Newbie Looking for advise

10 Replies

Hi, 

I am Kevin. 

I don't own any real estate yet but I am looking to make my first purchase in the next year. I am looking into out of state real estate because I live in the Bay Area in CA and things are way over priced here. I am in the middle of David Greene Book "Long Distance Real estate Investing" and loving it. I am thinking of buying a multifamily duplex or triplex to start out. I have been considering just paying all cash for my first unit. Not sure if this is a wise mover or not.  I can see the upsides of no debt and a lot less risk, with higher Cash flow every month but not sure if this is a mistake and I should take the money I have and try to buy a couple places at the same time and finance them. looking for advise from experienced investors out there. 

Hey Kevin. Congratulations on taking your first steps to owning rental properties. I would recommend you start out with one property I would take out a loan to buy it, saving cash for further investments, like you said. Owning out of state property can be tricky. It is important to have all the right people in place for it to work. I see a lot of people who live in a similar areas and invest out of state to meet up and share ideas. I would recommend that. Good Luck! If you decide to Invest in OhIo, look me up. JIm

@Kevin R Moses , leveraging real estate takes advantage of you owning the whole property without paying for it out right. You realize this gain when taxes come around. The IRS doesn't care if you have leverage or not when you take deductions (unless it's IRA money). Considering this, leverage is good. On the other hand, too much leverage is risky if the market downturns and you need to liquidate. This is how many went 'under water' or had more leverage than the value of the property during the great recession.

Many portfolio owners with plenty of cash will maintain leverage between 50-75% as a safe play. Multiple properties also spreads your risk of vacancy, maintenance, etc. As @Jim Walters says, it's always good to have cash in hand for another investment. Once you buy your first, you will very soon be looking for your next one.

@Kevin R Moses - search for house hack or house hacking and read Set For Life. I bought a too big house and rented to roommates - people I interviewed and liked - and made my own rental costs $0. Bay Area appreciation can crush “real estate returns” elsewhere, though you can’t bank on it. If you buy in a great location, you can always get roommates or Airbnb (subject to local rules).

Originally posted by @Natalie Schanne :

Kevin R Moses - search for house hack or house hacking and read Set For Life. I bought a too big house and rented to roommates - people I interviewed and liked - and made my own rental costs $0. Bay Area appreciation can crush “real estate returns” elsewhere, though you can’t bank on it. If you buy in a great location, you can always get roommates or Airbnb (subject to local rules).

 This one is strong with the force!

I bought my dream home in Pensacola Florida amongst the hillbillies and pinknecks!

I knew a 3000 square foot house with 5 rooms would be cheaper for me than the standard 3 bedroom 1800 square foot house. Why?

I charge 650 ech for 2 of the bedrooms and 700 for the other 2 larger bedrooms and walk away with 2700 a month. 1800 goes to mortgage, and I pay utilities and the end result????

Well poop... there is not much left.. 

OTHER than getting my dream house foh free yo!!

Yeah, it is a great way to do it if you ask me!

Thank you Jim, Mitch, Natalie and Jerryll, for the feed back. 

It seems a bit daunting at first but I know with the right help and research I will get through this learning curve quickly!

Jim: thanks for the advise. I am looking to join a local group of REI or start one of my own here in the next month.

Mitch: Thanks, Thats kinda what I was thinking but wanted to see what others with experience thought.

Natalie: I see you are a KW agent. My Wife Kimberly Moses is a Agent here in Vacaville CA, (Vaca Vally KW office) I love the culture and attitude that KW creates. Cheers. I will Definitely  Check out Set for Life

Jerryll: Congrats on the Dream house purchase. I always liked the idea of room mates and have had a lot of great ones in the past. Although not sure if I can get the wife on board with the RM mates.

I bought in Raleigh NC while in Virginia area of DC, for the first time years back, as a out of state landlord.. I was terrified....i wish i had bought more..

light fixes, and holds, turn over to prop mngmnt, with right funding in place beforehand is pretty easy..even less emotional than being to much into it involved present...i just suggest don't buy substantial fix, rehab and flip from out of state...and not knowing area or connections...but hold is pretty easy, not so hard, with right agent boots on ground...

1. If you're looking to scale, use leverage.  Plain and simple.  

2. Do you have an idea of where you want to invest?

3. Your team is going to be crucial if you're investing from out of state. 

@Kevin R Moses If it’s your first deal. I always suggest getting more eyeballs on it sooner. Underwriters and loan officers are often viewed as “obstacles”, I personally think they can be guardians for rookies. They want it to beneficial for everyone. If later you decide you want more cash flow, you can always pay it off. But you’ll have peace of mind that you made a sound financial decision. Goodluck!
Originally posted by @Kevin R Moses :

Hi, 

I am Kevin. 

I don't own any real estate yet but I am looking to make my first purchase in the next year. I am looking into out of state real estate because I live in the Bay Area in CA and things are way over priced here. I am in the middle of David Greene Book "Long Distance Real estate Investing" and loving it. I am thinking of buying a multifamily duplex or triplex to start out. I have been considering just paying all cash for my first unit. Not sure if this is a wise mover or not.  I can see the upsides of no debt and a lot less risk, with higher Cash flow every month but not sure if this is a mistake and I should take the money I have and try to buy a couple places at the same time and finance them. looking for advise from experienced investors out there. 

 Hello and welcome! Best of luck to you!