Hello all! I'm Paul from Colorado Springs, CO and I'm convinced that real estate investing is the best long term wealth building strategy. I'm at the nervous and cautious stage, but am trying to educate myself as much as I can before diving in. We have a decent amount of equity in our primary home so I'm hoping to secure a HELOC, then possibly Flip my first investment to build the capital needed for a Rental property. This path may change as I gain more knowledge, so feel free to share your advice with me!
Excited to be here and hopefully optimistic about moving forward in the world of REI!
Welcome to Bigger Pockets!
This is a great place to learn and network. A lot of forum members are very knowledgeable in their respective fields related to real estate investing, whether that is real estate sales, wholesaling, flipping, rentals, lending, self-directed IRA and Solo 401k investing, or tax and legal guidance.
If you haven’t been to it already, you might want to check out the BP blog: https://www.biggerpockets.com/renewsblog/
The site has quite a few tools that can be helpful for new members. I like the search features: https://www.biggerpockets.com/search
Alerts can be really helpful too: http://www.biggerpockets.com/alerts
Thanks @Justin Windham! I appreciate the welcome and resources.
Congrats on taking a big step toward real estate investing. You're in a decent place for it. Colorado Springs is not what it used to be in terms of prices. (Don't look at the history of a home price just in the last few years, unless you want to feel really bad.) But it's better than a lot. And I'm a big advocate of making that first investment in your backyard, so to speak, where you know the neighborhoods better and you're nearby to address any issues.
You talk about getting a HELOC but also flipping the first one as a way to generate enough income for a rental. Are you saying the HELOC wouldn't get you the needed down payment for a rental?
As far as options ... there are tons.
It sounds like you already own your primary residence and don't want to move, so maybe the house-hacking option is off the table. But you find yourself a decent 3 or 4 bedroom house and rent it by the room. Heck, I still think the right SFH in the Springs can cash flow with a long-term rent. Colorado Springs' regulatory system -- unlike Denver's -- is much more open to short-term rentals and Airbnb, so you can go that route.
I'd say talk to a lender, find an investment-minded agent and start to develop a plan that suits your interests and goals. Good luck!
Hey @Paul Graham welcome! Have you thought about doing a live in flip? That might be a good idea if you don't have a ton of cash to work with since you can put less $$ down. One strategy I'm pursuing now to obtain rental properties in our very expensive market is buying a new primary residence every 1-2 years and converting into a rental when we move out. This allows for a 5% down payment and keep the cash down to a level I can replenish every few years. If you don't have a realtor @James Carlson is awesome and can help you out.
Welcome! Like others have said you're in the right place to learn and grow your network and business!
Thanks for the shout-out @Tyler Work. Hope all's going well for you. Your strategy works wonders ... if you have a cooperative partner. At the risk of drawing ire, what we see when working with buyers is that younger men are pretty excited about the idea of buying, living-in, and then moving every year or two to create a rental out of the old place. Women are less excited about that idea. So you either want to be a single dude or a guy with a partner who is open to that idea. That's true in Denver, Colorado Springs, and I'm guessing most anywhere.
Hey @Paul Graham, as the others have said, welcome to the BP community. Great place for resources and the opportunity to network with like-minded individuals. Another route you can take is the live in flip @Tyler Work mentioned, but instead of converting to a rental, you can live in it for two years and sell it once you hit that two year period to take advantage of the Section 121 tax exclusion (exclude $250k of capital gains if filing single, $500k if filing married jointly) in the hopes of capitalizing on some good appreciation along with the value you add by renovating. However, this also requires a cooperative partner as @James Carlson mentioned as you will be potentially moving every 2 or so years. Sounds like you're going more of a buy-and-hold route though, but thought this would be some information to consider!
Thanks for all the replies! @Tyler Work I have a good sized family living in our primary residence so a live in flip isn't likely to work well at this stage. This is the same reason we aren't able to do a House-Hack like @James Carlson recommended. However, with the growing equity in our primary home, I figure we can somehow use that leverage to fund our first rental or flip. James, you asked about a HELOC providing enough capital to fund a down-payment, and you're right, but it would be nice to pay back the HELOC and pay down some unsecured debts with a flip. Then perhaps use the HELOC again to buy a rental (unless our first flip yields a large enough profit to fund the next one).
As of now I'm still learning and spending time exploring property searches, Redfin, Roofstock, etc. to get more comfortable with the playing field.
@Paul Graham Hey Paul, I lived in the Springs for a long time and am helping an investor there as well. If you need an additional resource, I’m available!
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