Hello from Little Rock, Arkansas

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Hello from Little Rock, Arkansas

Nathan Scarborough
Little Rock, AR · Member since 2016 · 2 posts · 4 votes

Hey there everyone, I'm 28 and getting tired of paying other people's mortgages for them! I'm seriously considering buying my first home when my current lease is up this fall, and from what various calculators are telling me I can afford about $100k worth of house. 

That said, duplexes seem to make a heck of a lot more sense than single family homes, and I'd like to leverage first time home buying and owner/occupancy into something I can pay off relatively quickly and turn into income before moving on.

Is it reasonable to think paying off my mortgage is possible in multi-family housing in 10-15 years?  I've been browsing zillow at work tonight and saw a triplex at $85k with two units rented out for $840 a month in gross income...if I put the $500/month I'm currently paying in rent on top of that, it looks too good to be true.  I'm skeptical as hell of most investment literature, but on paper this looks like it would be difficult not to at very least break even while building equity, and possibly a way to break into serious investing. I've never fantasized about being a landlord or anything, but at the risk of sounding ignorant, why isn't this absurdly popular? 

Is this a good idea? Have you done it yourself? What should I be thinking about as I move forward? 

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Stanley E.
Rental Property Investor · North Little Rock, AR · Member since 2014 · 148 posts · 43 votes
10y
Hi Nathan Scarborough . I agree with Douglas Skipworth . Listen to the podcast and read all you can on bigger pockets. I wish I had been introduced to REI at 28. It seems you have an advantage that you don't have a wife and kids. So the skies the limit and you have more time. Just do your due diligence, but based on the info you provided, this souds like an awesome first deal. If you don't want to be a landlord, maybe you should consider getting a property manager and truly let your passive income be passive.
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  • Douglas SkipworthBusiness Member
    Rental Property Investor · Memphis, TN · Member since 2014 · 1k+ posts · 1k+ votes
    10y

    Hi, @Nathan Scarborough.

    Welcome to BiggerPockets.

    Your plan sounds great to me!  

    Be sure to check out the podcasts and blogs as well as the forums. You can learn a ton from the real estate experts on the site. 

    There is a lot of talk on BP about "House Hacking," which is exactly what you're thinking about doing by investing and living in a multiunit home.  Personally, I think it's an awesome idea.  By the time I wised up to the benefits of real estate investing I already had a pregnant wife and two children so I was more limited on the house hacking option than you are.

    Best of luck to you!

    Investor's Guide to Memphis Real Estate
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  • Stanley E.
    Rental Property Investor · North Little Rock, AR · Member since 2014 · 148 posts · 43 votes
    10y
    Hi Nathan Scarborough . I agree with Douglas Skipworth . Listen to the podcast and read all you can on bigger pockets. I wish I had been introduced to REI at 28. It seems you have an advantage that you don't have a wife and kids. So the skies the limit and you have more time. Just do your due diligence, but based on the info you provided, this souds like an awesome first deal. If you don't want to be a landlord, maybe you should consider getting a property manager and truly let your passive income be passive.
    2Reply
  • Robert A Lawson
    Real Estate Agent · Noblesville, IN · Member since 2015 · 7 posts · 1 vote
    10y

    All owners need to think like this!!! If people want to check in with a property manager every day, then they're better off being their own property manager. The purpose of a manager is to handle everything a homeowner doesn't want to worry about and just send them their passive income. 

    0Reply
  • Account Closed
    Lender · Hot Springs Village, AR · Member since 2014 · 274 posts · 92 votes
    10y

    Get into the Little Rock Real Estate scene. Join the the REIA and start talking to people and listening to current RE investors. Your plan can be discussed with others who have experience and knowledge of similar situations. If you get in the Hot Springs area consider joining us in our MeetUp on the 3 Sat. of the month.

    2Reply
  • Nicole Almond
    Investor · Maumelle, AR · Member since 2015 · 25 posts · 9 votes
    10y
    I think it sounds great! My fiancée and I are new to this as well, also residing in Little Rock! This is our plan exactly. If you ever want to meet up to brainstorm ( newbie power session) let us know! We are always looking to connect with people traveling the same path as us. Good luck to you!
    0Reply
  • Account Closed
    New to Real Estate · Charlotte, NC · Member since 2015 · 177 posts · 69 votes
    10y

    @Nathan Scarborough 

    Welcome to BiggerPockets! You have come to the right place for RE investing lot’s of great info and advice from the BP community.

    Here are some links that I have put together for you, hope it will help you on your path to REI. I hope this will answer some of your questions.

    https://www.biggerpockets.com/renewsblog/2013/11/0... (Get Paid House hacking)

    https://www.biggerpockets.com/renewsblog/2014/03/13/investing-multifamily-ben-leybovich/ (Podcast 061 - How to succeed in multifamily investing-Ben Leybovich)

    https://www.biggerpockets.com/renewsblog/2013/04/09/how-to-buy-a-small-multifamily-property/ (How to buy a small multifamily property)

    https://www.biggerpockets.com/renewsblog/2015/11/16/how-to-choose-areas-multifamily-deals/ (How to choose multi-family deals)

    http://www.biggerpockets.com/renewsblog/2014/07/19/how-to-buy-a-duplex/(How to buy a duplex)

    https://www.biggerpockets.com/renewsblog/2013/12/12/bp-podcast-048-duplex-managing-tenants-darren-sager/ (Podcast 048 Duplex investing and managing tenants-Darren Sager)

    Much success to you!

    1Reply
  • Mark Nolan
    Professional · Carlsbad, CA · Member since 2012 · 12k+ posts · 1k+ votes
    10y

    @Nathan Scarborough

    Welcome to Bigger Pockets.

    0Reply
  • Nathan Scarborough
    OP
    Little Rock, AR · Member since 2016 · 2 posts · 4 votes
    10y

    Thanks everybody! 

    @Douglas Skipworth that's good to hear =)  I'm assuming all the properties worth investing in that I see now are going to be gone by the time I've talked to lenders, realtors, and am ready to move, but I like running through examples to get a sense of what's reasonable

    @Stanley E.- I'm tempted to ask the folks I'm currently a tenant with if they'd manage any property I get.  I live in an owner-occupied duplex now as a tenant, and the owner uses a management company for tenant screening and rent payments, as well as contractors for maintenance. I'm sure it's more complicated than it looks, but as far as I can tell she mostly makes decisions and just drops by every now and then to let us know when she's out of pocket on exotic vacations, haha. 

    @Account Closed thanks =) 

    0Reply
  • Stanley E.
    Rental Property Investor · North Little Rock, AR · Member since 2014 · 148 posts · 43 votes
    10y
    Nathan Scarborough My tenants don't even know who I am or that I exist. I think it is better that way. I do however discuss with my management company whether the tenant is happy and if they need anything extra. For example, I drive by my investment often, althought the PM does qtrly inspections. Paint was peeling so I asked PM if it needed to be repainted because I wanted the tenant to be happy with their residence. I like being an anonymous owner.
    0Reply
  • Paul Thompson
    Investor · Little Rock, AR · Member since 2015 · 130 posts · 119 votes
    10y

    @Nathan Scarborough

    Welcome to the community. You are thinking differently than most people and certainly thinking differently that most people your age. Any good real estate investor (especially when they're younger) should be able to manufacture a clever financial solution to their primary residence by using their real estate wiles and keep from paying retail, live mortgage free (or near to it), or buy property well above their income level. Conventional wisdom tells people the American Dream is home ownership  and that their house is their best investment. I suspect most people on BP know better. Yes there are financial advantages  to owning your primary residence (interest deduction, amortization, etc) but it's not an investment. 

    I encourage you to visit the local REIA: www.carreia.com. If you are a member we also have subgroups discussions. I host one called "Deal or NO Deal" that analyzes scenarios just like this. I happen to be familiar with this very triplex you are talking about. I even considered using it as a case study in our subgroup meeting. Since it's still on the market and you're still considering it I won't go into any further details. But feel free to contact me directly and we can chat about it. 

    To use property management or not?? That's a sorted question that a lot of people fall on different sides on for good reasons. It often boils down to your personal situation and goals. My only suggestion to you is to budget for it when doing your analysis no matter what. Then you bought it such that you can afford to use property management if you choose to.

    Since you're new to this read the links @Account Closed provided and then go look at a bunch of properties (if you haven't already). You need to start getting a feel for property condition you are comfortable with, surrounding neighborhoods, what is the market doing in your micro area (i.e. near your school), what are small multifamilies renting for, how fast do they rent, etc. Drive your area and call every for rent sign you find and ask questions and listen.... In just a weekend you'll get a really good idea what the rental market is like.

    Wish all the best and hope to see you at the next REIA meeting. It's on estimating repairs which is a great topic for someone getting started.

    Cheers!

    0Reply
  • Robert Norvell
    Investor · Fort Smith, AR · Member since 2013 · 150 posts · 32 votes
    10y

    Welcome to BP from a Fort Smith neighbor!

    0Reply
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