a conventional landlord is just one option you have. Conventional landlording is the least profitable way to operate a rental. Corporate housing is the most profitable way ... and there are lots of modes in between.
So @Sarah Nation stay open to the MANY options you have as a property owner. Don't fall into operating as if the interment doesn't exist unless you chose to do so.
Best to you.
I'm not yet a seasoned pro but after talking to experienced investors/ listening to podcasts it seems most wish they would've went bigger sooner. If talking about first deals, this seems to mean not sitting on the sidelines any longer than necessary. Having just bought my first property after searching my local market relentlessly for over a year, I can 100% agree with this. The amount of knowledge I've gained from this first deal has more than negated any small missteps or inefficiencies I've had.
The property is a duplex which I will be house-hacking after rehabbing both units. Both units are identical floor plans and I was able to add a third bedroom (making each unit a 3 bed 2 bath) and tear out the kitchen pantries creating twice as much counter space as before with a much more open floorplan. My offer was at asking and first on the table after the property was listed for less than 24 hours and the seller received two more offers that afternoon after mine (I'm in a very competitive market for small multifamily properties.) Having not known everything I had learned in the previous year from Bigger Pockets and getting to know my market by searching so meticulously, I highly doubt I would've had the confidence to pull the trigger so quickly. I've done the rehab all myself so far with the exception of contracting out the new HVAC installation and electrician and I've gained a great deal of experience and appreciation for what is involved. So for me, the process of finding the deal was definitely the most challenging part of my first deal.
Part of me wishes I could have started earlier but at the same time this deal is looking to be a solid one as the numbers are indicating I will be able to recoup most of my rehab costs when I cash-out refinance the loan after the six month seasoning period passes. I hope this helps and good luck in your search!
@Zachary LaJoye - Hey, do you feel the pressure of always needing your house to be full? How do your numbers look if one door is empty?
I'm not an investor yet, I do not own any property, but from everything I've read, right now I'd be scared of buying one or two or maybe even three units since my loan repayment would depend on very few doors and, I would guess, a 100% occupancy.
Here in Croatia, of course landlords have contracts etc. but it seems to me from my own experience in dealing with landlords and renting out, these contracts are more like gentelman's agreements.
I'm wondering how do you deal with sudden changes that can occur if people don't respect the contract?
If I had to go back to 1996 when I started, I would do the same thing - get a small multifamily and live in one of the units.
One thing I'd change is that I'd operate on of the units as a short-term rental/corporate rental.
The technology wasn't around then, but it sure is available now.
Getting a rental is great, but operating it as a conventional landlord is just one option you have. Conventional landlording is the least profitable way to operate a rental. Corporate housing is the most profitable way ... and there are lots of modes in between.
So @Sarah Nation stay open to the MANY options you have as a property owner. Don't fall into operating as if the interment doesn't exist unless you chose to do so.
Best to you.
Advice:
1. Understand your numbers well. If you need to take a real estate finance course do so before.
2. You should understand construction management.
3. Try to have someone as support/mentor.
4. Plan for worst case scenario. Under promise yourself, over perform.