Hello Bigger Pockets Community!!!

Lender · Mesa, AZ · Member since 2018 · 69 posts · 24 votes

4y

Welcome to BP Noah! I purchased my first home about 18 months ago and I know how you feel. I think the best thing you can do is pick an area that you love to live in. Try to find the a great neighborhood and get one of the cheaper/smaller homes. Find something that is in your budget that you can afford on a monthly basis. Also make sure to find a great realtor that is experienced and understands your goals! There are down payment assistance programs out there if you are short on funds for buying a house. You can also put as little as 3% as a down payment.

I also think that its important to remember that this home can be your first home and doesn't have to be your forever home. Use this home to your advantage. When I bought my home I did the minimum 3% down payment. We installed new flooring, countertops, carpet, painted, new baseboards and bathroom tile. (We actually mostly hired out people to do so) About 6 months ago I put about 5k into redoing our front yard.

Every dollar that you put into your home can increase the value and help you later. We ended up doing a cash out refinance and our home grew about 194k in equity in about 18 months, after probably paying about 40k total for all the improvements. I live in Arizona and it is a crazy market out here, but now we have over 100k from our refinance to put into an investment property.

Message me if there is anything I can help you with, good luck!

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Tim SwierczekPro Member

Lender · White Bear Township, MN · Member since 2016 · 1k+ posts · 1k+ votes

4y

@Noah Jacobson I work with between 10-15 buyers per month and most of them are first-time buyers so I hear this a lot and your concerns are both common and have some small roots in reality. I'm here to offer you a counterpoint, and a couple of solutions.

First, yes buying a house is a big purchase, and most industry professionals will remind you of this but mostly their reminders are self-serving. They generally will tell you how big of a deal buying a house is, how much you can lose, and they are the solution, so with them, you are safe. It's a formula to gain a client. Present a problem, build the problem up to a pain point, and then offer the solution that solves the client's pain. Obviously, that is mostly overhyped garbage. The fact is the overwhelming majority of the people over the age of 33 are either homeowners or were for the majority of their life. Many of these people are less intelligent than you are, many made bad decisions in life, and most of them made the overwhelming majority of their wealth in their primary residence. Yes, I'm including the mortgage crash in these statements.

The fact is you are very likely paying more in rent than you would if you house hack. And, even if that statement is not true in your case, and you purchase a new single-family home with a price of $300,000 and the minimum down payment of 3.5% with no rent received (not a house hack), but you adjusted your payment for the tax deduction, and then you calculate your loan paydown ($5897.58 in year one, and $45,600.81 cumulative in the first 7 years) you will be $55-60K wealthier if you buy vs rent.

What does it take to not lose? The simplified answer is stable income, and the ability to afford the payment and the cash needed to close. If you check those 3 boxes you need to get over your fears and see yourself as a homeowner.

My recommended solutions

1. Listen to the Gary Vee podcast until you see that you are making too much out of this. This is not a life or death decision, any reasonable decision will lead to success

2. Meet with a loan officer and get pre-approved to see what you qualify for and what you can afford.

3. Take a deep breath and realize you are ready, and if you can afford it monthly you will someday be a millionaire.

4. Realize that being a millionaire 30 years from now is not the end goal but it's only property number 1.

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Julio GonzalezPro Member

Specialist · West Palm Beach, FL · Member since 2008 · 4k+ posts · 1k+ votes

4y

Welcome to BiggerPockets, Noah! You came to the right place to learn all about real estate investing!

I want to wish you the best of luck on your journey!

561-253-6640

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Jeff SchemmelBusiness Member

Real Estate Agent · Saint Paul, MN · Member since 2014 · 384 posts · 401 votes

4y

@Noah Jacobson house hacking is a great way to start. Get to know homeownership, landlording, and learn how to manage your home while living in it - you get a bit more flexibility here and it's a little easier for most to swallow the risk if you're feeling like it's a big leap. Also, you seem like the type to trust the numbers. I recommend setting up your own rental analysis calculator so the numbers are YOUR numbers, and you're intimately familiar with them. I invest and house hack in STP, and there are many of us here happy to share our deal analysis techniques, what we've learned, tips and recommendations. @Tim Swierczek is a phenomenal lender and can give you a solid strategic perspective on what options you may have as a buyer. Forming relationships with good lenders is something I always recommend to a buyer before they start looking. A great lender will set you up long-term and look strategically at your first purchases and your financial situation and make recommendations to set you up long-term, not just the first transaction. I highly recommend partnering with lenders, agents, CPAs, Attorney's who are investors or have a long track record investing so they can give you the perspective you need. Lastly, regarding feeling like you need a perfect deal, I don't think you do. The most important thing is to get in and start learning. Trust your numbers, but perfection isn't required - and the best thing I could say here is "every day you're not investing, is a day you're not gaining appreciation, cost of living reduction, and experience in the business." - good luck, reach out anytime!

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Chad McMahan

Residential Real Estate Broker · Sedona, AZ · Member since 2017 · 751 posts · 504 votes

4y

Originally posted by @Noah Jacobson:

Hello Bigger Pockets Groupies!

My name is Noah Jacobson, and I am BRAND NEW to the Bigger Pockets community and the world of real estate investing. A bit of background about myself: I just turned 25 years old, graduated from Hamline University (in Saint Paul Minnesota) in 2019 with a degree in Economics. I started my job in public accounting as an auditor, and recently took a new job a couple months ago in industry doing accounting for private equity funds. I currently hold an active CPA license in the state of MN.

A friend turned me on to Bigger Pockets and over the weekend, I finished 'How to Invest in Real Estate', and found it absolutely fascinating. I have recently gotten very interested in house-hacking, and this is the first step I would like to take in my real estate investing journey. I have a couple of friends that do it, and after seeing how they are able to manage, and reading the book, it seems like a no-brainer. My girlfriend and I currently rent a one bedroom apartment, and it seems such a waste to be throwing money away on rent each month (and year) when that money could be going towards equity in a property, with someone else assisting in paying the mortgage with house-hacking!

However, even after reading the book and seeing my friends start, I will confess something - I am VERY scared about purchasing a home. To me it seems like such a large purchase, something so permanent, that I feel I need to make the perfect decision, or I won't make one at all. I'm not sure if anyone can relate to this, but this is how I'm feeling currently. So doing my best to try and put those thoughts behind me and being analyzing deals. I would appreciate any advice, tips, tricks, or anything anyone has to offer about the world of house-hacking and getting started on your real estate journey. Thank you all so much in advance, and I am so excited to be a part of this community!!

Noah

Welcome, Noah!

Most people (myself included) feel truly ready once they know more and feel comfortable with investing. First thing to know, is you cannot build wealth (and keep it) without investing. So know that no matter what, you need to do it.

Read a few more top real estate books and maybe attend a real estate investing seminar or 2, as surrounding yourself with active investors is highly inspiring and educational.

Connect with a really good realtor in the local market you want to start with and talk about investing and how to get started. Be very honest about your fear and your inexperience. A great realtor will have many years of experience and a strong network, including a dynamite local lender for you to benefit from. You can talk about local expected STR returns and what the process will be like, so that you have less surprises.

Then- just begin. Make some offers with your realtor and talk about each property. You will become more and more comfortable. It's exciting; It's fun. As long as you take action. all of a sudden you will realize you are obsessed and you a portfolio of 10+ homes and it's beautiful!

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Justin WindhamPro Member

Banker · Nationwide · Member since 2015 · 4k+ posts · 1k+ votes

4y

@Noah Jacobson

Welcome to Bigger Pockets!

If you are looking to invest into real estate, I have found this site to be incredibly helpful.

The site has quite a few tools that can be helpful for new members. For example, if you are looking to connect with other members near you, want to learn from people in a specific area you’d like to invest in, or have a desire to find people interested in certain topics, you could use the search feature here: https://www.biggerpockets.com/search/users

I really like the alerts feature that can quickly guide you to current topics that may be of interest: http://www.biggerpockets.com/alerts

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Erik M Lara

Member since 2021 · 1 post · 1 vote

4y

Hay Noah, welcome. My names Erik and I’m a fellow investor. Not a realtor or lender or contractor. I’ve been investing for a while, but not an expert by far. I just closed on a house here in the twin city area and am going through the learning pains of beginning a rehab at the start of the Holidays. If you want we could talk and perhaps I can help encourage you.

Merry Christmas

Erik

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Hello Bigger Pockets Community!!!

Hello Bigger Pockets Community!!!

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