What is the best course of action?

Question

What's up BP! I am sort of at a crossroads when it comes to deciding where to start when making my first buy. So many options appeal to me such as Multi-Family rentals, Flips, and also going in with a partner on large 10+ unit apartment buildings. I will be getting out of the Marines in about 9 months and will have around 50k liquid to begin investing with. I am just curious with everyones past successors when they first got started, along with their opinions on the pros and cons of each option for your first buy. Thanks for the help! Also i plan to make this my full time job and do not plan on getting a 9-5 when i get out.

Jesse Doyle · Answer

@Elizabeth  Colegrove Thank you! Account Closed see above.

Tyler Flagg · Answer

@Jesse Doyle congrats on your impending retirement! I'm an Air Force guy myself with about 6 years left. Although I'm not too familiar with the Rochester, NY area, I might be able to help when it comes to the VA loan.

Much like a lot of the people above have been saying, you could use the VA loan to purchase a multi-family property with little or no money down. Your tenants would pay down your mortgage and you could potentially bring in cash flow too. This would really help to keep your expenses low so that you could concentrate on real estate investing instead of having to take a part-time job.

So far I've written two blog's about the VA loan and how it can benefit military investors. Feel free to check them out here Tyler's Blog and let me know what you think. Hopefully this helps in a small way.

Best of luck to you!

Tyler

Guy M. · Answer

Like @Joe Cayse said, let other people's money work for you. If you can avoid making a down-payment, you're golden. As mentioned by others, VA should be able to help you purchase a multi-family home without the need for a down-payment.

With 50k liquid, you are in a very good position starting out. What I would do is use that capital for negotiating power. For example, look for homes $30k and below and negotiate the price to rock bottom promising that you can close within a week or less, which you actually can with that type of cash. Cash and speed are powerful tools for getting what you want.

Once your properties are rented, open lines of credit against some of them and accumulate more great buys... maybe move up to the 10 unit investments.

Guy M. · Answer

Congrats, Marine!

I am in the Army... I've got about 2 years left and then retirement.

I did not start out this way but...

Many investors in my niche of buy and hold suggest starting with multi-family rentals. You live in one of the units and rent the remaining units out. I agree with this strategy because:

- You could potentially live in a unit for free as your other tenants will pay your mortgage

- You are right there to eyeball everything that goes on with the property

- Rents are more than enough to pay your mortgage monthly

- Take your profits and roll them into another rental property

Try that baby step. It makes complete sense for a guy transitioning into this business.

Jesse Doyle · Answer

Thanks for the insight Account Closed VA loans can be used on live-in Multi-family properties right?

Joe Cayse · Answer

IMO Jesse I'd go with the lowest amount down possible so you can essentially let your tenants put equity into your house for you. Then you have more capital freed up for other investment properties. I'm not sure what VA loans are like on multi-family properties. Maybe some folks can share some experience with that process.

Jesse Doyle · Answer

@Dave Savage thank you very much this is some great info and I am currently re analyzing my specific goals at the moment to try and find the best route. I am motivated to learn,buy,sell,rent,fix whatever it takes to become a successful real estate investor and financially free.

Dave Savage · Answer

@Jesse Doyle a few words to consider.

Definitely look to use a VA or FHA loan to buy a multi and live in it...definitely a first place to start.

I would be cautious on going full time when first getting out without any experience.  You need to have a definite plan of action to accomplish this to generate true cash flow.   I would look for a job with a Property Management company, or Development company to get some income and relevant experience, and learn at night and on the weekends before going full time.   You can burn through your money pretty quickly and finding HMLs and Bank Loans with no income or experience will be difficult.

It takes real "seat" time to come up to speed and build a network and experience before you can start doing multiple deals and making real money.  It isn't easy but it can be done.  Many investors have gone full time in the Rochester, NY market, but they all did it after a year or two of grinding it out at night and on weekends to learn the hard lessons.

If you are focused on going full time, rentals shouldn't be an area of focus as it is too hard to build consistent cash flow with a small number, and unexpected repairs could eat into your assets.   Think about partnering on flips where you do a lot of labor, etc to save your capital and gain experience; or wholesaling which in and of itself is much harder than it sounds to make consistent income but won't require you to dip into your assets.

Keep asking questions and tagging Rochester, NY in your posts and we will be glad to help you start out.

Jesse Doyle · Answer

@Joseph Ball Thanks for the incouragement! I appreciate the wisdom.

Joseph Ball · Answer

Start small. Do little deals. I always recommend 3/2, because everyone wants to live in a 3/2. When it is time to sell, you can sell to an end-user or an investor. If you buy a 2/1 or a duplex, you will most likely be selling later to a bad old investor. LOL

Be reading (Used) real estate books now. I recommend Jack Miller, Jimmy Napier. James Misko wrote a good one. I do not recommend Rich Dad (The State of Ohio agrees with me). Don't let anyone pressure you into spending big money on a seminar or other. You can do it!

What is the best course of action?

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