Hey everyone I’m a rookie investor and new to BP forums, been listening to their podcast a little over two months now and reading everything I can just to expand my knowledge on investing. I’ve recently bought a duplex (1year ago) and it’s been going great. My first investment property in the books! My questions are; 1.) how soon can I start looking into the next investment (do I have to wait a year or two)? 2.) how do I save up money/or come up with funds for the down payment for the second and third property?
Any advice/guidance would greatly be appreciated!
Thank you in advance!
To answer your first question, as soon as you find a deal and are able to get financing you can get a second property! If you want a lower down payment, then you'll need to live in the property for 1 year, so you could get a low down payment conventional or FHA loan on an owner occupied multifamily property. You'll have to wait a year before you can buy another owner occupied property, however, if you're able to save up 20-25% and get a investment loan, you can buy another property whenever!
One of the best ways to save up funds is by eliminating expenses, and usually people's biggest expense is their house. If you house hack a multifamily and rent the other rooms in your unit, that would most likely be the easiest way to save up money, other than getting a second job.
Don't hold yourself back, man. You can get the next one as fast as you want. The deals and the money are out there, but the deals need to be made and the money needs to be found. Saving the money is one way to get it, but it's slow going and there are other ways to bring it in. Go make it happen!
Taylor is right...look for a equity partner. Start going to meetups and networking. You will find people who have the money to invest but not always the time and experience. If you bring what they lack, there’s potential for a great partnership. It is hard to scale alone, there is power in building a strong team and partnerships.
House hack, house hack, and house hack.
MF investing has a pretty high constraint with cash. You'd have to put 25% down on an investment loan and this can quickly become a lot of money.
I'm on my 3rd house hack and plan to do my 4th this year in Columbus Oh.
Equity partners is a good idea. However, I don't love them for long terms buy and holds. I'll do them for flips though.
Hey @Edwin Hidalgo congrats on getting into the game! I'm not a lender, and if you're looking to house hack again, my understanding you only need to live in the property for one year and then you can start looking for another. If you live in it 2 years there are major tax benefits if you're going to sell it in the next 5 years. However, if you've only lived in it a year or two qualifying for your next house hack could be tricky because your DTI ratio might be a little off. You need to speak with your lender about this to find out the real answers. Send them an email now and set up an appointment. This is your real first step. If your lender sucked contact another one.
I agree with @Landon Bleau on how to save money: cut expenses, rent out a room, find a side hustle. I drove Uber and Lyft for a couple years and it really helped me make a little extra cash AND learn the market.
Hey Edwin! Welcome to BP. As @Landon Bleau mentioned, you can buy a property as soon as you can find the deal and get the financing for it!
As for your second question, you can either raise the capital from a pool of investors. You can reach out to your personal connections, or try to attract investors by creating a thought leadership platform. This can be in the form of a podcast, a blog, Youtube channel, etc. The point is to lead with value with content, then drive traffic to a website. Once you get someone on your website, you can have them provide their email in exchange for a Call to Action (like a "Top 10 Reasons Why Real Estate is Better than the Stock Market" Pamphlet). Then, you reach out to them, build the relationship (making sure to follow within the SEC guidelines), and once you find a deal, you can present it to them.
Or you could find someone who has the capital and bring them value by finding the deal. Then, you could JV with them on the deal. However, you might not get as much equity in the deal if you only brought the deal to the table. If you managed to raise a portion of the equity, you would likely get a larger piece of the pie.
It all comes down to how you finance it. You can buy cash whenever but using a lender usually takes a bit of planning. If it’s a great deal, hard money lenders work great to fund rehab cost and close quickly. If you go the Fannie Mae conventional route you’ll have to wait a year for an owner occupied or do 20-25% as an investment property.
Congrats on getting started! The more creative you get with financing ex) seller financing, partnerships... the faster you can start to scale. I agree though that try and keep house hacking as much as possible. @Edwin Hidalgo