New Member Making an offer in St. Pete Area - Any Advice

[Lizette Rivera]

Hey investors, 

At 43 years old, I have finally decided to stop renting and start investing in real estate. I will be moving from Manhattan, NYC to St. Pete, FL and made an offer today on a single-family home 3/1. The house is selling at $377k but needs some cosmetic upgrades. Property Taxes: $6,373/year – Actual. Insurance: $3,600/year – Estimated.

Based on my agent's recommendation, I made an offer for $340k and am waiting to hear back from the seller's agent. The seller paid $353k in 2023 and has been posting the property on Airbnb for the past 6 months. I would like to live in the house the first year then buy my second property and rent out the first house. I have $120k saved. 

1. Should I put 10% or 20% down at 5.99% interest? I'm thinking it would be best for me to keep more cash in my savings for the upgrades that are needed. I've also heard that it is best to make 2 payments per month toward the principle. 

2. Any advice on becoming a first time home owner/investor? 

3. Is it reasonable to think that I can purchase my second property next year? 

[Drew Sygit]

Quote from @Lizette Rivera:

Hey investors, 

At 43 years old, I have finally decided to stop renting and start investing in real estate. I will be moving from Manhattan, NYC to St. Pete, FL and made an offer today on a single-family home 3/1. The house is selling at $377k but needs some cosmetic upgrades. Property Taxes: $6,373/year – Actual. Insurance: $3,600/year – Estimated.

Based on my agent's recommendation, I made an offer for $340k and am waiting to hear back from the seller's agent. The seller paid $353k in 2023 and has been posting the property on Airbnb for the past 6 months. I would like to live in the house the first year then buy my second property and rent out the first house. I have $120k saved. 

1. Should I put 10% or 20% down at 5.99% interest? I'm thinking it would be best for me to keep more cash in my savings for the upgrades that are needed. I've also heard that it is best to make 2 payments per month toward the principle. 

2. Any advice on becoming a first time home owner/investor? 

3. Is it reasonable to think that I can purchase my second property next year? 

@Bill B. is pretty much correct on analyzing the 10% and 20% down options.

One other comment though - research what your HELOC options are. You may be able to put 20% down to avoid the PMI and then secure a HELOC for 10% of the equity, effectively matching the 10% down option. Then it is up to you whether or not to tap the HELOC in the future.
NOTE: you would want to secure the HELOC while you are owner-occupying the property.

@Masoud Arouni covered the property tax issues you should be aware of.

Home insurance is another major expense in Florida. Due to all the hurricanes, Florida has some of the highest insurance premiums in the country.

INVESTMENT ADVICE: be careful of buying and making improvements YOU want instead of researching what the market wants!

Too many investors overspend on improvements that either:
- Tenants don't care about
- Tenants won't pay extra rent for, to cover the improvement expenses

HOW DO YOU KNOW YOU'RE CUT OUT TO BE A LANDLORD?

You're buying your first property EVER.

Learning to be an owner-occupant homeowner is your first challenge.
- Maintaining the yard, doing small repairs, etc. will all take time.

If you buy another primary and rent this one out (called stacking), are you planning to DIY manage the rental or hire a PMC?
- DIY: start ASAP about learning what you have to do.
- PMC: start interviews 3+ months before you plan on wanting a tenant. There's a blog series here on BP, "How to Screen a PMC Better than a Tenant" that may help you.

CRAZY IDEA:
You state seller has had property on Airbnb.
Why not give something similar a try via STR or MTR the other bedrooms?

This would not only give you extra funds for the next purchase, but you'd learn a few things about being a landlord.