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!
Congratulations on your first purchase, Zach! You seem to be off to a great start. I started researching real estate investing and got into bigger pockets about a month ago. Since then I have really focused on educating myself as much as possible on the subject.
As much as I would love to start searching for my first property now, I am currently locked into my current lease until December. Additionally I will be out of the country for several weeks in August. I have made the decision to obtain my preapproval upon arrival back in the states and start my search for my first house hack at that time.
I also live in a very competitive market for small multi families so I agree that once I find a deal I will have to move quickly.
Again, thank you for your input and best of luck on your property!
@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?
I’m only just now finishing up the rehab and will be looking for tenants to move in August 1st. However the previous owners built the property 30+ years ago and in that time only had to evict a single tenant. Each unit rents for $1100 and my mortgage payment is $650. When I factor in insurance and property tax my monthly expenses add up to $950. Even with one unit sitting vacant I will break even after maintenance and other such expenses.
As I said, I will be occupying one unit so I’m basically breaking even while living there. Based off the numbers, I’m not going to lose any sleep over possible vacancies. I’m not sure how the legal system handles leases and evictions over in Croatia and if they are in fact, simply “gentlemen’s agreements” that is unfortunate. In the U.S. leases are a binding legal contract giving the property owners the right to evict tenants who do not honor their end. Any property owner who is dealing with a large number of evictions or high vacancy rates at the expense of their cash flow needs to find better tenants or probably consider bringing in a property management firm.
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.
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.