All Forum Posts by: Brianna Billings

Hi Windell!

From listening to the recent Bigger Pockets podcasts, something that has been coming up frequently is the idea to focus on investing in real estate in areas that are appreciating, rather than just relying on cash flow. I have noticed that Alabama achieves cashflow seemingly well (referencing the homes listed on 'Rent to Retirement'), however from my perspective, there is not much keeping people in that area, or causing an influx in the population. 

A strategy that I have noticed some taking part in is targeting areas that have recently added major companies bringing lots of jobs, such as Intell and Amazon. In particular, there was an Amazon warehouse recently created in Ohio, raising the value of the surrounding real estate due to demand. 

If I were you, I would target locations with large potential for growth. However, if you were able to find a deal in Mongomery, and the numbers worked out to where there could be a vacancy without major loss, perhaps that wouldn't be a bad place to start. Especially if the property had a value add opportunity. 

Lastly, I would contact a few investor friendly agents in that area, and obtain an idea of what trends they are currently seeing in the market. 

Hope this helps!

Brianna

Hi Michael,

Reading this story was somewhat liberating in that it is insane to see how much adversity you faced in your first deal, but so exciting and promising that you got through it. Thanks for sharing!

Brianna

Hi Mike!

I am also learning how to be a real estate agent. Something I keep in mind when researching on YouTube is finding someone the most similar to myself in regard to personality, so that when you viewe their videos, you could see myself easily applying the information. For instance, I get a lot of value from Caryse Eccleshall, because she is also female and has an aspirational demeanor. I watch Brandon Mulrenin for his cold calling content, just for knowledge, however when I obtain my license I anticipate using a different approach to his when it comes to personality and tone. My conclusion is that it is beneficial to find a real estate agent on Youtube who you find most relatable and does the type of transactions you think your niche will be primarily in. I would look the agent up as well, to make sure that they are a top performing agent (because you should only take advice from someone you would want to switch places with).

Hope that helped!

Brianna

Thank you Kenneth!

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $358,000
Cash invested: $45,000

This is my first short-term rental property investment, located in Green Valley Lake, CA. Owning and running a short term rental has been a great (and grueling) learning experience, and there have been a lot of lessons learned along the way. My favorite part about this process was being able to fix-up the home and make it an aesthetic and cozy place that people want to spend their vacation in.

What made you interested in investing in this type of deal?

My family has always traveled to Big Bear, CA at least once a year for New Years, and I loved the idea of owning a family cabin that we could stay in for years to come. I also was interested in learning about owning a Short-Term Rental, since the owner is in charge of furnishing and decorating the home to make it appealing to renters. Lastly, the returns on Airbnb's from a cash-flow perspective seemed substantial.

How did you find this deal and how did you negotiate it?

I found this deal driving in the area after viewing another property (that property was a former Airbnb that was listed for sale, but required a lot of work to get it to be livable). This property was appealing because the only upgrades required were cosmetic, and it had great bones. The previous owners had done a lot of improvements to get it to great living condition, and a lot of major upgrades were already complete (Washer/dryer, AC, heaters, Security, etc.).

How did you finance this deal?

This deal was financed using the 10% down vacation/second home loan.

How did you add value to the deal?

I added value to this deal by making a lot of cosmetic improvements. While the home itself was nice, it was not decorated to be a successful and eye-catching Airbnb. We used a consistent color scheme throughout (earthy green hues from Magnolia home), and printed old graphics of the Green Valley Lake area to put on the wall for travelers to get inspiration from. The theme of the accessories was tribal patterns layered with natural textures.

What was the outcome?

The outcome was an STR that was booked the majority of the year, and I did have "Super Host Status. However, I was not great at using the algorithm to my advantage for pricing, so the overall income was not what it should have been for the first year. In seeing this and also being overwhelmed with the constant demand of running an STR on top of my job (in which I work over 50 hours a week on a construction site), I decided to hire a property management company.

Lessons learned? Challenges?

My main lesson learned was once again (if you read my first rental investment story, my lesson learned was similar), to get help from experts. I ran the property for over a year and while I did a great job ensuring that renters were happy and we obtained great ratings, I did not have my grasp on the nightly rates, which lost me a lot of revenue. I hired a PM company that I am super happy with so far. They are small and new, but understand the algorithm and do a great job maximizing profit.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Yes. I would highly recommend "Rather Be Properties", for short-term rental management. In addition, I worked with Victoria Davis, with Compass Real Estate, who did a great job steering me in the right direction in investing in an area I knew little to nothing about. Highly recommend making sure that your agent lives in the town that you are investing in, because they are able to understand potential risks to certain areas, especially in snowy conditions (example: access, plowing, etc.).

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $565,000
Cash invested: $40,000

My first real estate purchase was a 2 bed, 1 bath, single family residence in La Mesa, CA. It is currently being rented to great tenants, with two small kids and two dogs. The house was built in 1942, and did not require a lot of upgrades, except for the kitchen and bathroom. The lot is huge, with room for kids and dogs to play.

What made you interested in investing in this type of deal?

I was primarily interested in this deal because I wanted to make the most out of my purchase budget. La Mesa is one of the nicest neighborhoods I could afford in San Diego County at the time, it has historic homes and a charming downtown center. This area is continuing to become more desirable, thus raising the value of the properties. The lots in this area are also great for a potential ADU build given their size and alley access.

How did you find this deal and how did you negotiate it?

I found this deal on Trulia. It was Easter weekend that we toured the home, which I think is the reason there was not as much competition. This home purchase was in the middle of the sellers' market, so we offered $30k over asking (as was typical during this time). Originally, the sellers went with another offer however, the original offer they accepted did not fill out or submit all the appropriate paperwork, so they ultimately accepted my offer.

How did you finance this deal?

This deal was financed with a 5% down conventional loan. My interest rate is 3.25%.

How did you add value to the deal?

I added value to this deal through some minor cosmetic fixes of the bathroom and kitchen. Fixtures throughout the home were also replaced. In the future, the goal is to add an ADU in the back of the home. This will significantly raise the rental income in proportion to the monthly payments.

What was the outcome?

The outcome was overall positive. I am not achieving the cashflow that I would like out of my investments, however the appreciation was on my side with this one. I am really grateful to have such great tenants that pay on time, only call for fixes that are necessary and reasonable, and who seem to be long term (less turnover). While I think I could have been more strategic with my first purchase (hustled for an off-market deal, etc.) I am happy to have gotten my feet wet.

Lessons learned? Challenges?

My main lesson learned with this house was to seek the right people as resources when making a purchase. I initially sought investor friendly agents, but ultimately used an agent who I met at an open house. While it all worked out, and luckily my agent was able to close the deal, I would have really benefitted from advice from an agent who understands investing, and could have steered me in the right direction to make the most of my capital.

@Twana Rasoul I’m really gravitating toward the idea of the duplex. I’m going to contact my lender and see what my new budget would be taking the duplex into account. Thanks so much for your input! 

Thank you all for the responses! I have a few "inside deals" that I am pursuing from potentially my uncle (condo he currently rents out) or my neighbor (house with enough room for ADU). If these don't end up working out, I'll at least have more time to learn more before my first deal.

Definitely took notes on the possibility to use the duplex to supplement the loan (if I understood correctly, the bank could factor the rental income from the duplex into the loan). There are a few properties within my range currently, however they are not in the best neighborhoods. I may be able to afford a duplex in a relatively better area if the bank will account for that in the loan.

Also going to look into the post tax Roth 401k, I was under the impression that my Roth IRA was the same thing as that, so I'm going to have to do some follow up research on that.

Also took note about not leveraging myself too much on my first property, just in case things go south. 

Once more, I really appreciate the time everyone took to respond, and I will hopefully post an update soon!

Hello All, 

I graduated from undergraduate in May 2020 with no debt (low tuition cost, scholarships, and a little help from my parents). I started my first salaried job ($80,000k per year) in early August 2020. At that time, I had about $11k in my bank account and $9k in a Roth IRA that I had started about 2 years prior. I kept my high school car which is 100% paid off, and I pay my parents for insurance twice annually (about $1000 total). I also opted to continue to live with my parents, rent free. Because all I pay for is gas and food, I have been able to save most of my taxed salary and currently have $38k in my savings and $12k in my ROTH IRA. I have also been putting 10% pre-taxed income into my 401k and have about $4k in that; 6% will be matched following 1 year of employment, in August 2021.

When I reached 6 months of of employment, I applied for home loan preapproval from 4 different lenders. My max loan currently (30 years, 2.855% APR) is for a $580,000 purchase price, with 5% down ($29,000). I am able to purchase a $600,000 home with this lender if I increase my down payment and closing costs to $50,000. This would take me about 15 more weeks to accomplish at my currently savings rate.

I would like to purchase my first property with the intention to occupy one room and rent out the remainder (I am actually moving in with my Grandma for the foreseeable future, she is 92 years old. So until I need to live elsewhere, I could potentially rent out all rooms or the house/condo as a whole? I am not sure if that is an issue with the rules for a first time home owner). I live and work in San Diego, where property is pretty pricy. I have a few options outlined below and would like to get more experienced opinions on what my move should be. 

1) Single family home inland with large property: These are going for between $450k - $600k. If the property is large enough, I could build an ADU on it in a year and also collect rent from that. Only issue is that the rents are barely covering the mortgage payments it seems. I think the only way I would make money every month would be with the ADU.

2) Condo in beachside communities: The ones in my price range are between 2-3 bedrooms and 1-2 baths. They are going for between $450k and $600k. I like this idea because I surf, so if I need to ultimately stay in my first property, I would feel way better about being close to the beach. My hesitation with this option is the HOAs I am seeing and the lack of potential in the property. The HOAs are around $300/month, which really cuts into the profitability it seems. Also, unlike the single family home, I am limited in the amount of additions to the property that could potentially increase rental income as well as appreciation. 

3) Condo in inland communities: These go for between $350k to $450k. About 2-3 bedrooms and 1-2 baths. My hesitation with this is that it is well below my budget. My idea was to make the most of the 5% down payment, since I only get that opportunity on my first property I believe. I want to leverage myself as much as possible in this first property so I am able to take out more money from it in the future. Is this a correct way of thinking, or should I buy anything that produces cashflow each month?

3) Any other ideas? Things that you noticed I am confused about/need clarification on?

Sorry for the essay! I really appreciate anyone who took the time to read this. 

Thank you!

Bri

Hello All, 

I graduated from undergraduate in May 2020 with no debt (low tuition cost, scholarships, and a little help from my parents). I started my first salaried job ($80,000k per year) in early August 2020. At that time, I had about $11k in my bank account and $9k in a Roth IRA that I had started about 2 years prior. I kept my high school car which is 100% paid off, and I pay my parents for insurance twice annually (about $1000 total). I also opted to continue to live with my parents, rent free. Because all I pay for is gas and food, I have been able to save most of my taxed salary and currently have $38k in my savings and $12k in my ROTH IRA. I have also been putting 10% pre-taxed income into my 401k and have about $4k in that; 6% will be matched following 1 year of employment, in August 2021.

When I reached 6 months of of employment, I applied for home loan preapproval from 4 different lenders. My max loan currently (30 years, 2.855% APR) is for a $580,000 purchase price, with 5% down ($29,000). I am able to purchase a $600,000 home with this lender if I increase my down payment and closing costs to $50,000. This would take me about 15 more weeks to accomplish at my currently savings rate.

I would like to purchase my first property with the intention to occupy one room and rent out the remainder (I am actually moving in with my Grandma for the foreseeable future, she is 92 years old. So until I need to live elsewhere, I could potentially rent out all rooms or the house/condo as a whole? I am not sure if that is an issue with the rules for a first time home owner). I live and work in San Diego, where property is pretty pricy. I have a few options outlined below and would like to get more experienced opinions on what my move should be. 

1) Single family home inland with large property: These are going for between $450k - $600k. If the property is large enough, I could build an ADU on it in a year and also collect rent from that. Only issue is that the rents are barely covering the mortgage payments it seems. I think the only way I would make money every month would be with the ADU.

2) Condo in beachside communities: The ones in my price range are between 2-3 bedrooms and 1-2 baths. They are going for between $450k and $600k. I like this idea because I surf, so if I need to ultimately stay in my first property, I would feel way better about being close to the beach. My hesitation with this option is the HOAs I am seeing and the lack of potential in the property. The HOAs are around $300/month, which really cuts into the profitability it seems. Also, unlike the single family home, I am limited in the amount of additions to the property that could potentially increase rental income as well as appreciation. 

3) Condo in inland communities: These go for between $350k to $450k. About 2-3 bedrooms and 1-2 baths. My hesitation with this is that it is well below my budget. My idea was to make the most of the 5% down payment, since I only get that opportunity on my first property I believe. I want to leverage myself as much as possible in this first property so I am able to take out more money from it in the future. Is this a correct way of thinking, or should I buy anything that produces cashflow each month?

3) Any other ideas? Things that you noticed I am confused about/need clarification on?

Sorry for the essay! I really appreciate anyone who took the time to read this. 

Thank you!

Bri