Real Estate Agent · Long Island NY · Member since 2017 · 89 posts · 33 votes
Hello Everybody,
Here is my situation,
I am very eager to jump into REI however I just signed a 15 month rental lease with my girlfriend. Do you think it is a good idea to try and pursue long term buy and hold rental properties while still paying $600/month in rent? Or would it be wise to wait until the lease is up and have my next residence be a house hack so I will not have the added stress of having a fixed rental payment on top of a mortgage payment etc. ?
I am 22 years old with about 30k in savings. I am currently looking to invest in the Cincinnati/Dayton, Ohio market (where I currently live).
Columbus, OH · Member since 2017 · 101 posts · 56 votes
9y
Jordan Bochner if I were you I would start now. I currently live in Columbus, Ohio and am renting an apartment for $620 a month. With utilities the total cost $700, which my girlfriend and I split. My total out of pocket, monthly, is about $350. I own a duplex, which I was planning on house hacking, but my tenants pay $650 on each side and they cover utilities. It ended up making more sense for me to continue renting at the moment. One side of the duplex covers the entire mortgage, taxes, insurance, with a little bit left over. If you have $30,000 in savings you're in a great position to get started. I would start now to start building equity, establish a relationship with a lender, and start seeing some cash flow. There's no time like the present. However, I'm no expert yet, this is just my humble opinion. Best of luck!
Developer · Closter, NJ · Member since 2016 · 392 posts · 109 votes
9y
Hello !!!!
The benefits of house hacking is far more better than the strain.
If there is a possibility to pay a early termination fee ( as long as the fee is responsible)
You could also depending on the circumstances invest in a two family and when the lease is up next year don't renew and live in one while leaving the other to month to month. That way your locking in two rents in one year and flexibility next.
You could wait till the lease is up and start then.
Ultimately the choice is yours depending on your circumstances!
Flipper/Rehabber · Los Angeles, CA · Member since 2009 · 1k+ posts · 732 votes
9y
Jordan Bochner , that is interesting about a 15 month lease haven't heard of that before .
$600 is very reasonable rent at least compared to where I am .
Are you currently working full time ? $600 rent shouldn't affect your ability to obtain loans much I wouldn't think . Not sure if you have any student loans or any other debt though
You are in a great market in my opinion for starting out since prices are still very reasonable in Ohio and seems a lot easier to cash flow versus other markets .
Also seems like a lot of interesting things happening in and around the downtown areas in Cincinnati .
Best of luck
Specialist · Charlotte, NC · Member since 2016 · 239 posts · 117 votes
9y
I would highly suggest starting now. No time like the present to begin investing, especially in RE. House hacking would be a fantastic option as previously mentioned. It sounds like you have a great nest egg needed to start so I wouldn't be too nervous about being stuck in a lease. Perhaps take 15k of that 30k and use it for a down payment for a property that you can self-manage, but I wouldn't take any more than half. Best of luck!
Investor · Cincinnati, OH · Member since 2016 · 208 posts · 157 votes
9y
Jordan Bochner I think you should start now- the benefit of using the fha will be there in 15 months.
With $30k saved, you can surely get a SFH rental or small MF, and after 12 months it'll be on your taxes and considered as income from most any bank when you go to qualify for an fha mortgage on your house hack in 15 months.
Jordan if you'd like to talk further I can help you with some investment friendly banks(15% down) and share some of my thoughts on the market here in Cincinnati.
I also wholesale some deals.
PM me if you'd like to discuss further.
Cheers
Real Estate Agent · Long Island NY · Member since 2017 · 89 posts · 33 votes
9y
Thank you all for the advice.
@Joseph M. Yes I am currently working full time earning an average salary and do not have any debts.
@Ian Kurela I know I have enough for a down payment but I'm not sure I will have enough cash reserves if things go very wrong such as long vacancies, costly repairs, on top of paying rent. But I guess that all plays into the analysis of the deal.
@Jake Walroth That is very true. I appreciate the help. I will PM you.
Lender · Dayton, OH · Member since 2008 · 1k+ posts · 705 votes
9y
@Jordan B.. There's no requirement to own a home before investing. I know multiple people who rent where they live and invest in other RE. Go for it. The two markets you're targeting have a lot of opportunities, take advantage of it.
Real Estate Agent · Long Island NY · Member since 2017 · 89 posts · 33 votes
9y
@Darrin Carey thank you for the advice. Could you recommend any investor-friendly RE agents in the area? Also do you know of any small banks that might be willing to loan to a young chap like me?
Jordan I definitely recommend house hacking. I did the same thing in Cincinnati, OH, in a 5 unit building I purchased. Don't have the mindset that because you're young you can't get a loan. I thought the same thing... Just go into these banks, put on a suit, have your numbers in front of you, and present to them why they should loan to you. I bought mine when I was 23. I'm 25 now and just bought my second investment property in Cincinnati. It's awesome you're getting the ball rolling at 22! I recommend house hacking because it lays a great foundation and you learn tools that will help you in your investment career. When renting out the four units I have in my building, all four tenants made the same comment about me living in the building. They saw that everything was well maintained and viewed it as their home rather than an apartment. You set the expectation with tenants as to how things are supposed to look and be maintained. Screen your tenants very diligently! Remember, there your neighbors! Feel free to shoot me a message. I'm no RE expert by any means, but happy to help anyway that I can. Any contacts you need I am happy to share. Best of luck.
Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes
9y
I rent and am about 30 days from owning my second rental. By next year my cash flow will be well above what my rent is. I like renting because it provides mobility. Don't buy a primary residence unless you see yourself staying in the area for 5 plus years OR it makes a good rental.
Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes
9y
Jordan Bochner for context, I'm around your age as I'm 23. If you buy a primary residence and it doesn't make a good rental and you end up moving a couple years in, you'll lose money. So if you avoid that, I'd simply live in your lease, and when that ends go house hack. But also if you have 30k in savings you can invest now, I wouldn't wait.
Lender · Nashville, TN · Member since 2017 · 205 posts · 107 votes
9y
@Jordan B. with that much starting capital, I say go for it! I am in a very similar situation as you, just with less capital so I may have to go directly to a house hack with FHA financing once my lease is up. I think finding a great deal on a SFH with a traditional mortgage and down payment and then finding the multi-family house hack when your lease is up could really accelerate your wealth.
Good luck with everything, I look forward to see how it turns out for you.
Real Estate Agent · Long Island NY · Member since 2017 · 89 posts · 33 votes
9y
@Jamie Jones Thank you for the input and support. My original plan was to start with an FHA house like you are planning, but signing my rental lease changed that. I've heard nothing but good things about the Nashville market and I know you will have tremendous success.
P.S I visited Nashville last year and it was incredible.
Rental Property Investor · Richmond, VA · Member since 2017 · 295 posts · 229 votes
9y
@Jordan B. My boyfriend and I purchased our first home before even thinking about getting involved in real estate as a side hustle. If we could change it, we would have rented longer. I have felt a little obligated to decorate, complete upgrades, and house projects that have taken away capital from our other investments. If I was you, I'd go ahead and start investing!
Lender · Dayton, OH · Member since 2008 · 1k+ posts · 705 votes
9y
@Jordan B., Young Chap or no, loans are all about collateral, credit, character, and capacity to repay the loan. I'd rather see you investing at a younger age anyway.
And congrats on the savings, I know far too many people twice your age that couldn't come up with $1000 to save their life.
Investor & Developer · Ludington, MI · Member since 2014 · 54 posts · 40 votes
9y
@Jordan B. - The biggest hurdle you'll face when purchasing your first property is getting out of your own way. Trust yourself and the process, assuming you've done some preliminary reading on REI and are willing to put in the continued effort to consistently educate yourself. The second largest obstacle you'll face is not giving up the first time sh*t gets tough. You'll survive. You have quite the leg up on the majority of investors your age, but you still have to know your comfort zone. Keep enough for a down payment on a home, should that be the route you choose. good luck to you!
Columbus, OH · Member since 2017 · 101 posts · 56 votes
9y
Jordan Bochner if I were you I would start now. I currently live in Columbus, Ohio and am renting an apartment for $620 a month. With utilities the total cost $700, which my girlfriend and I split. My total out of pocket, monthly, is about $350. I own a duplex, which I was planning on house hacking, but my tenants pay $650 on each side and they cover utilities. It ended up making more sense for me to continue renting at the moment. One side of the duplex covers the entire mortgage, taxes, insurance, with a little bit left over. If you have $30,000 in savings you're in a great position to get started. I would start now to start building equity, establish a relationship with a lender, and start seeing some cash flow. There's no time like the present. However, I'm no expert yet, this is just my humble opinion. Best of luck!
Investor · Little Rock, AR · Member since 2016 · 152 posts · 40 votes
9y
@Jordan B., my contractor owns at least two dozen properties but still rents himself because he doesn't want to deal with the upkeep of his own home when he stops working for the evening.
Real Estate Agent · Long Island NY · Member since 2017 · 89 posts · 33 votes
9y
@Joshua BiondiWow that is quite a deal you got with that duplex. How long were you actively searching for an investment before you pulled the trigger? How picky were you in deciding what amount of cash flow you would accept? I want to try and get into your head and see what your thinking was as you were just getting started and looking. If you could walk me through those thought processes I would really appreciate it.
Rental Property Investor · Honolulu, HAWAII (HI) · Member since 2011 · 4k+ posts · 2k+ votes
9y
Jordan Bochner if you live in a place where the rent to value ratios are lower than 0.8 percent for a class b asset then it's better to rent. If you live in San Francisco, Seattle, Hawaii, etc then live where you want and invest elsewhere... and rent for your home which is not an asset.
Columbus, OH · Member since 2017 · 101 posts · 56 votes
9y
Jordan Bochner I was looking for an investment property for a little under two months when I got the opportunity to acquire this duplex from a family member on a land contract. I then ended up getting a conventional loan on the property about 6 months later.
When looking for an investment property I wouldn't accept less than $150, per door, after factoring cap ex and all expenses, including property management. I manage the property myself, but once my portfolio is large enough I won't, and I definitely want to leave room for sufficient cash flow after property management. The amount I'm putting down on the property also plays a part in the minimum cash flow I'll accept because a decent cash on cash return is important.
Again, I'm a newbie investor myself, so I'm by no means an expert. I'm actually in the process of purchasing a 20 unit apartment complex via land contract at the moment, which will put me at 22 units in the first year. I'm both nervous and excited lol.
Let me know if there's anything else I can answer for you, although there are certainly those on here far more qualified than myself. Im still learning too, but I'm happy to help in anyway that I can. I wish you nothing but success in the future!