My first house hack/ selling my current single family home

17 Replies

This coming year I will be taking my first step in the direction or real estate investing. I'm 27 years old and I purchased my first single family house at 25. After a few updates and repairs I plan to sell my house and buy a multi family home which I plan to occupy. I'm specifically looking for a 3-4 family home, which is very possible in my area (upstate NY) however, I am not opposed to the idea of a duplex if the price is right. 

   With the money I'm saving on a mortgage, which is currently almost $1000 a month as well as the profit I anticipate making on my house (after many updates and repairs) I plan to invest in my first flip. I currently work as a union carpenter and have been involved in the trades since I was 16 years old. I do not plan to hire any contractors to help with the flip. Any work that I don't feel comfortable performing on my own, such as electrical work and some more involved plumbing would be taken care of by friends and acquaintances who work in the field professionally.

  I will add that I do work full time and plan to do so full time until I get to a point where it just doesn't make sense any more. That being said I currently earn 65k-80k per year.

  Just looking for some advice/opinions from those who have been here before. Anything you would do differently? Where would you go next? Is a flip a good next move?  Thanks in advance!

Welcome to Biggerpockets!! Nice to meet you! Good luck going forward! Sounds like you are off to a great start!  Not sure about New York license,  but sounds like you could do some contractor. 

@Ryan Hoffman-Scranton

Congratulations! Taking the first step is the hardest. I am also in the process of starting my first flip. I close December 3rd. I like the idea of house hacking a multi unit also sweat equity in a flip is a good way to get started in the business. There are a lot of stories on here about starting that way. What part of upstate ny?

@Ryan Hoffman-Scranton - Welcome to BiggerPockets! I assume you are going to 1031 that single family house into the multi-family? Unless you've been living there for two years in which case you would not need to. 

My question to you is why flip when you can BRRRR? If you have a full time job it seems like you won't need the extra cash. So why not refinance, take the cash you originally invested out, and then rent that property you "flipped" out? So now you have a cash flowing rental property with hardly any money in the deal and you can use the money you got from your refinance for the next one?

 

@Craig Curelop good point. 

@Ryan Hoffman-Scranton - when weighing your options I would suggest that you be conscious of your project timeline as well as what your time is worth ($30-$40/hour based on the salary listed). If not managed well flips can sometimes take much longer than anticipated, which will squeeze your return. You are looking for the best return on your time and money, and ultimately something that will pay better than your full-time job (in theory that is less risky than a flip).

Based on what you mentioned, I would suggest considering another multi-family purchase rather than a single - this will help build your stack quicker. 

Originally posted by @Craig Curelop :

@Ryan Hoffman-Scranton - Welcome to BiggerPockets! I assume you are going to 1031 that single family house into the multi-family? Unless you've been living there for two years in which case you would not need to. 

My question to you is why flip when you can BRRRR? If you have a full time job it seems like you won't need the extra cash. So why not refinance, take the cash you originally invested out, and then rent that property you "flipped" out? So now you have a cash flowing rental property with hardly any money in the deal and you can use the money you got from your refinance for the next one?

 

I have been listening to the podcasts and I've heard about the brrr strategy but I don't fully understand how it works. What happens to my mortgage after refinancing? From my understanding; after renovation I refinance the property and use the equity as a down payment on another rental property?

 By the way thanks for reaching out, I listened to a podcast that featured you a few weeks ago and it really helped make my mind up on the house hacking idea!

 

Originally posted by @Michael S. :

@Ryan Hoffman-Scranton

Congratulations! Taking the first step is the hardest. I am also in the process of starting my first flip. I close December 3rd. I like the idea of house hacking a multi unit also sweat equity in a flip is a good way to get started in the business. There are a lot of stories on here about starting that way. What part of upstate ny?

 Thanks! Initially my goal was to start with a multi family home rather than going the single family route. Its been a long time coming so I feel more than ready to take the first step. I live in the Glens Falls/ Queensbury area.

Originally posted by @Ryan Hoffman-Scranton :

This coming year I will be taking my first step in the direction or real estate investing. I'm 27 years old and I purchased my first single family house at 25. After a few updates and repairs I plan to sell my house and buy a multi family home which I plan to occupy. I'm specifically looking for a 3-4 family home, which is very possible in my area (upstate NY) however, I am not opposed to the idea of a duplex if the price is right. 

   With the money I'm saving on a mortgage, which is currently almost $1000 a month as well as the profit I anticipate making on my house (after many updates and repairs) I plan to invest in my first flip. I currently work as a union carpenter and have been involved in the trades since I was 16 years old. I do not plan to hire any contractors to help with the flip. Any work that I don't feel comfortable performing on my own, such as electrical work and some more involved plumbing would be taken care of by friends and acquaintances who work in the field professionally.

  I will add that I do work full time and plan to do so full time until I get to a point where it just doesn't make sense any more. That being said I currently earn 65k-80k per year.

  Just looking for some advice/opinions from those who have been here before. Anything you would do differently? Where would you go next? Is a flip a good next move?  Thanks in advance!

 You're going to save yourself thousands of dollars since you know how to perform the a 3rd or more of a rehab.

Originally posted by @Shaun McQuiston :

@Ryan Hoffman-Scranton you said you want to get a multi family next? If that’s the case I wouldn’t flip it. Hold all multi families. The rental market in GF is good. You aren’t going to gain the equity like the single family.

 Yes my next move will be a multi-family which I plan to hold. Was actually looking for advice on where to go next. I was considering a flip thinking it may be a quicker way to generate cash for my next deal, especially since I can do the majority of the work myself. Also considering the refinance strategy. Really just weighing my options at this point, probably getting ahead of myself!

@Ryan Hoffman-Scranton

Brrrr’ing is a great way to accumulate properties. There brrrr’ing book is on bigger pockets and there are quite a few podcasts that go into detail. There is a local real estate meeting up in Albany that I have been attending and it is awesome. There are about 100 people there from contractors to money lenders, agents, investors. The majority of people there are vetted and all the businesses give members discounts on materials for rehabs. It’s a great place to network and learn more about the business it’s the 3rd Monday of every month. Action investors network if you’re interested in going let me know and I can get you the information.

@Ryan Hoffman-Scranton

Ryan, I am in a very similar boat. I have just finished my first deal on a duplex and have renters in them currently. Sweat Equity is all fine and dandy until you drag out a project a couple more months and lose on those opportunity costs and have to make the mortgage, and utilities every month. I did this on my second unit and ended up having to list it for rent later in the year and missed out on a potentially higher rent because of the not so prime time of year to be listing a home for rent. You may make less money by using a contractor but at least you'll wrap up the project much sooner and can get going on that next deal FAST!!! And on top of that if the numbers are so slim you can't use a contractor it might not be a good deal.

Hello Ryan and welcome to Bigger Pockets!  It sounds like you are on the right track for sure.  Also, it is good that you can do most of the rehabbing yourself.  When I first started, I tried to do everything myself while working a full time job.  My first property took me almost two years to complete because I thought I couldn't afford to pay someone to help me at the least.  I am sure it wont take you that long but just make sure to get it done way sooner than that because each month that passes is a months rent that you could use to pay someone.  I still try to do a lot of work myself but while working I have been able to buy more properties faster by paying a handyman.  I can get properties done in about 2 weeks to a month depending on the rehab, while still working a full time job.  Just trying to help you avoid one of the mistakes I have made.  Hope this helps.

Justin

I appreciate all of the solid advice and encouragement! Good to know bigger pockets has such a helpful community. I apologize for not being able to respond to everyone individually. The website has been a little temperamental on my phone

Nice to see another young guy in the area looking to invest. I agree with @Craig Curelop here. The Glens Falls market makes sense if you're investing for cash flow- its a great market for that. Multi's go quick in this market so be prepared to jump as soon as you see a listing. It is not unusual for buildings to go over asking. I lost out on a best and final offer on a 3 unit going 5k above asking a few months ago so be prepared for competitiveness but if the numbers make sense go for it. That deal closed for 10k above asking. 

Reach out at anytime if you have any questions about investing in Glens falls. I own a portfolio here and am continuing to build that portfolio staying in the Glens Falls area. 

In terms of financing your best bet is to get ahold of @Jerry Padilla . Jerry has impeccable knowledge when in comes to real estate and financing. 

-DM 

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

We hate spam just as much as you

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here