Opinions about getting started.

6 Replies

I am new to investing in real estate, I am 18, trying to buy a triplex as my first property. I live southern California, I would prefer to stay in California but I know the market is rough, wondering if there are any good markets here. I have been researching about real estate for a bit but would like a second opinion on some things and some guidance. At the moment, I think I will move to Arizona (would also like to get opinions about Arizona) and start with a FHA loan and also see if I can get the Bank of America grant where I can use 7,500 for the closing cost and another 10,000 for the down payment. Any opinions, suggestions, market advice? Thank you!

@Josue Juarez Antonio good idea on jumping in on everything while being so young! The one thing to remember in this market is that the inventory is very low. An article just came out stating that we are 3.8Million houses short of Buyer's demand. So, each property that goes on the market gets snatched up quickly and over asking too! 

Some of the DPA (downpayment assistant loans) do create a silent second on the home, and that is something to consider when using this tactic for financing. The FHA is a great option for low down payment, and it depends on the area you are looking in SoCal. If you go get a triplex in the Inland Empire will be $600K and above and in Orange County, Ca it will run you $1,200,000+.
 

Hey @Josue Juarez Antonio

Congrats to you for your ambition! If you are looking to connect with someone for some guidance or advice, feel free to reach out. I also recommend you read this article I wrote for Bigger Pockets titled How to Invest in Real Estate Before Turning 21. Once you've read it, let me know your thoughts and if you have any questions. I am a high school teacher in Colorado and I am always looking to help young people get started in real estate investing or help in any way I can. Let me know if you want to chat sometime. https://www.biggerpockets.com/

Hey @Dan Sheeks , Thank you for the response, I read your article and thought it was helpful. Here is a quick update on my plan. I analyzed a few markets and created a Top 3 list: Phoenix-Arizona, Boise-Idaho, and Indianapolis-Indiana. I spoke with a BoA representative who told me that both Idaho and Indiana won't have the Closing Cost assistance of 7,500, only the Down payment Assistance, where as Arizona has both. My next step is to find the top 15 properties that work for me and then apply for the loans. I am missing anything, or anything I should consider? There is also another thing I would like to add. Biden is planning to pass a bill where it would help first gen homebuyers and give them 25k for both the closing cost and down payment. I do want to wait and see where that goes to take advantage of it.

Originally posted by @Josue Juarez Antonio :

Hey @Dan Sheeks , Thank you for the response, I read your article and thought it was helpful. Here is a quick update on my plan. I analyzed a few markets and created a Top 3 list: Phoenix-Arizona, Boise-Idaho, and Indianapolis-Indiana. I spoke with a BoA representative who told me that both Idaho and Indiana won't have the Closing Cost assistance of 7,500, only the Down payment Assistance, where as Arizona has both. My next step is to find the top 15 properties that work for me and then apply for the loans. I am missing anything, or anything I should consider? There is also another thing I would like to add. Biden is planning to pass a bill where it would help first gen homebuyers and give them 25k for both the closing cost and down payment. I do want to wait and see where that goes to take advantage of it.

Hi @Josue Juarez Antonio! Congrats on getting started so early, I wish I would've. I can give you a bit of perspective on the Boise market as I live here, grew up here and raised my kids here. To be very honest with you its going to be tough to move to the Boise market. We have a massive housing shortage coupled with a never-ending stream of people moving here from out-of-state (mostly California as far as out-of-stater's), so competition for homes is very, very fierce. A local realtor can give you better specifics, but many homes here are going for all cash, no contingencies and often $30k-$50k above asking price. A few days ago on the local news they had a piece about how many sellers will not even consider FHA or VA loan offers because there's no shortage of cash offers. A local investor I know had his last offer beat by $50k, and one of my neighbors who moved here from Santa Monica bought their primary home sight unseen and had to beat out 10 other offers.  Now, people are obviously buying here, but just starting out you're going to need a good chunk of money to grab something.  You can find cheaper places on the backside (closer to Owyhee County) of Nampa and Caldwell, but traffic is horrendous there as that's one of the areas where population growth is exploding, and on a good day with average traffic will take you 45 minutes to get to dowtown Boise from the backside of Nampa/Caldwell.  Another option would be to look in Boise near the BSU campus if you're willing to house-hack and rent out the rooms-LOTS of student rental potential there.

I would continue on with your plan but I would recommend not factoring in the proposed housing assistance from the Biden administration- realistically nothing will come of it and if anything does, it will be severely watered down.  Not to get too political, but they would need virtually all Dems in the House, all in the Senate plus 10 Repubs to pass it and several Dems have already said they don't support it.  I personally don't count on/factor those things in until its officially signed into law.

Again, I applaud you for taking these first steps, good on you.  A couple books I'd recommend to you to help fine tune your mindset would be Scott Trench's book "Set For Life" and David Bach's "The Latte Factor".  Good luck to you!

Hey @Jason Bohling

Thanks for the useful information and background, I really appreciate it. After looking at some properties in the Boise area, I definitely saw the shortage and realized that Arizona is my best option. The houses are cheaper and rent seems to be more, where as for Idaho, the prices are more and the rent is less. Also there seems to be a good amount of triplexes and 4-plexes in Arizona. Also would like to add that I am not relying on the Biden's affordable housing plan, but it would be a great help at the moment if it did happen, I am just keeping an eye on it. Anyway, thank you for the book recommendations, I would definitely take a look at those! I would also like to keep in touch and maybe get some questions answered about my process. 

Best,

Josue Juarez

@Josue Juarez Antonio absolutely stay in touch! Arizona sounds like a great option based on what you said, admittedly I don’t know much about that market. You’re right on your observation about the prices to rents here; what a lot of people don’t realize looking at this market is (in my opinion) what seems to be largely driving purchase prices and rents are the HUGE inflows of our-of-state people moving in...I’ve literally met more people than I can count who have come here from SoCal and told me about how they sold their home in Huntington Beach or Santa Barbara, etc (pretty much you pick the city) and made $700k profit and came here and paid cash. Some of these people are savvy in that they’ll pick up homes that would’ve made good flips but were able to pay more cause they aren’t concerned with profit margin and renovate it and instead of selling it, move into it, so it’s not just ready-to-go mls homes being bought up. This is inflating the price which reduces affordability and then increases rental demand with little supply driving up rents. Now 2 of the big dangers here are: 1) what happens when the in-flow of out-of-state money dries up (I posted somewhere else talking about all this) which also leads to 2) this has always been a very low wage state, and many people were already struggling with rent prices as-is before the influx of people; in other words, I don’t think long-term rent prices can be supported here.

Another thing to think about is your quality of life. If you’re going to be moving (by the way, I admire your hustle and willingness to move to a different state for your future), pick a place you’re going to want to live in..from what I know Arizona is similar climate and culture to where you’re at; that very much does matter. Regardless of what you do, good luck to you!!! We’re all rooting hard for you!