I'm 36 now. Own 3 rentals, all SFH's technically but actually rowhouses all in a major city in the East Coast.
My first one, I bought when I was 28. It's a rowhouse that was newly flipped, and the seller created an entrance for the basement. Owner occupied mortgage, I did a VA loan for 445K so zero downpayment. So from day 1, I didn't think of the basement as my own unit but strictly rental. The rental for it was paying 65% of my mortgage. It's almost legally separated now so renting the upstairs to 1 tenant (now a 3-BR/1.5 BA) I got rid of a bathroom and converted it back to a bedroom since it rents for much higher, and the basement (1BR/1 BA) to another tenant.
2016 - I bought a fixer upper that needed work. Updated it through the year and a half we lived in it (updated the kitchen, added central heating/cooling, redid the floors myself). The house is YUUUUGE (almost 3000 sf and is 4 BR/2 BA), and has a basement that I was planning on concerting it to a rental unit as well. Bought it for 600K (which is actually cheap shockingly in the city), with 5 % down as a conventional loan. Rented it out eventually since it'll cash flow much more than us living in it. The rent is 142 % of my mortgage currently. I self-manage currently.
2017 - bought a 3rd house I should have moved in vs flipping. It cost me money since I was going back and forth with the drawings as to move in it or reno/sell. Actually took a loss on this one, but I learned a LOT and realized I have a knack for designing some and managing the trades. Working on getting my GC license now.
2018 - bought a house with my partner but we're actually at a loss of $180 for the house. It's a gorgeous house, but it was more emotional-driven and I got distracted from my usual path
We went back to my first house but after a year and looking at my numbers, it actually is better for us to rent and get much more space and amenities so found a SFH to rent 10 minutes outside the city.
Since you're just starting out, I would do owner-occupied mortgage since you can move in to a house with 0 - 5 % downpayment at the most. Only buy something you can afford on your own however, then rent out the spare bedrooms (if you wouldn't mind living with roommates). Do that for a year, then you can rinse and repeat. The banks would calculate 75% of the rental income when calculating your DTI when you're trying to buy a new house.
Important things: have savings set aside for repairs/maintenance(I allocate 10% of the rentals for this), and money set aside if your vacancy lasted longer than a month. Thorough screening of potential tenants/roommates, and not being afraid of tackling house repairs. Youtube, reddit and diyforums has been a godsend.
If you're trying to do strictly rental, you'll usually need 20-25% as a downpayment. Like folks here also say, attend local meet-ups, and network network. Steer clear of those seminars though where you pay to learn the tricks, etc. This website is plenty of help I feel.
I'm currently 35 (will be 36 in September) and I have six total units (three duplexes).
How I got started was that I purchased a condo in an "A" class area of Minneapolis to test the waters. The condo was really cheap in comparison to the median purchase price in the Boston area. I came to the table with the down payment from savings. After this property, I refinanced out my primary residence and took out a HELOC and went on a buying spree (using the proceeds mostly from the cash out refi to purchase the first two duplexes), buying the six units within 18 months (February 2017 was the first duplex purchase and my last purchase was June of 2018). I stopped buying recently due to three factors. First factor is that I had a really big ticket item come up out of the blue and wanted to pump the brakes after that happened (had to get creative to absorb the cost). The second item is that prices in the Twin Cities have been on a steady climb. There are a lot of younger buyers in the Twin Cities that are scooping up small multis to house hack (driving up pricing). Last and not least, the break has allowed me to stabilize the properties, understand pricing/the numbers and can be sharper on any future investments.
@Cameron Lee Brown I have family in Elizabethton, TN. I’m from Nashville originally. Good luck!
@J. Mitchell Bernier I just recently purchased my first duplex this year and trying to navigate the financing of my next deal. We're you able to finance those first three properties on your own, or we're you able find private funding? I see you're a lender, so I may be answering my own question. Any help is appreciated.
@Kristopher Allen thank you for the information. I’m not sure my wife would be agreeable to moving every year with two small children, but I love the strategy. Currently we are on a debt payoff journey which we started last March. So far we have paid off 100k in debt with the end date next year sometime (mostly student loans). What’s hard is that the only loans we have left are low interest and I could save 4700 a month towards a down payment right now. However I’m trying not to FOMO in while keeping a level head and learning as much as I can in the mean time.
Originally posted by @Ryan Hazelwood :
@Ujwal Velagapudi Do you use a property manager?
I did for about half of them, but the other half I managed myself. I had the operations pretty streamlined to the point where my self-managed units were just a few hours a month of work at most, especially since I had long term tenants with little turnover.
I’m 38 years of age, I have one rental & working on finding my second. I got my start by buying my first home 3 years ago renovating it and then rented it out. I also am learning everything I can about real estate and investing.
I wish you the best of luck and many beneficial hours of reading 😊
@Leatha L. Luttrell thank you! I may have to go that route since we don’t own a home. My rent is really cheap (1250 per month) and our landlord is a friend who has never raised the rent in the 4 years we’ve lived here.
I'm 46 I own one Rental SFH (my original owner occupied home ) I'm in what will soon be my 2nd rental and looking for my third home .
@James Cook do you have a wife and kids? If so, how long did you live in each and how did your family do with the transitions?
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