What is everyone's thoughts on their FIRST buy & hold property to purchase? I have experience fix & flipping, I live in Illinois and have around $200K cash to invest.
I feel like a good strategy would be: BRRRR on a Single Family Home under 75k or something. Thoughts on this process?
The reason why I like this strategy is:
- Seems like lower risk;
- If numbers are correct, its not much out of pocket;
- Seems like a good way to get feet wet, get a rental & some positive cash flow.
My concern is:
- I speak with investors all the time who started off in SFH and they all say moving forward their strategy will be multi family.
Any insight is greatly appreciated!
You should check out Rockford, IL. I’ve seen some nice single family homes that need a little TLC in high cap areas.
If you are going to live in it I would suggest either a duplex or a four-plex. You still get owner occupied insurance rates. You will then ad schedule E to your personal income tax return and get depreciation on the rented units. You can also expense the portion of mortgage interest, real estate taxes, homeowner's insurance and exterior renovations based on the percentage of the property which is comprised of the rental unit(s).
Example 2000 Sq Ft duplex. Each side is the same size then 50% of your expenses are deductible against rents. If you show a loss then they can offset earned income as well.
>>>> Love SFH have 32+ working on 4 at the moment with another short sale awaiting lender approval.I have owned attached and am in fact building some in our market. Prefer SFH far and away for the following reasons:
Easier to rent / more responsible tenant - built in buyer - lower maintenance issues ( tenants typically take care of incidentals ) - larger appreciation - easier to sell - larger cash flow - low vacancy rates ( 1.2 % average over the last 3 years ) - easier to overall manage
All my units are in Winnebago County with the following averages appraised value $88,000 / cash flow $312 m / LTV 67.2% / 5+ and 13+ remaining amortizations ( originally 7 and 15 full termed ) monthly expenses $54 m 2018 47 m 2017 so technically net cash flow would be $258 2018 and $265 2017. We purchase and rehab everything and fix it to the 9's to avoid unexpected capital expenditures. Total out of pocket all props $60K ( not counting holding while we rehab ) for rehabs. We purchase everything "cash" which is a LOC issued by my lender - put our own funds in for rehab then refi get vast majority of funds returned. Rockvegas great place to live and invest IMHO.
Best wishes moving forward!
I'm in Dayton Ohio, currently workin 90to150ARV homes, Look to make 20-25k per flip but then purchase the property from myself with WPCU @ 15% down and 4.75% for a 30 year. Keep 10k + per property and have a free house to rent out.