Ann Arbor, MI · Member since 2013 · 19 posts · 0 votes
hi i am a 29 yr old south east Michigan resident.. i am going to begin actively searching for my first real estate investment may 1st... i am starting by investing my own hard money .but i am still debating on weather to buy n hold or fix n flip
Scott W. J Scott You do realize he is in Ann Arbor, Michigan? Not exactly Illinois or Atlanta, GA. Maybe his market is not as hot as those in your locations. He may be able to do both as there may be more properties available to investors. It was a valid question and deserves the respect of appropriate answers.
Perhaps in order to get to know newbies, there should be a prerequisite to have everyone fill out a survey to list more about themselves so that we can help without commenting about Vegas, strippers, and answer in a constructive manner. We're all real estate professionals here, and would not respond if we did not care.
i was focusing my plans on fix and flips because i can not live off the cash flow of one or two rental properties.. my five yr plan was to do fix and flips for the first two yrs of my real estate investing and then to acquire 2 buy and hold properties per yr after that while continuing to do fix and flips at the five yr mark i was going to re evaluate... in my market u can buy a 3 bdr 1 bt brick ranch style 1300 sq ft home in low crime area for $25000 ... flipping is harder to put a number on due to all the variables
Not quite sure why you started this thread asking if you should rehab or landlord when it sounds like you already have some good ideas. Honestly, what you've written above indicates that you've thought about this more than many people who just jump in with absolutely no plan at all.
So, it sounds like you want to start by rehabbing...what issues are you currently facing?
j scott.. my main issue is being able to do a general estimate to know if i want to put a property under contract before i can have my g.c give me estimate.. and no support i.e friend and family all tell me real estate investing is a pipe dream.. example "if it was that easy everybody would be doing it"
j scott.. my main issue is being able to do a general estimate to know if i want to put a property under contract before i can have my g.c give me estimate.. and no support i.e friend and family all tell me real estate investing is a pipe dream.. example "if it was that easy everybody would be doing it"
It's NOT easy. Far far from it. But it's certainly not impossible. It takes a lot of study, hard work, some risk and some perseverance, but as the hundreds (thousands?) of successful members of BP will attest, it's certainly possible.
And the estimating rehab costs is definitely one of the hardest pieces if you don't have a construction background. While there is no foolproof method of estimating costs, I did just finish writing something that should be helpful:
Noah Campbell ~ I would recommend having three exit strategies before buying and use your three exit strategies as criteria for buying/rehabbing.
For example:
1. Wholesale, I will only buy a property if my research leads me to believe I can resale the property to another investor with $__,___ profit (adjust the number to meet your market)
2. If I cannot wholesale the property I will rehab the property and will retail flip the property for $__,___ of profit.
3. If the property does not resale with my margin within ___ number of days I will hold the property as a rental and will have a monthly positive cash flow of $___
If a property does not line up with the three criteria do not look at it. If a rehab plan does not allow for all of the exit strategies than adjust your rehab plan to make the margins/cash flow work.
Given your current situation with $70,000 in cash but no current employment, it might be best to go the buy and hold route at the beginning. This also seems to be the best route in your market at the time judging by your responses. Some repairs might be necessary that can give you valuable experience in estimating repairs, meeting contractors, etc. that will pay off down the road when you are ready to fix and flip.
$70,000 can go quick if you get into a messy rehab or something unexpected happens. If you have no steady income during this time, what could you do? If you don't have a viable option, I would strongly recommend you not to do a fix and flip at this time.
thank u everybody for the great comments.. if my flip didn't go as i hope i would definitely try to hold n rent it or maybe live in it temporarily... i am a intelligent able bodied man so if my best option for my future was to go back to work a nine to five type job i will... i am familiar with the 70% formula and exit strategies the first rehab i choose i will make sure to save enough money to run over budget as i have learned from b.p .. i feel confident in my Realtor. i don't have a g.c yet and would love if anybody could suggest one in my area. as far if i choose to rent how do u determine the rent for a specific house and neighborhood and if i bought n held two properties for two years would i be able to borrow on those two properties to buy two more
Buy and hold vs flip... I look at these two vehicles as being very different. With the one (flipping) the goal is to generate short term income. The other (buy and hold) is investing. Either can be a great vehicle depending in your goals.
In my opinion flipping is seldom the answer by itself because the day you stop actively flipping houses the income stops.
Hello all..
I'm a newbie..I was told you need to figure out
Your Goal 1st...rent and hold is long term... Flips are short term.
Is this true??? I found that you can finance a owner occupied home live in it for a little while and then add it to your porfolio of holds. The article I read said that Fannie Mae allows a person to have up to 10 loans but must banks wont finance you pass 4? Also while reading forums someone suggested that I start attending some seminars and networking with local realtors..while the site is very very helpful I think the advice was good. From what I read there is a lot to learn about buy and flip...you need a team or your honest go to ppl.
I'm a newbie but if I was unemployed and trying to make my 70k stretch and invest I'd look for a job so I can get all the benefits of a owner occupied loans..buy a duplex, live on one side rent free while renting out the other side. Still holding on to my 70k b/c I got all the benefits of owner occupied loans.. Move after a year into my property #2 (duplex,triplex) financed with owner occupied benefits..live there a lil while and rent it out...You will know have 2 properties for renters buying property for you while you still have all or most of your cash....your back up plan to vanacies and repairs or exit plan can be your 70k...Is this realistic or nieve??
I'm a newbie also trying to learn more about investing. I work FT don't have much $$. I do have 2 properties that I bought as a Owner Occupied. I lived in one for 5yrs and now rent it out the other I still live in. I want to finance #3 with a duplex. I'm 32yr so I'm betting on my renters buying these homes for me and me retiring selling them or living off the income. These are long term goals...I have no cash for short term goals. I wish you success ...I wish I had your 70k
My worthless opinion based off of the limited information you have shared... I would look at getting a day job and look at investing in a 4 plex that I could live in one unit and rent out the other three. Get in with as little out of pocket as possible and then take the balance and attempt a flip.
Based on not having a source of income and $70K to invest, its my opinion that the safest and smartest strategy would be to partner with an experienced rehabber. Find a property together, you put some money into the deal and work on rehab. Ride his coat tails from beginning to end. Get a decent return on your money invested and on the job training. I would only invest a third of your cash in first deal. There are plenty of investors who would be happy to use your money and help you learn the biz. And in doing so, you are using his money as well.
Based on not having a source of income and $70K to invest, its my opinion that the safest and smartest strategy would be to partner with an experienced rehabber. Find a property together, you put some money into the deal and work on rehab. Ride his coat tails from beginning to end. Get a decent return on your money invested and on the job training. I would only invest a third of your cash in first deal. There are plenty of investors who would be happy to use your money and help you learn the biz. And in doing so, you are using his money as well.
that would be great.. any suggestions on how to find a good credible partner
You might start by getting to know investors here on BP that are from your area. You can search your location and then hit the "people" tab and follow them and those you seem to relate with, send a colleague request an invite to lunch. Local REI meetings and thru realtors is good as well.