Breaking an apartment lease to start real estate investing.
I currently live in Grand Haven Michigan. Me and my girlfriend have decided to stay for at least one more year before we move to Colorado. We are living in an apartment right now and thought since we are staying for another year that maybe it would be a good idea to try and find a duplex to house hack or to purchase a single family house. Would it be a good idea or even possible to try and find something like that get a loan and break our lease. Or wait to move to Colorado?
What happens after you move to Colorado with the property? Are you selling it or renting it? Who will be managing it? Being a long distance landlord is possible but you need to find the right manager.
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Real Estate Agent Florida (#SL3473500)
- Global Investors Podcast
- https://harborsidepartners.com/commercial-real-estate-podcast/
I was thinking about renting it out but of course the property management side of it would be difficult. I was also thinking maybe doing a little work to up the price of a house and selling before we left.
#2 Managing Your Property Contributor
- Property Manager
- Royal Oak, MI
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#2 Managing Your Property Contributor
- Property Manager
- Royal Oak, MI
@Paul Luna not sure of the karma in breaking your lease, then turning around and becoming a landlord - hoping a tenant doesn't do the same to you!
Why don't you discuss an early termination with your landlord?
#2 House Hacking Contributor
- Real Estate Agent
- Los Angeles, CA
A couple of things to note:
-You would have to live in the duplex for at least two years to benefit from the capital gains exclusion. So selling in one year doesn't really make sense because any profits would be taxed. Even a 10% appreciation, 6% or so would go towards agent fees and closing costs, and then a third of the costs would go towards taxes (consult a CPA). That leaves 3% profits but then factor in the cost of the initial acquisition. It might make more sense to throw your money in a high interest savings account at that point and strategize on buying the house hack in Colorado.
-Before deciding to break the lease, you need to see if the numbers even make sense. Can you live in a place for a year and make money/break even moving out so soon?
-It could take months before you find something and close, so your 12 month window to move shrinks unless the thought is whatever you buy, you stay for a year starting at that point. Maybe you ask the landlord what the policy is for early termination. For example you have to give 60 day notice. Keep in mind a smart landlord will let you break the lease with enough notice and depending on when you leave (seasonality will play a role) if it means getting market rents (assuming you are paying below).
#3 Managing Your Property Contributor
As others said, run the numbers to see if buying a place in Michigan makes sense and include the costs of a property manager when running the numbers.
When is your lease up for renewal?
Reading All these helpful comments, if I got this right, are letting me know I'm rushing into this faster then I should and lack the proper steps and knowledge that I would need to do what I am thinking and it would be better to save and learn more on how to start than to rush into. So maybe I should wait till colorado. What are some good processes to get started I listen to the podcast and watch some YouTube videos withBP but am having a hard time grasping this?