First Purchase Timeline

19 Replies

Greetings BP!

New member and first time posting in the forum. Great late-night reading btw. I was curious when a good time would be to start looking at properties? My wife and I plan to purchase Summer of 2022 and house-hack a 2-4 unit property (first one).

Thank You,

@Destry B.

Start looking at what is happening in your local market now to get a sense of what your budget will afford and to confirm your expectations are in line with the market. 

Depending on what is happening in your local area, you may need to be "actively buying" now in order to get a place by next summer. In our area, the inventory of small multi-families is so low, it may take 1/2 a year or longer for the right property to come on the market. When it finally does come on the market, Buyers need to be ready to jump on it. 

Welcome @Destry B. - I'm not familiar with the Twin Cities market, if that's where you will be buying, but in general, especially in this current environment, you're going to want to start looking several months in advance of when you need/plan to be moved in. This is especially true of multi-unit properties, as there are a whole lot less of these. I'd recommend working with a lender to get pre-qualified and identifying a solid realtor sooner than later, so that you can get a feel for what you can afford and what areas make the most sense. Good luck! 

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@Destry B. welcome to your first post! I would recommend speaking with a lender to see what price point you could be approved for. It works well to do this in advance because if you need to work on something you have the time to do it. It is important to speak with a lender who is an investor and works with people who are first time house hackers. I have an awesome lender who house hacks himself and is a treasure trove of knowledge. I would love to connect you together.

I would recommend that you start actively looking at properties at least 4 months before you need to move. This gives time to find a great property and not make you feel rushed.

Hi Destry,

Going along with what everyone else has said, I think you can start looking any time. Getting set up on an MLS search would be nice for you to get an idea of what is out there and what types of properties you are liking. Also speaking with a lender is important to know your budget, which can sometimes be higher when looking at multifamily properties, but speak with a lender to know for sure! My husband and I house-hacked in NE Minneapolis from 2018-2020. If you want to chat we would love to meet up with you sometime.

What areas are you looking at? 

Hi @Destry B. , Welcome to BP! as for me real estate investing for beginners doesn’t have to be overwhelming. Start small, do your research, and consider your short-term and long-term goals. Talk to experts and learn more about investing and the market where you wish to buy, and most importantly, don’t rush!

Goodluck!

Updating w/ some info due to my newbie mistake of not providing a more detailed picture of our scenario:

Looking in TC area, I haven’t nailed down an exact city/neighborhood (a lot of good ones), but we do know where we don’t want to be. We seem to like Columbia Hts, N. St. Paul/Little Canada/Roseville.

Purchase timeline is set around Summer 2022 and could do sooner but w/ current lease would prefer not too. Also starting to see price drops on Realtor.com for the first time in awhile.

All financing aspects are taken care of.

Don’t intend to spend more than 400k.

I can go conventional w/ 20% down but since reading Vol. 1 TMM & listening to BP podcasts, I've kicked around the idea of conserving reserves and doing 3.5% FHA, since the second investment 1-2 yrs later will require more than 3.5%. 🤷🏻‍♂️



Originally posted by @Kirsten F. :

Hi Destry,

Going along with what everyone else has said, I think you can start looking any time. Getting set up on an MLS search would be nice for you to get an idea of what is out there and what types of properties you are liking. Also speaking with a lender is important to know your budget, which can sometimes be higher when looking at multifamily properties, but speak with a lender to know for sure! My husband and I house-hacked in NE Minneapolis from 2018-2020. If you want to chat we would love to meet up with you sometime.

What areas are you looking at? 

Love NE area and have friends there. I like seeing where the property is located and then filter for characteristics. I’m still working remote so we have flexibility. I’m thinking that will continue long-term. What advice would you give based on that experience from 2018-2020?

@Destry B. nice! We were in Waite Park and loved it. For advice, I would say pick tenants you would like to live next to. Make sure and ask questions not only about finances and logistical things, but ask them more about their lifestyle. That being said, it is important to find that balance between being friends and doing business. This was the hardest part for us!

There’s so much more I could say! What is your long term plan? Do you want to keep it as an investment property after you house hack?

Originally posted by @Kirsten F. :

@Destry Brink nice! We were in Waite Park and loved it. For advice, I would say pick tenants you would like to live next to. Make sure and ask questions not only about finances and logistical things, but ask them more about their lifestyle. That being said, it is important to find that balance between being friends and doing business. This was the hardest part for us!

There’s so much more I could say! What is your long term plan? Do you want to keep it as an investment property after you house hack?

Thank you, that helps. Was there any 1 or 2 two things you learned the hard way or wished you did differently? 

Yes, that is the plan at the moment; keep building the portfolio. What did you end up doing with that property?

@Destry B. If I were you I'd use the next 9 months to run my numbers and build my "buy box". Study what areas appeal to you, the type of properties you like It, and play with what tyoe of Financials it would take to reach your desired yield. I'd also take time to develop relationships with multiple lenders, realtors, and property managers in the area to not only make connections...but have them stress test your ideas a bit and guide you... Do that and you'll be ready to jump next summer because you will recognize a great deal when you see it and will have the knowledge and connections to execute.

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Honestly, right now. 

There is never a bad time to look at properties, drive by properties, or analyze properties. Especially when doing it for the first time. Start looking now, and once you and your wife actually buy one and begin house hacking it, still keep looking at and learning about the properties around you/in your area.

Best of luck!

@Destry B. There have been a lot of good answers so far, one thing I would suggest that I have not seen is to analyze sold properties in the area you are looking.  What this will do is allow you to analyze more properties without having to wait for them to come to market.  It will shorten you an educational curve.  I wouldn't go back further than a year but seeing how many properties have sold and how prices have changed.

I note you mentioned price reductions on Reatltor.com.  It think its important to note that a softening in a strong seller's market does not me a reduction in pricing it just means prices will not increase as quickly as before and overpriced homes will not sell.  You should still assume that prices next Summer will be higher than now.  Current projections are 6.7% annual so about 3% higher this next Summer.

For many reasons I recommend starting with an FHA 3.5% down even if you could do more you will serve your long-term future by starting with the lowest possible down payment and saving your cash for future investments when you do not have the luxury of low down payment.


I'd be happy to connect and talk more. PM me if interested.

@Kirsten F. I would second what Kirsten said! I am currently house hacking a duplex in NE. NE is a booming area. Rents and purchase price numbers work really well in the area.

Reach out if you have any questions. I’d be happy to chat more!

Don't underestimate how long the process can take. 98/100 properties either a. won't cashflow or b. you won't want to live in. We were lucky enough to find our last HH (3 unit Cathedral Hill) fairly quickly, but many new buyers can plan for a ~6 month journey. Best of luck! 

All good answers here.

I would start with the FHA 3.5% down and save the rest for future investments. You'll glean a lot of experience from this first purchase that you can deploy along with your capital into future purchases.

With that said, you'll be at a disadvantage compared to others that are paying cash or using financing with fewer hurdles, so give yourself a lot of time for your search. Also, be prepared to make a lot of offers before you land your first deal.

Start analyzing past transactions and on-market deals in your area now, with the goal of further understanding the norms of your market and how you'll need to prepare when ready to buy.

@Destry B.

I agree with what many others are saying about an FHA 3.5%. However, I would look into the Home Possible loan program which will get you an owner occupied loan for only 5% down. A little more money than the FHA, but you are able to get conventional financing rather than all of the strings that come with FHA! Additionally, if you want to build your portfolio, you can use this program for a year and then buy a second duplex, owner occupy it for only 3.5% down on an FHA! That's two properties in two years for very low money down :)

Hi @Destry B. ,

My wife and I closed on our first single-family home at the end of June of this year. We partnered with our realtor at the end of January, we saw about two dozen homes over 4 months (1-2 a week as our work schedules permitted), we put out two offers and had the last accepted by the end of May!

All in from zero to our first property, it took 5.5 months. As a newer investor to the Twin Cities, I'm happy to answer any questions you may have so that you may avoid the rookie mistakes that we made. Shoot me a DM, would love to connect!