Hi BP friends!
I'm new to the community, but have been "stalking" it for some time through articles, YouTube, etc. A little about me; I live in the Salt Lake City, Utah area and I'm really excited about beginning my journey (thinking small multifamily) and would love to introduce myself and see if there are any suggestions for those of you in the area. The wife and I both work full-time and I'm convinced passive income from real estate is the only way I'll ever retire so I'm definitely "bought in" to the concept of buying and holding rentals. To that end, we decided to payoff our mortgage of our home last year (yahoo - mortgage free as of March!) simply because the wife didn't want two mortgages (happy wife = happy life) and to do it, we had to throw some of the cash we were saving for an investment property at the principal balance. Long story short, we're now mortgage free but a little short on cash, and I feel like the clock is ticking. The good news is that we have a bunch of equity in our home now (~$400k) which i'm debating pulling out to purchase a duplex/triplex with, but I'm struggling with how to do that (insert LLC questions, financing questions, rates, cashflow, etc). So, at the end of the day, I'm super overwhelmed with what next steps to take. I know I need to get an agent to find a place, talk to a bank/banks on financing options, decide if I'll get a property management company (then vet them), and so on, but struggling with the best way to do it all. I'm thinking renting my house for the cashflow and using that to grow it all faster, but struggling on if that even makes sense. Anyway, a bit of a ramble, if nothing else I just wanted to see if I was alone in my struggles, say hi to the group and see if there are any tips for a newbie struggling with analysis paralysis. :)
@Mike Zoellner you’re certainly not alone in your struggles! It took me a while to get my first duplex in Ogden under contract (closes this month can I get a yahoo?). If you have any interest in being added to my multi family hot sheet I have set up in salt lake county I’d be happy to add you! It helps you get an idea of what properties are out there right now and what new ones are hitting the market! Best of luck!
Welcome, Mike! Congratulations on your first steps on your path to freedom. Everything you said was right on point. Find a good team to help you build your REI empire. Study all you can here, read the forums, listen to the podcasts, and read the books.
The equity in your home will be a great tool to get you started with your first investment purchase, if you choose to tap into it. First, start narrowing down how you want to invest your way to wealth... fix n' flip,buy and hold, BRRRR, etc.
Best of luck!
@Mike Zoellner Hi Mike. I am happy to help you with the LLC questions, financing, rates, etc. There's also a whole lot to know about advanced tax strategies, cost segregation and accelerated depreciation which many investors completely overlook. It's way too long and complex of a conversation for me to do it in written form. If you would like to schedule a half hour to talk it through on the phone I'd be happy to do so.
Multi family are a bit tough in Salt Lake right now. However they still pop up every once in a while. There are lots of opportunities in the valley. I have lots of people coming from out of state to invest here. You really can’t go wrong if you are looking for long term in this area
Your story sound similar to mine. I was an engineer with 3 kids and I used a HELOC from my home as a down payment for a rental, fixed it, learned how to landlord, rinsed repeated. I worked on my rentals after work and on weekends then just waited for the process to evolve over 20 years. This allowed me to quit my job at 45 and have 13 paid off homes in the Salt Lake Valley and now I just kindof goof off :-), I'm 54 now. You are on the right track by being wary of debt and being conservative. If you want to meet I can give you some of my tricks and tips. The big thing for you is to start right and then hang in there when the going gets rough (which it will!).
Real estate investment is stinky, dangerous, frustrating and a scary thing to do. Its not glamorous, you are going to have to learn to talk to renters and understand a different socio-economic world than your own. And guess what, contrary to popular belief there is not a "team" that is going to do this for you. That BS. You are alone dude! You have to learn to do math correctly, read people correctly and fix your homes on your own most of the time.
Also, (even though I'm a realtor, I got my license just for kicks an giggles), and with apologies to my realtors friends, realtors are almost 100% useless in helping you be a real estate investor. In fact, most of them will guide you to ruin with their ignorance to purchase a home that is wrong for you. They don't understand what you are doing and don't know how to help you. They don't think well financially and 80% of them are broke and the good ones are completely engrossed in customer relationships and networking most of which is not that useful to you as an owner of rental homes. In 20 years as an investor in Utah I have only found one realtor that even understood what owning rental property is all about. No realtor has ever found me a home that was right for a buy and hold property. I found them all myself on the MLS, HUD repossession, through wholesalers etc.
To find a cash flow home you are going to have to invest in the bad part of town and landlord some pretty rough people for some years until you figure it out. I would be happy to sit down and give my tricks and tips and even evaluate a deal (I help people all the time, for FREE, just because its fun for me to talk about real estate and I always learns something). I'm located in Sandy.
And be careful of multifamily 4 plexes. The renters move out more frequently, you are going to have more tenant conflict as well as tenants that are poorer and less able to pay rent on time and the 4 plexes don't appreciate as well as single family homes. Save multifamily until you get some practice. Its probably best for you to get a single family home close to you in your county that cash flows.
@Darren Larsen You paint a pretty bleak picture. But I would agree it is not passive per se even with property management, which I would agree is an expense starting out most people cant/shouldn't pay for.
@Scott Bowles , leveraging your primary residence equity is a great way to go. It's one of the cheaper ways to fund real estate investments. Your next step is to get the HELOC in place. It generally costs nothing, and you can use it for all sorts of reasons.
In parallel, you just need to decide what direction to go, based on your personal preference. If you want a strictly passive experience, you might want to invest in debt rather than buying property directly (then paying others to fix and operate it). On the other hand, if the thought of being a landlord/owner excites you, then go for it. Since it seems you're overwhelmed right now, I suspect you might be happier focusing on debt investments.
For example, you can use HELOC money to do some crowdfunding and/or private lending. You might be able to find a friendly HELOC lender doing rates near prime, then explore various short-term debt investments out there, both online and local. You'll make money on the interest rate spread - all using the bank's money.
I caution against using HELOC for buy & hold or equity investments because the interest rate is too variable.
My homes cash flow $18,000/month. That income can last until I die. Bleak? Not so much..... :-) Easy? No. Doable? YES! I think if you go into something with a strong mind set and know what the problems are you can figure out how to manage those problems. Tenants are hard but on the other hand being able to retire early and sculpt your own schedule is nice. A lot of people use words that are a lie when describing real estate they say words like fun, passion. Those are very dishonest ways to describe this industry. Fun is when you go to the beach and play in the water, Passion is what you should have for your spouse or protecting your children or your religion or your hobbies. Having to evict a single mother is not fun and guess what I'm not passionate about scooping up a 5 gallon bucket of dog poop when a bad renter moves out. I am proud of the work I do and I am satisfied that I am a fair landlord and people respect me.
@Darren Larsen That is awesome! That is great monthly income! We are definitely not there yet but would like to be. I do hear you about the troubles we have maybe 4 section 8 tenants and generally own property in mediocre areas so I do end up dealing with some issues. I guess my personality is such that I just dont get that worked up about minor drama and honestly I have not had to do an eviction yet...
I just wanted to jump in here because I'm a brand new investor in the Southern Utah area.
Just count me as a fly on the wall as I read your conversations.
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