Working full-time but ready to invest in real estate
Nichole KinardPro Member
Member since 2024 · 13 posts · 9 votesWorking full-time but ready to invest in real estate
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Nicholas L.Pro Member
Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votescan you use a low down payment loan to house hack something? you mention you are overseas quite a bit, but maybe you could still have a primary residence with a primary residence loan. you might even be able to MTR some of it while you're not there since it would be furnished for you. maybe talk to some lenders and see what options you have.
unfortunately i think the active methods take a lot of time, and the passive methods take a lot of capital.
for example - on the active side - BRRRR is a really great but really difficult method. step 1 is buying a distressed property at a great price, which is really tough to do right now, and way harder than it was 5 or 10 years ago. just to be realistic i think it would be tough to just pick one up on a 'break.' that's not to say it can't be done, just that you'd really need to be getting things set up as you go.
and on the passive side - i really think the more passive options, like lending or syndications, are for experienced, well capitalized investors. others might disagree, but if you have 50K in savings, you don't have any business putting all of it in one basket, whether that's a BRRRR or a loan or a syndication. those can all go to zero.
happy to answer any questions you have - i've done a little bit of everything. not trying to be discouraging, just realistic. the market is unforgiving right now with rates high, prices high, limited inventory, and tremendous demand for both retail and distressed properties.
12 Replies
- 2yNicholas L.Pro MemberFlipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
can you use a low down payment loan to house hack something? you mention you are overseas quite a bit, but maybe you could still have a primary residence with a primary residence loan. you might even be able to MTR some of it while you're not there since it would be furnished for you. maybe talk to some lenders and see what options you have.
unfortunately i think the active methods take a lot of time, and the passive methods take a lot of capital.
for example - on the active side - BRRRR is a really great but really difficult method. step 1 is buying a distressed property at a great price, which is really tough to do right now, and way harder than it was 5 or 10 years ago. just to be realistic i think it would be tough to just pick one up on a 'break.' that's not to say it can't be done, just that you'd really need to be getting things set up as you go.
and on the passive side - i really think the more passive options, like lending or syndications, are for experienced, well capitalized investors. others might disagree, but if you have 50K in savings, you don't have any business putting all of it in one basket, whether that's a BRRRR or a loan or a syndication. those can all go to zero.
happy to answer any questions you have - i've done a little bit of everything. not trying to be discouraging, just realistic. the market is unforgiving right now with rates high, prices high, limited inventory, and tremendous demand for both retail and distressed properties.
- Real Estate Agent · Atlanta, GA · Member since 2020 · 1k+ posts · 1k+ votes2y
@Nichole Kinard, I 100% concur with what Nicholas noted above. Given your situation, you should consider and explore house hacking options heavily. Acquire a primary residence, and while out of town for work, rent the property as either an STR or MTR. House hacking will be a risk-averse investment strategy compared to implementing the BRRRR method. Moreover, you'll receive more favorable terms/rates utilizing a primarily home loan product than an investment loan.
I highly recommend the above strategy. Please let me know if you have any questions.
- Member since 2024 · 1k+ posts · 351 votes2y
@Nichole Kinard Best to keep the w2 and invest on the side until you feel you can walk away.
Easier to get financing when you have a solid W2 job
- Member since 2024 · 13 posts · 9 votes2y
@John Mason what do you mean by invest in the side?
- Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes2y
@Nichole Kinard
This is very common, and most likely what 90% of us do. The strategies I recommend would be those that are more on the passive side. For example, buying a rental property and getting a property manager.
You mentioned about the BRRR strategy, this is not as easy as it sounds. Trying to find quality subcontractors and writing proper contracts I would not recommend for somebody outside of the construction industry. There are many horror stories of people getting taken for tons of thousands of dollars because unfortunately, they did not have the experience on how to manage. Projects can also take a lot longer, and cost a lot more money, which can have a significant impact on your bottom line. For example, you mentioned you have times when you have availability, but what would happen if the practical was not completed during that time.
Before, jumping into some of the advanced strategies, I would recommend starting at level one which is own property with a tenant and a property manager .
7e investments53 Reviews - Member since 2024 · 1k+ posts · 351 votes2y
I meant work in the w2 job and build real estate on the side
- Member since 2024 · 13 posts · 9 votes2y
@Nicholas L. Thanks for responding. That is a little discouraging, but I do appreciate you being frank.
So if I do have a sum of money in savings to invest and don’t need a primary home, what could I do with it in real estate? Doing nothing with it even where the market is right now feels unacceptable, so I want to find a way to get into the game. Just gotta figure out where to start. What do you think would legitimize getting into buying LTRs despite the market? More time and attention to offer to it? Ways to finance it with lower interest rates? What if I can give several months to it? I want long-term investments not necessarily immediate cash flow and I want to start now.
We could consider a house hack but we have 4 kids in tow. I wouldn’t want to live in a house with 4 kids that weren’t mine! I wonder if anyone out there has successfully house-hacked with a family.
- Member since 2024 · 13 posts · 9 votes2y
@Chris Seveney Thanks, that’s helpful and helps me assess my situation a little better. My dad lives in the area where I want to buy and is a contractor, but maybe with the time my husband and I have personally, we would consider a smaller, more cosmetic repair on a house rather than jumping into our first big rehab.
- Specialist · NJ · Member since 2022 · 1k+ posts · 663 votes2y
I advise you to start small, start safe. Don't rush to hold just to hold, not everything has to be held, some sell off and make your 30k - 40k. I price DSCR loans all day, lots and I mean lots if times SFH do not qualify for max cash outs because they are DSCR constrained because of the rent. The 2- 4 unit builders are never, ever DSCR constrained, in fact I've seen some incredible DSCR numbers when pricing 2 - 4 unit refis. I just refinanced a triplex for a client and his loan payment is 2k and he collects 4200/month between all the units. Imagine acquiring 10 of those over 5 years.
Atlanta is a higher end market, so expect deals out there to require every bit of 60k - 80k in liquidity between downpayment, holding costs, and closing costs. I know it is a very competitive market as well, but if you want to build something sustainable you will need:
1) Sources to send you options. Agents, wholesalers, direct from seller, whatever. You need to start bringing in options
2) The assets you trapped in your net need to be analyzed now A - Z and pick out the best ones based on area, grade, project cost, ARV, etc. I like to have a contractor and an Agent both weigh in on the house. Get both POV.
3) Return to your lender with the addresses you are interested in and get some term sheets. Calculate the costs of the loan and the entire project and calculate your expected profit.
4) Make the offer on the one you feel best about and off you go!
- Real Estate Agent · Memphis, TN · Member since 2019 · 365 posts · 264 votes2y
@Nicole Arocha you've gotten same great advice on this thread. If you're wanting to do some of the work yourself I'd definitely recommend house hacking vs BRRRR. If you can get a multi unit to house hack you could potentially do a short term rental of your space while you're out of the countrry if you really wanted to get creative but either way house hacking gives you the experience of being a real estate investor while being hands on and managing a renovation if you chose to do one and being a property manager.
There are passive ways to own real estate as well, like Nicholas said syndication, lending or working with turnkey providers. There are companies that are vertically integrated specialized for helping investors who don't have the time nor the effort to spend sourcing deals, managing contractors, finding residents and managing. Working with a team that does all this in house is essential because there's a level of accountability that comes along with it. Some of these companies have gotten creative with lenders and can offer rates as low as 4.75% on a 30 year fixed loan. Feel free to reach out if I can be of any assistance
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