Advice on purchasing my 2nd property

19 Replies

I recently purchased my first duplex in Conyers, GA as a househack. It's going solid so far besides a couple hiccups. I used a good bit of my cash I had saved away on this first property. I'm able to start saving a good bit again now with my low expenses. Does anyone have any advice on purchasing my 2nd property in Atlanta? I'm new to the area and am still meeting new people. I can continue to save money and purchase my 2nd property through another househack but I'm looking to expedite the process. If any has any tips that would be great.

thanks!  

I'm curious about financing for the second purchase. Househacking is not an option for me. I just changed jobs with a huge pay cut (commute from 1 hour driving to walking 3 blocks - hooray!) and am thinking I will need the two years of employment before qualifying for another conventional loan. I don't want to take on a lot of risk by being overleveraged. It seems to me that because of the increase in the standard deduction with the tax reform, that I don't really have a big enough mortgage to get any additional tax benefits. So it would seem that to my finance my next deal I just have to do the grunt work of saving again, which will be slow given my pay cut. I heard that the first property is the hardest and then it gets easier, but financially I don't see any advantages to having 1 property already in this situation. To be clear, I am ecstatic to have finally (finally!) made my first purchase and also very satisfied with my decision to take the new job. I am content with everything as-is, just curious to hear others' thoughts and experiences with how their financial picture changed after 1 purchase. It was a SFH around $140k.

Originally posted by @Matthew Nicklin :

What advice are you looking for specifically? Financing, Area, Property type, etc? 

The financing part and deals not on the MLS. Since I used most of my cash on my first property I'm going to have to wait until I save enough up for next one. But if I can find some private money I may be able to get back in the game sooner. The property i'm housing hacking looks like it may have a vacate duplex behind me. So there is some potential for a BRRRR there but I don't have the funds at the moment.

Originally posted by @Jordan Whitworth :
Originally posted by @Matthew Nicklin:

What advice are you looking for specifically? Financing, Area, Property type, etc? 

The financing part and deals not on the MLS. Since I used most of my cash on my first property I'm going to have to wait until I save enough up for next one. But if I can find some private money I may be able to get back in the game sooner. The property i'm housing hacking looks like it may have a vacate duplex behind me. So there is some potential for a BRRRR there but I don't have the funds at the moment.

@Jordan Whitworth

Have you seen who owns the vacant property? Have you researched if there are any liens against the property? Maybe you can reach out to the owner and see if they would be open to seller financing or some deal like that. Just remember it doesn't hurt to ask. 

@Jordan Whitworth , congrats on the first one. 

I myself is on the same boat. I have realized that just saving money and waiting to purchase next one takes time. If you want to scale up without having a high leverage of debt, in my opinion, BRRRR is the best way to do it.

- You get your cash back 

- you will have around 20% equity on each deal when you refi

Given that buying a distressed property and refinancing take you 6 months because of the seasoning period, It is still better than saving money each month to buy another property. 

At least that's what I plan to do. 

Also partnering up with other investors rather than waiting until you save entire amount works out better. 

Keep us updated, we would love to hear. 

Originally posted by @Juan Jackson :

@Jordan Whitworth you have the FHA play on a 1-4 unit. Live in one unit for a the required time. I know of an unlisted 4 unit that may entertain offers and a 8 unit that is available. FYI I know Conyers well.

Thanks for the advice Juan. I'm currently doing a househack and will definitely going to purchase another in the next year.

Originally posted by @Matthew Nicklin :
Originally posted by @Jordan Whitworth:
Originally posted by @Matthew Nicklin:

What advice are you looking for specifically? Financing, Area, Property type, etc? 

The financing part and deals not on the MLS. Since I used most of my cash on my first property I'm going to have to wait until I save enough up for next one. But if I can find some private money I may be able to get back in the game sooner. The property i'm housing hacking looks like it may have a vacate duplex behind me. So there is some potential for a BRRRR there but I don't have the funds at the moment.

@Jordan Whitworth

Have you seen who owns the vacant property? Have you researched if there are any liens against the property? Maybe you can reach out to the owner and see if they would be open to seller financing or some deal like that. Just remember it doesn't hurt to ask. 

What is the best way to find the owner? I figured out what the address is. Is there a website or i'm guessing country records to find out?

Originally posted by @Ashish Acharya :

@Jordan Whitworth , congrats on the first one. 

I myself is on the same boat. I have realized that just saving money and waiting to purchase next one takes time. If you want to scale up without having a high leverage of debt, in my opinion, BRRRR is the best way to do it.

- You get your cash back 

- you will have around 20% equity on each deal when you refi

Given that buying a distressed property and refinancing take you 6 months because of the seasoning period, It is still better than saving money each month to buy another property. 

At least that's what I plan to do. 

Also partnering up with other investors rather than waiting until you save entire amount works out better. 

Keep us updated, we would love to hear. 

That's a great idea with BRRRR method. That's what I'm leaning towards doing. I will let you know how it goes.

Originally posted by @Jordan Whitworth :
Originally posted by @Matthew Nicklin:
Originally posted by @Jordan Whitworth:
Originally posted by @Matthew Nicklin:

What advice are you looking for specifically? Financing, Area, Property type, etc? 

The financing part and deals not on the MLS. Since I used most of my cash on my first property I'm going to have to wait until I save enough up for next one. But if I can find some private money I may be able to get back in the game sooner. The property i'm housing hacking looks like it may have a vacate duplex behind me. So there is some potential for a BRRRR there but I don't have the funds at the moment.

@Jordan Whitworth

Have you seen who owns the vacant property? Have you researched if there are any liens against the property? Maybe you can reach out to the owner and see if they would be open to seller financing or some deal like that. Just remember it doesn't hurt to ask. 

What is the best way to find the owner? I figured out what the address is. Is there a website or i'm guessing country records to find out?

Yes The County tax assessor website is going to be what you are looking for. Look up the owner and find their name or LLC, they should also have a mailing address located there. You can search around and see if you can find their phone number, if you can not find their phone number I would send them a letter. If you send them a letter make sure to include that you already own the neighboring property and the details so it doesn't blend it with wholesaler letters etc.

Thanks for the information everyone. I'm going to check the public records and country taxes this afternoon. Good idea to mail letter as well.

Purchased first property through conventional financing on May 1st, 2018.. had around 30k saved and was able to get a lower down payment since i'm living in one side (all you guys know this process i'm sure)

10k in savings now. I will be able to save rapidly starting in July. Promotion to outside sales at my day job and most of my expenses are covered by renting other side (Tenant moves in next week) and company paying my car etc..

I have goals to buy atleast two more properties in the next 12 months. Looking to househack again potentially and use the BRRRR. I'm thinking I need to find some private lenders and continue to save money.

That is where I am at in my investing career so all the advice above has been good stuff. Much appreciated.

Is it realistic to BRRRR from out of state? This is a strategy that I have had no interest in but wondering if I should take another look. I also work full time. I guess the answer lies in how good my team is in the area.

Hi Jordan,

It depends on what area you are specifically looking for help or advice on but the general term here from my perspective is risk assessment and aversion. Once you are able to separate what is working for you from what is not, then you can have a clear understanding of your area of concentration.

For example, you have just bought your first house. Now using this scenario: 

what went a bit wrong before? 

what are the hiccups? 

how can you avoid, improve or even overcome that if it happens again?

What are your financial leverages?

What is your marginal propensity to spend outside your disposable income?

And many more questions only you know that can or will help you do better on your second home.

Finally, what tool or software are you using to guide and help your decision? There are tons of great tools here at biggerpockets.com I am sure you can find them very useful.

I personally use this free house flipping software to help with many things from number crunching, getting money worth, cost cutting, saving time, and or even getting funding for projects to contract managment and your clients or friends will love it too. It is super simple to use.

Anyway, this is my take and I hope you find more valuable tips that will help you here on this discussion.

Cheers

Thanks Richard. I have found several things I can do better for my next property but nothing too major I missed. My first property is $50 short from covering my whole mortgage and I replaced a few cap Ex items that I built into the contact that the seller paid for. I missed a few items but learned from those mistakes. Property will cash flow around $600 (including cap ex, vacancy, etc..).

My next steps are going to be continuing to save money and try to make some connections with lenders and wholesalers. And Just continue to read up on real estate strategies and listen to podcast.

Thanks for the feedback Richard.

If your financing, work I don't recommend working with a large bank. They take a little bit longer, I recommend working with a direct lender with in house processor and underwriter. They are also more flexible with guidelines esp. if your self employed. I have purchase two rental properties this year and working with my local bank was very slow and not a smooth process.