New to Real Estate · Boston, MA · Member since 2020 · 5 posts · 2 votes
The subject says it all. I am a brand new investor and am looking into getting real estate. As a student, I have time on my hands. Say I find a corner lot going for $150K, 2000 sq. Prices of homes in that area typically goes for $525K.
Would it be a good call to purchase the lot and develop your own rental property?
Would you recommend a duplex, triplex, fourplex? Or more?
I have $80K in the bank. What would the cost of building something like that be? And how would I finance it?
Banker · Nationwide · Member since 2020 · 2k+ posts · 1k+ votes
6y
Construction loan to build your primary residence DP can range from 0%-20% there are programs that can also include the land purchase as well. You can also buy the land and in 12 months use the value of the land to reduce the LTV. There are a lot of options you just need to pick what best suits your budget and overall goals. The long run would be to rent the home out or sell it once your ready. Since your in school maybe rent a few rooms to your schoolmates until you find a permanent renter or sell.
New to Real Estate · Boston, MA · Member since 2020 · 5 posts · 2 votes
6y
@Jason Wray thank you so much for that. So Im not completely in over my head then.
The lot is about a 30 minute drive away from me, and I live close to campus, but I am primarily looking to start a portfolio and build it up in the New England area. I have about $500K that will be available to me in 2-3 years time, and so I want to gain as much experience as possible using the $80K I have in cash so I can invest it as efficiently as possible when it does become available to me.
What do you think are some of the things I should keep in mind and look out for when pursuing something like this? Any deal breakers? Any cons or things that I may find out harms my cash flow after I’m in too deep?
Banker · Nationwide · Member since 2020 · 2k+ posts · 1k+ votes
6y
One thing I would say is don't use your cash! Use the banks cash to finance the property and take advantage of the lending options. If you do not own a home yet take advantage of the lower down payment options. build or buy your primary home and rent out some rooms until you decide to rent it out completely or sell when it's time. Do not get suckered into spending a ton of money on the "Bells & Whistles" because renters do not care if you built a home that has over priced marble counter tops, expensive tile, cabinets, appliances etc. Be frugal and make it look show room on a budget and do not go over for any reason. Save your cash as an asset so you have collateral to borrower against if needed. Rates are so low right now it makes sense to borrow. Talk with people on here before you jump to any one source for financing. :)