I’m totally new to real estate and I would greatly appreciate some direction. I would like to know how to buy a home that I can realistically afford, ideally in Central Florida – either Volusia County (North of Orlando) or Pasco County (North of Tampa). I’m also open to living and buying elsewhere. Firstly, I’m interested in purchasing a home to live in, and secondly, investing in single-family and/or multifamily rental properties with long-term tenants.
In late January, I spent a week in Central Florida (Volusia County) looking for a property. I was pre-approved for a 30-year fixed loan. I looked at several homes in what I thought was my price range but did not make a purchase and returned to California discouraged. My original plan was to buy a move-in-ready 3 BD, 2 BA, 2 Car garage, 1,500 sq ft house in the $280,000 range, but I later found that to be unrealistic. Due to the doubled interest rates since then and my taking a closer look at my budget, it now seems that I will have to downgrade to a first home of a 2 BD, 1 BA, 1 Car garage, 1,100 sq ft in the $230,00 range, which will probably require me to be more flexible as far as the area to buy in. I have $65,000 to invest as a down payment and closing costs for a home. I have zero debt, an excellent credit score, and a stable W-2 job in Civil Service.
A few months ago, I read Robert Kiyosaki’s ‘Rich Dad, Poor Dad’. In addition to enjoying Mr. Kiyosaki’s wonderful storytelling, I learned several important things about finances, real estate, taxes, and mental attitude. There was much that went over my head, so I plan to read it again. Immediately after reading the book, I discovered Bigger Pockets and have now decided that real estate investment is the most practical and realistic vehicle for me to achieve financial independence. For now, my goal is to earn an additional $2,000 a month of passive income (after expenses) within 3-5 years from now, in addition to my regular income. Even though ‘house hacking’ makes sense financially, I’m not sure I could handle it, as I’ve lived alone for many years.
I plan to visit Central Florida again in late October to look at homes. To be honest, I’m terrified of taking the first step and seem to be full of excuses. I just signed up for Bigger Pockets Pro Membership, but am not certain how to proceed. I’d really like to have a mentor to guide me and keep me accountable, which would greatly increase the probability of success. I would very much appreciate any advice that you can offer.
If I could do it all over again and not have a spouse and dogs, etc. I would use my FHA loan for a 4 unit building. It is more difficult to house hack later in life if you have a larger family, so keep that in mind.
For example, in Hillsborough an FHA loan can finance up to $809,150 for 4 living-units. That is only 28,000 plus closing costs, well under your budget of 65k liquid to spend. Tampa, the main seat of Hillsborough county, has seen a cool off just like the rest of the country and getting a 4 unit in that price range is attainable.
As you mentioned, you first want to buy a place to live in; this could be the perfect setup: live in 1 and rent the other 3 out to cover your mortgage and maybe even have positive cash flow. Whatever you would normally pay for rent, put that away for 2 years and then after 2 years you have a nest egg for a downpayment for your next property. Rinse and repeat.
I am also a big fan of Robert Kiyosaki’s ‘Rich Dad, Poor Dad 'and in that book taxes are depreciation and tax savings are critical. If you go the multifamily route, I would recommend doing a cost segregation study within the first 2 years to accelerate depreciation, save on taxes and increase cash flow so you can attain your next property quicker.
If I could do it all over again and not have a spouse and dogs, etc. I would use my FHA loan for a 4 unit building. It is more difficult to house hack later in life if you have a larger family, so keep that in mind.
For example, in Hillsborough an FHA loan can finance up to $809,150 for 4 living-units. That is only 28,000 plus closing costs, well under your budget of 65k liquid to spend. Tampa, the main seat of Hillsborough county, has seen a cool off just like the rest of the country and getting a 4 unit in that price range is attainable.
As you mentioned, you first want to buy a place to live in; this could be the perfect setup: live in 1 and rent the other 3 out to cover your mortgage and maybe even have positive cash flow. Whatever you would normally pay for rent, put that away for 2 years and then after 2 years you have a nest egg for a downpayment for your next property. Rinse and repeat.
I am also a big fan of Robert Kiyosaki’s ‘Rich Dad, Poor Dad 'and in that book taxes are depreciation and tax savings are critical. If you go the multifamily route, I would recommend doing a cost segregation study within the first 2 years to accelerate depreciation, save on taxes and increase cash flow so you can attain your next property quicker.
Real Estate Agent · Chicago, IL · Member since 2017 · 2k+ posts · 2k+ votes
4y
Buy a duplex or a 4 unit if ok with apartments. A duplex can be two 3br 2ba two story townhouse type apartments so can work well as a spacious home/investment. Rates are up so make sure do your numbers well and that it will cashflow once you leave. Some people are running numbers on refinancing lower but I wouldn’t bet on it.
Thank you so much for extending a helping hand. It was great to receive such a quick reply to my first post. I really appreciate the specifics you provided to my situation. I have to admit that I will need to go over your tips a few more times to absorb it all. In reference to your opening lines, currently I don’t have any dogs or a spouse, although I look forward to having both soon, so I guess I have the flexibility you speak of.
I didn't realize that an FHA loan would allow me to purchase a 4-unit building and that I could do it with my current budget of $65K. Wow! You mean I could hit the ground running? Sounds intriguing. You're getting me to open my field of vision and reach for something out of my comfort zone, something bigger. Those numbers you provided are fascinating. Of course, I would then have to put off for a while (the dream of) buying and living in a single-family house, which is part of the sacrifice I need to make if I want to start generating cash flow from rentals to invest into more properties. I've lived in apartments all my life – sharing walls, ceilings, and floors with sometimes noisy neighbors. I thought I was done with that, but I guess not. The fourplex is a lot more financial risk than just one house for me for $230,000.
I’ll have to make sure it’s in a growth area where those units will always have tenants, which becomes a higher priority than my own comfort of living in an area I may like. I don’t understand something: Since in January I was approved for only up to a $350,000 30-year fixed conventional mortgage loan at 4% interest, isn’t it unlikely that I would be approved for a $809,150 loan? That’s a much bigger amount, hence bigger risk to the bank, right? I’ll need to spend a little more time figuring out your last part about cost segregation and accelerating depreciation for tax savings.
I notice you live in the Tampa area. I’ve never been there, but plan to visit and scout it out in late October. Would you say Hillsborough County has more job growth and stability than Volusia County, hence a safer bet for fourplex occupancy and tenant stability? I realize that Volusia County is near Orlando, with Disney as the big job draw, but if Tampa has a lot of Tech companies, is that better for my purposes?
I was glad to see that you’re familiar with Kiyosaki’s book. You probably understood a lot more of it than I did. By the way, what types of properties do you own? Do you and your husband manage the properties yourselves, or do you hire a property management company to do it for you?
You’ve given me some tools to work with and gotten me started on a path with some direction. I’m still scared, but more hopeful. Thank you!
Thank you so much for your reply. Would a fourplex be double the headache to manage and double the cost of upkeep and repairs than a duplex? Or even though it’s twice as big, it doesn’t really work that way?
I’ve never lived in a townhouse. One of the attractions for me of a single-family home is the extra space for storage, such as a 2-car garage or storage shed in the backyard. Do duplexes or fourplexes have a garage for one’s car, or usually just a Carport? Do they have front or back yards and a storage area? Perhaps I would need to rent a storage space elsewhere? That’s extra money right there. It looks like to make this work; I may need to downsize big time!
I appreciate your cautionary note about running the numbers in a realistic manner, so I’m not left holding the bag.
Investor · Tampa, FL · Member since 2016 · 679 posts · 288 votes
4y
Hello Wayne Basker, If you wait until the Fed stops raising Interest rates to lower Inflation, you may be able to find a Deal for half price. Do you know that if you can be a First Time Home Buyer and use the HUD listings and loans that you get all kinds of discounts? And then you live in your Home and Homestead it for two years it can be a Tax-free Sale of your Residence. You have to live in it for two out of five years to qualify and that's Tax-free up to $250,000. You need to study more and wait for a Deal after you know what your doing. Learn how to do Searches on Zillow for all the areas and States you think you might want to live.
If I had to start all over again, I'd look to acquire a 2-4 unit property with an FHA low-down payment mortgage.
Getting it under market value would be a bonus.
So, would using an FHA 203k renovation loan, which would allow me to buy something unqualified for a standard mortgage, which would weed out a lot of competition and push the price lower.
Hopefully, I would increase the value of the property in 1-2 years and be able to refi out of the FHA mortgage. I'd also learn a lot about maintenance and managing tenants.
Then, with my hands-on experience, I could decide if I wanted to repeat the process or target 5+ units - which my experience would help with lenders.
Thanks for those colorful tips. I like your optimism of how waiting a little longer will open up the possibility of my getting deals at half price!
I just went on the HUD website for the first time and was amazed at how many foreclosures there already are in some of the cities I'm interested in. I did not know about Homesteading and the tax advantages. I'll have to investigate that. You say I must live in the property for two out of the five years. What is the five in reference to? Do you mean out of five years of owning the property? So, in order to take advantage of those benefits I must not sell it before five years is up?
Yes, I see that I have a lot to learn. I’ll start becoming more familiar with doing searches on Zillow and read a little more in depth the data they provide on properties.
I see you’re in Tampa, Fl. Are you investing in the Tampa area instead of other Florida areas (such as Orlando, Jacksonville, etc.) for a particular reason, or you happen to live there already when you got into investing? What are pros and cons of Tampa?
Investor · Tampa, FL · Member since 2016 · 679 posts · 288 votes
4y
Hello Wayne, It amazes me that all the Newbies are so willing to jump into Investing without any knowledge. My last JOB was with a Union on Oil Tankers in 1999. While I sailed around the World I studied every minute possible. I Invested 40 years ago with a Mutual Fund guy in Seattle and made $100,000 in ten years to Invest in a Rental Property Portfolio in Tampa for my retirement. I am 74 and I sold my last house in Tampa two years ago to pay Cash for a 1500 sq. foot, 3/3 Townhome with garage and pool, like new, in a safe, quiet place in Valrico, Florida. The rest of my paid off properties are in Brazil. I did the Carelton Sheets, "Low and No Money Down," investing plan with an older Broker in S. Tampa. I attended 100 Get Rich Quick seminars and learned how to use the computer when it came out. If you do a Google Search you will find many 5 and 10 year plans with Real Estate to make a Million. I always thought that was a mistake. The one thing I learned from Robert Kiyosaki and "Rich Dad, Poor Dad," was that the most important thing is Daily Cash Flow. I joined a Stock Trading Club with 500 old guys who had a Million Dollars and all they ever wanted was a safe place to Park their Cash and go golfing. There is a progression to Investing in anything. I learned Mutual Fund investing and moved to individual Stocks. Then, Options on Stocks and finally Futures. I make my Daily Cash Flow with micro-scalping the ES mini Future. My partner makes $10,000 a day in two hours and never ends the day with a loss. With single family homes, you buy one or two to rent and fix them up and then sell to buy a Duplex or Fourplex and graduate from there to Commercial if you want to end up with a real Rental Portfolio. The best way if to Farm a Neighborhood and not be an Absentee Owner. Two years ago Robert Kiyosaki said he owned 33,000 Apartments etc. and he was only Selling. His method is the commercial use of Credit, like Donald Trump and play hardball with the Banks if things go bad. It's not the time to Buy at the Top of the Market with the Fed raising Interest rates to lower Inflation and talks of War with China. I watched NBC News from San Francisco this morning and all the talk was the $100,000 parking spot For Sale in the underground garage and not having enough energy to run the State. Idiots! I grew up in Palo Alto and made tons of mistakes. My life could have been a hundred times easier if I had the Mentor at that time. In the Viet Nam War days the only thing you could study was Law or Medicine. Girls could be Nurses or Teachers or Secretaries. There is no excuse to make mistakes now if you know how to use a computer. You can study all the Bigger Pockets books etc. Learn the methods to make Money with Real Estate Investing. The safest and easiest way to make Money with Real Estate is to Buy your First Home and Homestead it for less taxes for two years. The IRS rule for Tax-free Sale of your Residence in Online. Go there and learn the rule. You can rent for three out of the last five years to Sell Tax-free. The Method is to find a Fixer Upper and move into that as your Home. Look for a second Fixer Upper to Rent until you Sell your Residence, Tax-free when the value goes up and move into your Rental to do it again. Tax-free Money Machine. When you learn how to do Searches on Zillow, you need to look at all the selections from Land to Manufactured Homes to Townhomes and Apartments and Houses etc. No one ever explains how to easily estimate what a property is worth by finding what a vacant lot in that area is worth and adding on the New Construction Cost of a house with the same Square Footage. Then, you deduct all the negatives from the property you are looking at to get an idea of what it is really worth. Lots of properties here in the Tampa area could be built new for the same price. Just have to do your Due Dilligence. Learn to Work Smarter, Not Harder. BRRR at this time??? If you know how to play Pac Man? Then, do a Search for Trading the S&P eMini or Scalping the ES etc. Learn how to short term trade just one thing like Gold GC, until it is easy for you to pay for gas and beer. The Real Estate I have was always my Buy and Hold Investments while I did more study and traveled around the World. I own my Townhome, have Zero Debt, flush with Cash and all the property in Brazil. Now, if my Health holds out I can plan to go to beach.
Thank you so much for extending a helping hand. It was great to receive such a quick reply to my first post. I really appreciate the specifics you provided to my situation. I have to admit that I will need to go over your tips a few more times to absorb it all. In reference to your opening lines, currently I don’t have any dogs or a spouse, although I look forward to having both soon, so I guess I have the flexibility you speak of.
I didn't realize that an FHA loan would allow me to purchase a 4-unit building and that I could do it with my current budget of $65K. Wow! You mean I could hit the ground running? Sounds intriguing. You're getting me to open my field of vision and reach for something out of my comfort zone, something bigger. Those numbers you provided are fascinating. Of course, I would then have to put off for a while (the dream of) buying and living in a single-family house, which is part of the sacrifice I need to make if I want to start generating cash flow from rentals to invest into more properties. I've lived in apartments all my life – sharing walls, ceilings, and floors with sometimes noisy neighbors. I thought I was done with that, but I guess not. The fourplex is a lot more financial risk than just one house for me for $230,000.
I’ll have to make sure it’s in a growth area where those units will always have tenants, which becomes a higher priority than my own comfort of living in an area I may like. I don’t understand something: Since in January I was approved for only up to a $350,000 30-year fixed conventional mortgage loan at 4% interest, isn’t it unlikely that I would be approved for a $809,150 loan? That’s a much bigger amount, hence bigger risk to the bank, right? I’ll need to spend a little more time figuring out your last part about cost segregation and accelerating depreciation for tax savings.
I notice you live in the Tampa area. I’ve never been there, but plan to visit and scout it out in late October. Would you say Hillsborough County has more job growth and stability than Volusia County, hence a safer bet for fourplex occupancy and tenant stability? I realize that Volusia County is near Orlando, with Disney as the big job draw, but if Tampa has a lot of Tech companies, is that better for my purposes?
I was glad to see that you’re familiar with Kiyosaki’s book. You probably understood a lot more of it than I did. By the way, what types of properties do you own? Do you and your husband manage the properties yourselves, or do you hire a property management company to do it for you?
You’ve given me some tools to work with and gotten me started on a path with some direction. I’m still scared, but more hopeful. Thank you!
If I had to start all over again, I'd look to acquire a 2-4 unit property with an FHA low-down payment mortgage.
Getting it under market value would be a bonus.
So, would using an FHA 203k renovation loan, which would allow me to buy something unqualified for a standard mortgage, which would weed out a lot of competition and push the price lower.
Hopefully, I would increase the value of the property in 1-2 years and be able to refi out of the FHA mortgage. I'd also learn a lot about maintenance and managing tenants.
Then, with my hands-on experience, I could decide if I wanted to repeat the process or target 5+ units - which my experience would help with lenders.
Good luck with whatever you decide to do!
Hi Drew,
I appreciate your for the tips. I'll look into the FHA loan option with it's much lower interest rate, and which I had not considered before. I like how you get me to think further down the road and how after doing well with the smaller stuff (including properly managing tenants) I can take on a bigger project with more units. Thanks.
Lender · Seattle, WA · Member since 2014 · 2k+ posts · 899 votes
4y
@Wayne B.- thanks - make sure your loan pre approval is accurate and updated ( even if you updated it within the past 30 days - rates might be different / higher ...if your recent loan pre approval update is recent ( within the past week - then thats fine ...but stay in contact with your lender regarding possible properties and current rates ...also if you consider a condo or townhome - watch the HOA dues as these can affect your qualifying ratios
Thanks Dave - very interesting. Yes, I have not updated for 60 days and rates have changed since then. Also, due to this BP forum, now that I see the value of working with a lender and a realtor who are actual investors themselves, it makes sense to eventually search for and change to the latter. That's a whole other issue. HOA is off the table for me, as the thought of it is unappetizing. But as I learn more, I probably need to keep my options open.
Hello Wayne, It amazes me that all the Newbies are so willing to jump into Investing without any knowledge. My last JOB was with a Union on Oil Tankers in 1999. While I sailed around the World I studied every minute possible. I Invested 40 years ago with a Mutual Fund guy in Seattle and made $100,000 in ten years to Invest in a Rental Property Portfolio in Tampa for my retirement. I am 74 and I sold my last house in Tampa two years ago to pay Cash for a 1500 sq. foot, 3/3 Townhome with garage and pool, like new, in a safe, quiet place in Valrico, Florida. The rest of my paid off properties are in Brazil. I did the Carelton Sheets, "Low and No Money Down," investing plan with an older Broker in S. Tampa. I attended 100 Get Rich Quick seminars and learned how to use the computer when it came out. If you do a Google Search you will find many 5 and 10 year plans with Real Estate to make a Million. I always thought that was a mistake. The one thing I learned from Robert Kiyosaki and "Rich Dad, Poor Dad," was that the most important thing is Daily Cash Flow. I joined a Stock Trading Club with 500 old guys who had a Million Dollars and all they ever wanted was a safe place to Park their Cash and go golfing. There is a progression to Investing in anything. I learned Mutual Fund investing and moved to individual Stocks. Then, Options on Stocks and finally Futures. I make my Daily Cash Flow with micro-scalping the ES mini Future. My partner makes $10,000 a day in two hours and never ends the day with a loss. With single family homes, you buy one or two to rent and fix them up and then sell to buy a Duplex or Fourplex and graduate from there to Commercial if you want to end up with a real Rental Portfolio. The best way if to Farm a Neighborhood and not be an Absentee Owner. Two years ago Robert Kiyosaki said he owned 33,000 Apartments etc. and he was only Selling. His method is the commercial use of Credit, like Donald Trump and play hardball with the Banks if things go bad. It's not the time to Buy at the Top of the Market with the Fed raising Interest rates to lower Inflation and talks of War with China. I watched NBC News from San Francisco this morning and all the talk was the $100,000 parking spot For Sale in the underground garage and not having enough energy to run the State. Idiots! I grew up in Palo Alto and made tons of mistakes. My life could have been a hundred times easier if I had the Mentor at that time. In the Viet Nam War days the only thing you could study was Law or Medicine. Girls could be Nurses or Teachers or Secretaries. There is no excuse to make mistakes now if you know how to use a computer. You can study all the Bigger Pockets books etc. Learn the methods to make Money with Real Estate Investing. The safest and easiest way to make Money with Real Estate is to Buy your First Home and Homestead it for less taxes for two years. The IRS rule for Tax-free Sale of your Residence in Online. Go there and learn the rule. You can rent for three out of the last five years to Sell Tax-free. The Method is to find a Fixer Upper and move into that as your Home. Look for a second Fixer Upper to Rent until you Sell your Residence, Tax-free when the value goes up and move into your Rental to do it again. Tax-free Money Machine. When you learn how to do Searches on Zillow, you need to look at all the selections from Land to Manufactured Homes to Townhomes and Apartments and Houses etc. No one ever explains how to easily estimate what a property is worth by finding what a vacant lot in that area is worth and adding on the New Construction Cost of a house with the same Square Footage. Then, you deduct all the negatives from the property you are looking at to get an idea of what it is really worth. Lots of properties here in the Tampa area could be built new for the same price. Just have to do your Due Dilligence. Learn to Work Smarter, Not Harder. BRRR at this time??? If you know how to play Pac Man? Then, do a Search for Trading the S&P eMini or Scalping the ES etc. Learn how to short term trade just one thing like Gold GC, until it is easy for you to pay for gas and beer. The Real Estate I have was always my Buy and Hold Investments while I did more study and traveled around the World. I own my Townhome, have Zero Debt, flush with Cash and all the property in Brazil. Now, if my Health holds out I can plan to go to beach.
Hi Michael,
As you can see, it has taken me some time to reply to your message, as you laid out quite a smorgasbord of information and I've needed time to look up and try to understand so much of it. I'm encouraged by the specific suggestions you give on how to start small and build from there. It looks like you experimented and succeeded with many types of investments in your life and had lots of interesting adventures with the experiences. Like you say, now we have the benefit of the computer and the Internet with so many resources, so there is no excuse. Although, I am continually surprised at how even so, I often let fear of the unknown, fear of failure, or just plain distraction keep me from moving forward. Staying focused is a daily challenge. Kiyosaki talks a lot about that in his book too. How wonderful that in the end you are debt-free and can enjoy the fruits of your labor! Thank you for setting the example for the rest of us.
You've got a bunch of info here. Just be careful of the "upsell" or provided background info....
If you were pre-approved for $350k on a conventional loan, you would be approved for less on a FHA. Bottom line is you still need to be able to qualify for the loan.
Yes, starting out with a multi-family is a common way to go. FHA loans allow the lowest money down at 3.5%. While conventional loans can be as low as 5%, that is only for single family homes. As you increase the number of units the money down increases to 20%-25% (I forget the exact number). But, its good to know that you have the credit score and reserves to qualify for the conventional loan. Just realize that the FHA will be a little more expensive --- there is not free lunch.
That being said, with the multi-family, you can use the rent from the other units to help you qualify for the property. So, it IS possible to get a loan for more than $350k in your case. However, it will be dependent on the property and what sort of rent you can get for the other units.
Lender · Tampa, FL · Member since 2020 · 113 posts · 119 votes
4y
@Wayne B. I can't say I'm very familiar with the Orlando area, but I know Pasco well. Pasco's prices are considerably less than Tampa or St Pete and it's a very easy area to invest in for a few reasons:
- Majority of buildings are 1970s or newer and block (don't buy frame in Florida if you like appreciation)
- Very easy to comp for both rents and sale price to make sure you're getting a good deal. Developers built a lot of copy-and-paste type homes and many of the neighborhoods have similar layouts.
- Relatively less competitive than other areas in Florida so you have more negotiation power for listed and off-market deals.
The big thing to keep in mind with Pasco is that there are a lot of sinkholes in that county. Sinkholes or remediated sinkholes can cut the value of a property by 30-50% so make sure your bases on covered on the sinkhole status of a property!
You've got a bunch of info here. Just be careful of the "upsell" or provided background info....
If you were pre-approved for $350k on a conventional loan, you would be approved for less on a FHA. Bottom line is you still need to be able to qualify for the loan.
Yes, starting out with a multi-family is a common way to go. FHA loans allow the lowest money down at 3.5%. While conventional loans can be as low as 5%, that is only for single family homes. As you increase the number of units the money down increases to 20%-25% (I forget the exact number). But, its good to know that you have the credit score and reserves to qualify for the conventional loan. Just realize that the FHA will be a little more expensive --- there is not free lunch.
That being said, with the multi-family, you can use the rent from the other units to help you qualify for the property. So, it IS possible to get a loan for more than $350k in your case. However, it will be dependent on the property and what sort of rent you can get for the other units.
Hope this helps. Good luck.
Hi Michael – those are helpful tips. So, as I increase the number of units I want to buy (duplex, triplex, quadplex), the money I must put down increases to 20%-25% - good to know. No wonder you're also recommending I go with an FHA loan. So even with its own mortgage insurance and other annoying limitations, FHA is sounding more practical than the Conventional loan, which may go up again before the end of the year to 7%! As of last week, my TransUnion credit score was 813. I wish that were helpful for an FHA loan, but I don't think it is. It probably only matters for a Conventional loan. Thanks for informing me that with the multi-family property, I can use the fact that I will be receiving rent from the units to help me qualify for a bigger loan. As part of the application process, do I need to prove to the lender that based on typical rents for similar properties in that geographic area, I would be getting such and such amount of income from tenants? Would researching and organizing such a presentation ahead of time make a difference? Thanks!
Investor · Tampa, FL · Member since 2016 · 679 posts · 288 votes
3y
Hello Wayne Basker in California again...You are so eager to get yourself in trouble, Wayne. Slow, way, down and really learn how to use Zillow to do all the different types of Searches for Land, Manufactured, Condos, Townhomes, Homes and Multi-family. You should always know what the Land is worth, before you start looking at the rest of the Math. Bigger Pockets will show you the different ways to Invest in Real Estate, but, that does not mean that this is the way to make Real Money with Risking your hard won, nestegg. Be very careful. At this time we are at the top of the Market and going Down. We are in a Recession and the real part of it will START after the Fed stops raising Interest Rates in 2023. Wake Up! You can do all the Math you want and with 30yr. Mortgage rates going to 7 and headed for 10%, the whole picture is going to drastically change, quickly. You should take a few steps back and calm down, this is not 911. You don't need to do anything this year and use Time to learn more by watching what happens in a downtrend with the Markets. You can continue to save your Downpayment Money in Dollars as you will be able to Buy more after the Fed stops raising interest rates. One question is that you have a JOB in SF and why would you move? If you are renting outside of the City and commute into the center to work or work from your rented home, why move? My brother went to Stanford and has a Master's in Business and Finance. He was a VP with BofA as a Loan Workout guy when the bad times hit the Real Estate Market in 2008. All during the Lockdowns, he lived in his beautiful Home on a hill in Thousand Oaks, CA. He works at home for the IRS, doing online Bank Audits...He knows how to Invest. He had a Hedge Fund at one time and now is stuck, like all the big Buy and Hold guys, with their Stocks and Bonds, waiting for the Fed. Jesse Livermore said, "When your Right, Sit Tight!" When you are Wrong, with the Stocks and Bonds that your bought, you Have to Sit Tight. Robert Kiyosaki said last year that he owns 31,000 Apartments and he is just Selling! The only thing I learned from Kiyosaki is that you need to create Daily Cash Flow. Got it? Buying a Single Family House that may make you $100 a month is Not the Way in a Downtrend. You need to study where you are and start going to the local Bay Area Meet Ups to get over your nervousness. You can watch all the free youtube videos by Del Walmsley. Try, "Del Walmsley's Life Lessons Its not the money its the lifestyle." Also, watch all the free youtube videos by Nick at ReventureConsulting. Try, "Home Sales Collapse to 10 year low Realtors Freaking Out." You have to understand that Real Estate holdings are only part of a well rounded Investment Portfolio. You read Kiyosaki. Do you know that he never really had a Rich Dad and his father was a highly Educated and Positioned Poor Dad? Do you understand that Robert Kiyosaki is the biggest promoter of "Using Other People's Money," to make Money? He advocates using Credit to the Max, like Donald Trump does. They encourage you, along with all the Real Estate Agents with Bigger Pockets, to go into Debt at the Wrong Time. The other Extreme is Dave Ramsey...you know the, "I'm Debt Free!" guy? Listen to Dave on the radio and go watch his free yourtube videos to get the other viewpoint for Investing. How many members of the Bigger Prockets Club know what it feels like to own your Home Debt Free, with other Paid Off Rental or Commercial properties and Cash in the Bank at a time like this? How many Pros with Bigger Pockets know how to Trade every day on their laptops and make $1000 or more in a couple hours? How many Real Estate Agents actually own their own Home Debt Free? Sales are where the Money is at and you can pick your poison and Sell, Cars, Boats, Planes and things online with Ebay etc. Take some more Time and get the Big Picture. Investing means that you are taking on Longterm Risk. Trading, like in a Flip or BRRR situation, is a Short Time Risking your Money and Time. I am a micro-scalping Futures Trader. I trade at home on my laptop each day and I have my paid off Townhome in Valrico, Florida, along with paid off houses and a farm and a small mountain ranch in Brazil. I am a hands on Landlord and I learned from my Handymen, how to fix just about everything in a house. I built my houses in Brazil out of cement and rebar and bricks. I just bought ten Steers to raise on my ranch, with my neighbor/partner on the mountain while I am not there. There are always the Numbers, the Math to work out ahead of time and try to make each Investment work out. Cattle in Brazil is a Buy the young Steers and let them pasture, with vacinations and salt licks, for up to two years and double their weight to Sell when the Market is High. I have a friend in the North who wants me to Invest in Shrimp Farming as anything you do in Brazil with Seafood is Tax-free. Did you know that there is a Food and Water Crisis right now on our Planet? The Townhome next to me was just bought by a Smart lady doing Stupid Things. She had a horrible Agent and paid a Premium for the 3/3, 1689 sq. foot Townhome with a full downpayment on a 30 year loan that needed cosmetic work and the day after she moved in, she wants to Sell. So, I am helping her with some of the Honey Do List fixups and we have talked about the IRS law that makes it a Tax-free Sale of her Residence in two years. You need to look up the 2 out of 5 year Rule on the IRS site so you understand how to set up a Tax-free Residential Real Estate machine for yourself. I have suggested to her that later on we could make a Deal at the right Price or the wrong Price with Owner Financing. Do you see how to keep your eyes open for the next Deal? Did you read, "The Art of The Deal?" Once you learn how to "Horse Trade," you will find opportunities all over the place. My Trading partner bought a new Ford Ranger Hybrid when they came out at $20,000. He told his son, who bought one and sold it in a month later for a profit to pay off one of those little Econo Sedans, like a Fit? My 80 year old Real Estate friend and neighbor in Tampa, has three lots on a corner next to my ex-girlfriend/partner with a big, block, 3/2 with two car garage in Seminole Heights. It is on a hill just up from the Hillsborough River next to a big Park and near a Grammar School. He has been fixing it up for three months to Rent and I think I have convinced him to Sell. I am going to take it to the "Pro" who arranged the Sale of my four Commercial lots in South Tampa and see if I can get a Finder's Fee if he will be able to do a Deal. I have my friend's Price for the three 50 X 100 foot lots with the big house on the corner in a primo residential area and one of the safest places to live in Tampa. Lots are selling there for $400,000 plus and new 3/2 houses are selling for over $700,000. It's still a crazy Market in the right places. Do you get the Bigger Picture? I hope so. Get back if you have more ideas to run through, after the youtube videos and some of those local Meet Ups in the Bay Area.
Investor · Tampa, FL · Member since 2016 · 679 posts · 288 votes
3y
Hello David M. from NJ, I agree that if you were not following the conversation with Wayne Basker, that my examples of What Not to Do, are hard to follow. I can simplify the thread for you..."The Bigger They Are, The Harder They Fall...in a Recession, leading to a Depression."
Morris County, NJ · Member since 2020 · 5k+ posts · 2k+ votes
3y
@Michael Haynes ahh.. Yes, keep it simple.. Don't follow the sales talk (at least I don't). Diversify, which is to say don't just invest in real estate (this is definitely not my only investment strategy). Just be careful giving that we are going into or are in downturn. About right?
Investor · Tampa, FL · Member since 2016 · 679 posts · 288 votes
3y
David M. you do understand the message I have for the Newbie's on BP. Can you imagine how are all the BP members who Invested in the communities destroyed this week by hurricane Ian in Florida? One of my oldest Real Estate Agent friends was told by her Broker 40 years ago, "You have to learn how to take the losses."
Real Estate Agent · Pasadena, CA · Member since 2015 · 476 posts · 263 votes
3y
Hello Wayne,
It sounds to me like you can benefit from a buyer consult from a really good Realtor or Lender.
It is great to come to the forums of course, but as you can see, you always get many, many suggestions and ideas that are not 100% catered to you and your unique situation.
There are many avenues you can take here in CA or in other states and learning the ins and outs in a very systematic and low pressure way would be it.
Is there a reason why you have not had that conversation with a Real Estate professional that can guide you in your thinking?
1. Pros and cons of condos?
2. Starting with a SFR in CA and being a bit creative with the property?
3. Buying 2,3,4 units here our out of state and what you would qualify for in each scenario?
4. The implications of buying multiple units (managing, taxes, etc )
5. Down payment, loans and financial matters
6. Rental loans that would take the property cash flow into account and not your income…
The list goes on. Let me know if you need a referral to a lender ?
@Wayne B. I can't say I'm very familiar with the Orlando area, but I know Pasco well. Pasco's prices are considerably less than Tampa or St Pete and it's a very easy area to invest in for a few reasons:
- Majority of buildings are 1970s or newer and block (don't buy frame in Florida if you like appreciation)
- Very easy to comp for both rents and sale price to make sure you're getting a good deal. Developers built a lot of copy-and-paste type homes and many of the neighborhoods have similar layouts.
- Relatively less competitive than other areas in Florida so you have more negotiation power for listed and off-market deals.
The big thing to keep in mind with Pasco is that there are a lot of sinkholes in that county. Sinkholes or remediated sinkholes can cut the value of a property by 30-50% so make sure your bases on covered on the sinkhole status of a property!
Jared, thank you for your very useful tips. If you have a group that meets in the Tampa area I would love to stop by and learn a few things from you all. I'm in the area now. I can give you my contact info and vise versa.
It sounds to me like you can benefit from a buyer consult from a really good Realtor or Lender.
It is great to come to the forums of course, but as you can see, you always get many, many suggestions and ideas that are not 100% catered to you and your unique situation.
There are many avenues you can take here in CA or in other states and learning the ins and outs in a very systematic and low pressure way would be it.
Is there a reason why you have not had that conversation with a Real Estate professional that can guide you in your thinking?
1. Pros and cons of condos?
2. Starting with a SFR in CA and being a bit creative with the property?
3. Buying 2,3,4 units here our out of state and what you would qualify for in each scenario?
4. The implications of buying multiple units (managing, taxes, etc )
5. Down payment, loans and financial matters
6. Rental loans that would take the property cash flow into account and not your income…
The list goes on. Let me know if you need a referral to a lender ?
Good luck.
Hi Sebastian,
Thank you for reaching out. I was impressed with the list you laid out of important issues to consider. Yes, I could really use a consultation from someone like you! I've been seeking someone who understands my situation and has the experience and skill to help me navigate these treacherous waters. Someone who is willing to answer my questions, not just once, but as I take actions on different items, which I have been lately. It feels like I'm just throwing darts in the dark. What is the best way to contact you?
