I’ve heard a lot of talk going around that newbie investors should be saving up and holding onto their cash instead of investing during these uncertain times.
My thought process however is that, if you have the cash reserves, you purchase a multi family house hack that you can afford even if you can’t find the tenants. What could go wrong?
- I’d have 6 months reserves
- I’d be able to afford the mortgage payment if we couldn’t fill it
But, if everything went RIGHT I’d just be saving even more money because our tenant(s) would be paying the mortgage.
Sounds like you have planned ahead to mitigate any risks that might come up. Cant speak to whether you should buy now or not, though it seems like there isnt too much of a down turn in metro areas with low inventory...
You are right about finding live in tenants right now, might be a little more difficult than normal, with high unemployment, etc.
@Nicholas Chrisman I have had the same thoughts as you. I'm in the process of looking for my first house hack. I believe if you have the reserves and the property fits your criteria then why not. If you keep going down the what-if hole, then you'll never get started.
Newbie investor here - We own a rental property and our tenants had to break their lease given the climate, but like you're saying if you've got a reserve cushion and can cover the expenses in a pinch - it seems you've mitigated some of the risk and thought about your exit strategies. You might run your numbers and consider secondary and tertiary exit strategies, such as selling the property after some renovations and maybe a refinancing. It's up to you on whether to buy, but at least in our areas (MD) people are still looking to rent (although it took several dozen showings to find the RIGHT tenants). Just be mindful of your criteria for a tenant and don't accept less than that. We waited until we found a great family with steady income and the right mindset.
@Nicholas Chrisman I think if you’ve prepared properly (I.e. educated yourself), are buying from a strong financial position and buy a deal where the numbers work then you shouldn’t have to ask anyone whether to do it or not.
I was in the middle of a BRRRR when the pandemic hit. I filled it with a tenant at $175 more a month than expected and refinanced as planned. If you run your numbers conservatively and buy right, I wouldn't worry.
The experienced investors I know are continuing their business as usual. Keep cash reserves on hand, buy at a discount and avoid over leveraging.
Things could go wrong, of course, but I think you have a good plan. Everything has risks, but you seem to have a good strategy and I think you're on the right track.
@Nicholas Chrisman those that don’t want to invest will always find a reason not to whether in 2004, 2011, 2015 or now. Others will continue to buy in all those same years.
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