Hi I am new to the BP community and am looking to get started. I have been specifically looking into fix and flips and multi-family rental properties via the beloved BRRRR method for cash-flow. A little about myself, I am a nurse who travels between the East Coast(PA and NYC) and Los Angeles CA. I have never owned a home or property due to my travels so I would technically be a FTHB. I am looking to invest in the Lehigh Valley Pa(Allentown, Bethlehem, Easton) area as well as Philly. All that being said I have some questions on how to possibly get started.
1: Since I have never owned a home I was thinking of house hacking a multi-family with an FHA as my intro to REI. My concern with this is I travel for periods at a time for my job. Although this would be my primary residence I would be in L.A. for a portion of the first year requirement. Would I be able to STR my portion when I am away. I am clearly concerned with inadvertently committing any type of mortgage fraud, but also don't want an empty unit that can be generating cash flow for me when I am away.
2: Would it be wiser to get a few fix and flips under my belt via HML/Private Lenders to build liquid funds and then use that to start investing in multi-family rentals via Brrrr
3: Lastly, do many of you use HML for your initial purchase of a Brrrr property? If so have you found it hard to get lending without holding the property in an LLC(or other holding entity) and without experience? I ask because most(that I've researched) residential lenders will not cash out refi on property held in LLC. And I have found that many HML prefer your property be in LLC and that you have investing experience.
I thank you all in advance for any guidance and advice and I look forward to learning from and hearing all of your experiences. I am also very interested in networking with agents, mortgage brokers, contractors and other investors in the Lehigh Valley/Philadelphia area. So please feel free to message me.
Hey there @Michelle Sanchez welcome to the exciting dynamic investing world! Your post caught my eye since you mention markets that I am heavily engaged in. A few quick tips and thoughts for you:
- I caution you to try to mix too many goals into one investment/purchase - a place to live, a LTR, STR all wrapped into one will send you shooting wildly in all directions.
-Getting flips under your belt -- I am not sure why you think it may be a good first step and maybe I am wrong. But flipping is really really hard and much less forgiving than Buy&Hold. Forget everything you have ever seen on HGTV. Add to that that everything in Lehigh Valley has been going for over asking at numbers that don't often make sense. Seasoned flippers often lose money so I never understood how novices think they can jump in and have a risk free profitable first project -- sorry for being harsh but why bother saying anything if it is not the truth :-)
-STR in Bethlehem is not allowed. I think you can STR a place you live in but check that out before basing a decision on that plan. ANd STR in Philly is up in the air right now with legislation coming that will wipe it out (it is being fought)
-Philly and LV are two vastly different markets - each with many micro-markets. There are tons of opportunities and tons of people trying to get a piece of the action right now.
Hi @Sheryl Sitman thank you so so much for your response and your honesty. I am also a believer in being up front and honest about situations especially where potentially losing money is involved :) Thank you for informing me of the STR rules in Bethlehem. I definitely did not know that. So my question to you is, what would be your advice on the best way to start this wonderful works of REI?
I really don't want to get into STR at least not in the Lehigh Valley, I really want to build a portfolio of rental properties that cash flow well(everyone's goal I know lol). My reason for mentioning the STR is because I'm in the unique position of having my primary residence be in the Lehigh Valley but being gone for work months at a time. So my initial thought was to purchase a multi-family residence with and FHA and renting out the other unit/s for cash flow. However since I'd be gone for periods of time for work I wondered if I could STR it, but also didn't want to inadvertently commit any mortgage fraud as I know you must live in the residence for a year. I hope this helps to explain my thought process and again I both welcome and appreciate the honesty and any advice.
Perhaps you would be allowed to STR if it is your residence -could be very good money. Worth calling the municipalities that interest you and asking specifically what their regulations are currently. You probably know there are platforms specifically for nurses. To get started I would say spend as much time as you can learning - here, podcasts, books, meetups, other forums. Start building contacts by networking. Start putting feelers out for your team. You need to find a way to convince people that you are worth their time. Alternately consider finding someone who will help you jump the learning curve to some degree. Truthfully, people spend months if not years trying to lean this very complicated business and lose money by not getting in sooner. I sat and looked back at all the deals I did not buy several years ago and all I see is money lost. "Best time to get into real estate is yesterday." It really is true (usually)
Thank you again for you advice. I do appreciate it. When not at work I spend all day and night on here. Reading investment books, trying to understand the numbers. I can without a doubt believe it can take years to figure this all out, and yes I am certain in that time many good/great deals slip through your hands. I am without a doubt trying to network and meet people. Unfortunately I am in LA a good majority of each month so it’s hard to find meetups in PA that work with my schedule but I’ve been on here and also on FB groups. I thank you again for your advice and your time!
I don't see how a traveling nurse with no real estate experience can be successful rehabbing and flipping houses. No way!!! Even the pros who have been flipping houses for several years lose a lot of money on some of their flips.
Start with something like a 4-plex where the profit you earn is almost exponential when you increase the rents. Then, you can either try to manage it yourself, or hire a property management company, but expect to give the property management company a big chunk of your profit and expect their will be a lot of inefficiencies when you have a property management company vs. being hands-on where you have much better control and don't have to pay someone to make mistakes on your behalf.
Must have read one of those books that makes people think they can walk on water!
@Jack Orthman nah just save lives for a living so I guess that made me think I could walk on water lol! Anyway thank you for your amazingly sound advice. I like the 4-plex idea! Have a great day!
@Jack Orthman btw my friend I never said I was a travel nurse. I am in fact a Cardiothoracic ICU nurse. I said I live on the East coast and work on the West Coast and travel between often. Everyone knows nurses get paid 3x’s more in CA then they do on the East Coast. Just an FYI! Again thank you for your advice and I will definitely look into the 4-plex idea.
Welcome to the BP forum and congratulations on getting started. Best of luck on the journey.
I like your house hacking strategy on a 4 unit building. That's how I got started in Real Estate and it was the best decision I ever made. As far as renting out your unit via STR while you're away. Check with your lender. I do believe this would be allowed because one of the 'exceptions' to the year long rule that FHA/conventional lenders want you to abide by, is work reloction or travels. Again, please confirm this with your lender. Regarding the legalities of if STR's are allowed in the municipality you would be need to check with the local codes office to confirm.
Best of luck, and if you ever consider the Harrisburg/surrounding area (just a little west of Philly/Lehigh Valley), I'd be happy to help out.