All Forum Posts by: Benjamin Sulka

 Exactly, tons of businesses are family businesses. Sure, some don't work out but the same is true for non-family businesses. Personally I would rather run a family business with people I love and trust. I invest with my brother and would have no issue investing with my parents either.

If you invest with the wrong people, whether it's family or not, things are likely to go poorly. I have never liked the cliche advice of never investing with friends or family.

Personally I would not rent a unit to a friend though.

Not if I wanted to keep them as friends, same recommendation for family.  I keep my business and personal life separate and have declined family even though they were highly qualified because I’m not even putting myself in that situation and they understood. 

I haven't rented to a friend before because I haven't gotten a chance for that to come up. However, I will say make sure everything is in writing. Make sure the lease is up to date the way you want it and that the expectations are clear. I would let the friend know that you have 2 hats. A friend and a property owner. So when making decisions on the property then you're wearing the property owner hat. I think if your friend has a reliable history then this would make it easy but if not I wouldn't have trouble even going there. 

In general, no. Sooner or later something is going to come up. They will be late on their rent, you won't fix something in a way they won't like, and it can all go up in smoke. Now you've got an angry tenant and one less friend.

I've heard of people buying their first house in college and renting out rooms to their friends. I think house hacking is the only scenario this works in.

At the numbers that I have seen you would not be able to cashflow at anything below 10%.

With such a low down payment you would need to buy insurance that would eat your margin up.

Anything below 20% gets tricky. 

 To get a property with that down payment you'll need to live in it. It's definitely not going to cash flow in a traditional sense, but it doesn't need to cashflow to make it a great investment. 

You need a roof over your head. In order to get a roof over your head you have to pay a mortgage. Do you want that mortgage to be your landlord's mortgage, or do you want it to be your own mortgage? Of course you want it to be your own mortgage. On top of that, you'll have tenants paying down your living expenses. It's a can't lose scenario for you.

Hi Ben! So yes, as other have also mentioned-- the typical minimum down payment for an investment property is going to be 25% down. So knowing this and your down payment - this would be a house hack- at which point breaking even and living for free is a pretty sweet deal. To answer your question with regards to other investment properties- yes. Most Cleveland properties in "rental neighborhoods" will cashflow with 25% down. 

A few things I would add. The amount of closing costs on your house hack property are going to surprise you. It's typically going to match the cost of the 3.5-5% down payment so just be mentally prepared for that. A good strategy you might consider if you plan on continuing to invest in real estate is finding a property that has sat on the market for a while and maybe needs a little work. In this case-  you can submit an offer where the seller covers your closing costs and you'll have a chance to get your feet wet with renovations- either by doing them yourself or gaining experience interacting with contractors. 

I'm not sure how you plan on qualifying for a property. If you will have a W2 once you graduate then a conventional lender will work great. But if you go into any sort of sales job or self employment then make sure to talk to some "private" lenders because you'd be surprised at the different ways they can get you qualified- and although the interest rate on these unconventional loan products might be a little higher... its a lot better to pay an extra $100-150/m towards your own equity rather than continuing to pay $800/m in rent for 2 years while you wait to become conventionally qualified. 

If you'd like help with any of this then I'd love to connect as I am an investor focused agent here in Cleveland.