22yr old investor and my plan. Would love your feedback

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22yr old investor and my plan. Would love your feedback

Aurus J. Sanchez
Rental Property Investor · New York, NY · Member since 2018 · 14 posts · 15 votes

My goal is to achieve 3000 a month in real estate for my future and i would love to see if my following strategy sounds realistic or if it can be improved. I’m open to hear everything.

THE FOLLOWING IS MY SCENARIO:

I’m 22 and I live in NYC BROOKLYN. I want my first property to be a triplex or fourplex.

Everything in NYC is expensive so my plan is to purchase my first property in New Jersey using a FHA loan.

Once I have that loan and get the property I want to use the BRRR strategy and continue to get a couple other triplexes or fourplexes. Also how much money should I save for the Rehab portion?

I really do not want single family homes or 100 properties.

Just want about 3,000 a month of passive income in a future from my properties.

What do you guys think?

9Reply
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Most Popular Reply

Joe VilleneuvePro Member
Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
7y

OK.  What's your plan then?

19Reply
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  • Aaron K.
    Specialist · Riverside, CA · Member since 2015 · 6k+ posts · 3k+ votes
    7y

    1. So you are planning to move to NJ?

    2. If you are buying something that needs rehab you will need FHA 203k

    3. $3,000 is a ways off it may be unlikely that you will cash flow for a while just be prepared for that

    4. Have you already saved your down payment plus reserves?

    14Reply
  • Shawn McenteerBusiness Member
    Realtor · Boonton Township, NJ · Member since 2013 · 2k+ posts · 1k+ votes
    7y

    Every property is different. Tough to say how much you will need in rehab costs, the less you need to fix the more expensive the property. More work may mean more money up front but in many case better returns. SFR that work in NJ are tough to find. Getting 3k/month is for sure possible over the coarse of a few properties.

    973-975-3895
    House Hacking New Jersey563 Reviews
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    3Reply
  • Joe VilleneuvePro Member
    Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
    7y

    OK.  What's your plan then?

    19Reply
  • Eric van Dalen
    Dillon, MT · Member since 2017 · 31 posts · 9 votes
    7y

    My understanding Aurus is that you need to live in a home to finance it with FHA.

    I too am after multifamilies. Try aiming for rehab cost of whatever you have saved now or what you can pay for prior to refinancing.

    2Reply
  • Alexander Ritchie
    Member since 2018 · 19 posts · 1 vote
    7y

    I am not sure id FHA lets you fix up homes. Like others said you need to live in home for 1 year for FHA loan.

    I think if you figure out if fha loan allows rehabs and you're willing to go through the rehab while not making money and the deal makes sense (meaning it is worth significantly more than the cost you paid plus rehab) and you're able to do thta repeatedly it'll work. Maybe I'm missing something I would look into it more if it were me but that's my initial thoughts.

    Good luck

    0Reply
  • Caleb Heimsoth
    Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes
    7y

    @Aurus J. Sanchez. Just start with one property and go from there. You’re gonna to need a lot income to support that loan on an fha mortgage

    3Reply
  • Brian Wilson
    Investor · Longmont, CO · Member since 2016 · 185 posts · 156 votes
    7y

    @Aurus J. Sanchez

    Find a number you're comfortable with and stick to it. If that's 12% COC Net, then only buy properties with that metric. On the podcasts (which I assume you're listening to) you tend to hear Brandon and the guests talk about how much they want monthly per door. These are not arbitrary numbers, they are tied to some ROI % factor that tends to work out to that rough monthly figure. Every market is different. Meaning a 12% return may be under-performing for your market.

    Factors that control this are the asset class, condition, neighborhood, etc. Therefore, you need to get familiar with your area and talk to local investors and see if what you want is reasonable. 

    The bad thing about FHA loans is that the PMI never falls off so you have to refinance later on. I want to say the home path mortgage program (I can't remember the exact name) allows for 5% down but PMI falls off at 20% equity. Talk to a local lender and tell them you're looking to owner occupy a 2-4 unit property and see what programs they offer.

    3k a month is totally doable, but for one property small MF? I don't know. Unless your talking gross margin in a high rent market, and assuming no vacancies in the given year. 

    Make sure you have adequate reserves (15 months) to cover the rent in instances of vacancies. Many people will tell you that you need less but honestly it's your first property, and without knowing your income situation I would advise to play it conservative so you don't lose your shirt before you get started. 

    11Reply
  • Shawn McenteerBusiness Member
    Realtor · Boonton Township, NJ · Member since 2013 · 2k+ posts · 1k+ votes
    7y

    @Aurus J. Sanchez have you only looked into FHA? When I first started out in north jersey market I though FHA was the way to go, I then found low money down conventional mortgages for owner occupiers. At the time conventional offered better rates and I didn't have to worry about FHA guidelines.

    973-975-3895
    House Hacking New Jersey563 Reviews
    WebsiteView Page
    5Reply
  • Aurus J. Sanchez
    OP
    Rental Property Investor · New York, NY · Member since 2018 · 14 posts · 15 votes
    7y

    @Aaron K.

    Hello thanks for your answer.

    I do not want to move out of New York. But I don’t want to invest in this state. It’s way too expensive. So does that eliminate my FAH option?

    I’m in the middle of saving up now

    So instead of a FAH, what should I do instead? And when you say that it might take a while before I get to 3,000.... how long will that be?

    0Reply
  • Aurus J. Sanchez
    OP
    Rental Property Investor · New York, NY · Member since 2018 · 14 posts · 15 votes
    7y

    @Shawn M.

    Thank you so much for answering. So are you saying that New Jersey is not a good option for long distance investing?

    So what states would you recommend and why?

    1Reply
  • Aurus J. Sanchez
    OP
    Rental Property Investor · New York, NY · Member since 2018 · 14 posts · 15 votes
    7y

    @Eric van Dalen

    So instead of a FHA, what can I do instead to start with tri or Four plexus?

    Because I don’t plan on living in New Jersey. Where do you live and how is your territory when it comes to investing.

    0Reply
  • Dennis M.
    Rental Property Investor · Erie, PA · Member since 2018 · 6k+ posts · 9k+ votes
    7y

    @Aurus J. Sanchez

    You think New York is not an option for multifamily because of high prices so your looking at New Jersey ? Lol boy are you in for a treat . Look you must have a high income to accomplish these goals you must actually live in a fha loaned house and New Jersey is just as bad if not worse than NY for investing . taxes and property prices are astronomical . Jerseys landlord/ tenant laws are completely insane and skewed to the tenant . You said you had a plan but I’ve yet to see this “ plan”

    3Reply
  • Harrison Sharp
    Real Estate Broker · DFW · Member since 2015 · 350 posts · 270 votes
    7y

    @Aurus J. Sanchez

    If you don’t plan on living in the property you’re gonna have to save up 20% downpayment + reserves + closing costs which could take some time.

    FHA and low % down conventional mortgages make it easier to get started but you have to live in the property

    2Reply
  • Account Closed
    Rental Property Investor · Atlanta, GA · Member since 2017 · 45 posts · 25 votes
    7y

    @Aurus J. Sanchez If you haven’t done so yet, you might want to read “How to invest in Teal Estate”. It will help you a lot with the different methods of financing or listen to the podcast on that topic.

    2Reply
  • Aurus J. Sanchez
    OP
    Rental Property Investor · New York, NY · Member since 2018 · 14 posts · 15 votes
    7y

    @Caleb Heimsoth

    Hey thanks for answering back

    So you reccomend not using a FHA?

    So what would you do instead?

    0Reply
  • Shawn McenteerBusiness Member
    Realtor · Boonton Township, NJ · Member since 2013 · 2k+ posts · 1k+ votes
    7y

    @Aurus J. Sanchez not sure if NJ is good or bad for long distance investor.  I am happy I decided to stay local and mange properties myself.  I would recommend staying local, which for you North Jersey is local to NY,NY.  I will say owner occupying should help you tremendously. 

    973-975-3895
    House Hacking New Jersey563 Reviews
    WebsiteView Page
    0Reply
  • Craig Jeppesen
    Rental Property Investor · Chubbuck, ID · Member since 2018 · 532 posts · 466 votes
    7y

    If you live in the first fourplex and rent out the rest you can get an fha loan with 3.5% down.  This is the way to go to get started.  Once you are hear you will probably have your tenants make your mtg pmt and you live for free.  This is where you will live super cheap and save up a large portion of your income for a few years to save up a down pmt on your next purchase which will need to be 20% if you don't live in it.  Just keep doing this saving up your money and keep reinvesting in new properties or paying down your existing properties. How fast you get to $3000 depends on how fast you can save up a down pmt for each new property. if you can get $200 a door, you will need 4 fourplexes with you living in one unit to reach your goal.  Put it in a spreadsheet with your budget and you should have a good idea of how long it will take.

    3Reply
  • Erik KuhiPro Member
    Investor · Farmingdale, NJ · Member since 2017 · 62 posts · 39 votes
    7y

    @Aurus J. Sanchez I strongly recommend listening to all of the Bigger Pockets podcasts and post a lot of questions in the forums. Keep saving $$ and analyze as many properties as possible. You want to find properties of interest learn how to run your numbers to see if they will perform and see how fast they sell. If you see the properties you’re looking at are moving fast your heading in the right direction. Of course the ones that sit on the market for a while are good too if you’re up for dealing with whatever issues are keeping them from selling. From listening to the podcasts and learning to find and research properties your plan will become clearer and your forum questions will be more specific. When that happens you’ll be in a better situation to execute your plan and get in the game.

    Hope this helps!

    3Reply
  • Caleb Heimsoth
    Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes
    7y

    @Aurus J. Sanchez. FHA could work I'm just saying you'll need a lot of income to support that level of loan and the high LTV makes it riskier if the market turns, you could be underwater on your loan. Also keep in mind FHA has MI forever. Your better off With 5 percent down conventional if you can find it

    2Reply
  • Aurus J. Sanchez
    OP
    Rental Property Investor · New York, NY · Member since 2018 · 14 posts · 15 votes
    7y

    @Dennis M.

    Wow!! Thanks so much for your honesty and for being real! So if you were in my shoes what would you do to start with multi families?

    My future goal is to make 3,000 a month in income and i have been listening to BP podcasts and articles.

    What is it that you did?

    0Reply
  • Emile Papillon
    Windsor Ontario, Canada · Member since 2017 · 3 posts · 1 vote
    7y
    @Stacey Parker-Herman what book are you referring to?
    0Reply
  • Caleb Heimsoth
    Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes
    7y

    @Aurus J. Sanchez. Your goal is admirable but I don’t see any concrete plan as to how you’re going to achieve it. What’s your income? How much money do you have? Do you know how to analyze a property? Forget the 3k a month goal for now. Just figure out what you need to do to buy a property

    4Reply
  • Lony Dorce
    Jacksonville, FL · Member since 2018 · 8 posts · 3 votes
    7y

    @Aurus J. Sanchez If this is truly your goal, look outside of NYC for more affordable multi-family homes. See if you can find a family member or friend on board to gather a down payment and use an HML to finance the property and rehab. Then rent and refinance to pay the HML off and get your cash back to pay your family member or friend. BRRRR strategy.

    1Reply
  • Nick Schumacher
    Real Estate Agent · New Lenox, IL · Member since 2017 · 22 posts · 9 votes
    7y
    @Aurus J. Sanchez Do you plan on house hacking? If so try using a Freddie Mac home possible loan for your first building. It is a first time home buyer program, you can finance up to 4 units for 5% down. Save the fha loan for the second propertie. There are many forum post on this topic. Good luck on your journey
    5Reply
  • Account Closed
    Rental Property Investor · Atlanta, GA · Member since 2017 · 45 posts · 25 votes
    7y

    @Emile Papillon How to Invest in Real Estate is written by Brandon Turner and Josh Dorkin and can be bought on this site.  Go to bookstore, you can buy it in digital or audio for only $14.99!  I am a newbie myself and have just completed reading it today.  You'll be able to set your goals, determine what strategy you want to use, how to find deals, finance them and a whole lot more.  I've listened to many of the podcasts before but this book has brought it home!  I've spent my entire weekend reading it is about to start Investing in Out of State Real Estate.

    6Reply
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