All Forum Posts by: Fabio Salas

@Brandon Vannier with the FHA loan you have to live in the home for a minimum of one year.

I househacked a duplex in SD last year. I made a ton more money via Air BnB than I would have renting long term. In fact, during the summer I made more than enough money to cover the entire mortgage, ALL expenses, and have positive cash flow. However, there was also A LOT of work involved. Some days I was rushing home during my lunch break to clean the rental between guests (I routinely had guests checking out at 11:00 A.M. and guests checking in at 3:00 P.M. that same day). In order to get good reviews and provide great customer service you have to be extremely responsive. Air BnB actually tracks how quickly you respond to messages so this also makes it more work than managing a long term tenant. These are just examples of the extra work required. If you're up for all that, it can be a worthy investment (ignoring laws and HOA rules as you said). However, understand that you probably won't house hack and rent through Air BnB the lifetime of the mortgage, so you need to run the numbers as a long term rental as well. And run the #s to estimate how soon you can sell the property and still make a decent profit. My point here is, you need to provide yourself several different exit strategies so you don't end up with a huge SoCal loan that negative cash flows for years on end and eats into your bottom line.

@Ryan Forget I've been in the Marine Corps for 17 years now.  Throughout my career I got a few opportunities to spend time in San Diego for work.  I always loved and it always hoped I could get stationed there.  Last year after 16 years of service I finally got my wish.  I absolutely love it.  So I completely understand your reason to want to move to SD.

From reading your various posts on this thread it doesn't sound like you're married or have any kids.  You're also still extremely young.  I don't know if this is sound advice, but I've often heard that your 20s is the time to take risks and make mistakes.  I'm not saying you should act recklessly and go ruin your life through a few bad decisions.  What I am saying is this, if you want to live in SD and don't have anything tying you down to Mass, then just move as soon as possible.  Getting started in a new city without a ton of funds to get you going won't be easy, but if you're a driven person who doesn't give up you'll find a way to succeed.  You  may struggle financially for a few years, but you'll be in the city you want to live in, and if you pay attention to the little moments of each day you'll find happiness and growth in spite of the struggle.

The last think I'll tell you is DEFINITELY start investing in RE as soon as you're able to. I wish I'd taken the time to become more educated about REI when I was in my early 20s. I would not have left the Marine Corps any sooner, but I would be making a lot more money now through passive investments.

In any case, good luck with whatever path you choose.

Absolutely!  As long as you do your due diligence to learn how to evaluate potential properties, identify cities to invest with, identify personnel to handle your property (you can go with a good turn-key company or assemble your own team), learn the basic differences in tax laws for the cities you're considering, identify landlord friendly vs tenant friendly cities, etc.  There are a million and one ways to invest in RE; with due diligence and education on the subject any one of them can work for you.

Congrats on pulling the trigger.  I own a few rental properties, but I've never personally rehabbed a property.  But from what I know and from what others tell me, it's a great way to make some money as long as you manage the costs and budget appropriately.  The one things I'll tell you that I've heard from others who flip is to make sure your rehab is quality work.  Doing so will help give you a reputation as a flipper who can be trusted to provide quality homes.

Good luck and keep pressing forward.

There's a lot of ways to invest in real estate. If you want to own a property but have no time for the process of finding a property and seeing it through to having it rented and managed, then a turn-key company may suit your needs. Your returns won't be nearly as great, but if you're diligent about finding a good turn key company you should still be able to at least meet the 1% rent-to-purchase guideline. With your price range the markets are limited so make sure to stay out of 'war zones' just to meet your financial parameters. That said, there are some places in middle America that still sell for that price range and may work for you. Nowadays the internet has just about all the information you need so finding crime rates for different cities is just a matter of searching online. Read local news for each city, watch vlogs/podcasts about REI, look up specific major cities that interest you...there's a million and one ways to find info on different cities. Google can be your best friend here. As with anything else, just make sure to be wary of the sources you gather your information from.

On the other hand, if owning a rental property is not passive enough due to time constraints, you could consider other means of REI. For example, you could become a Private Money Lender (although you'd probably need to save up quite a bit more money for this), you could invest in rental property funds, you can buy and sell notes, the list goes on.

Personally, if I was in your situation I would want to own actual rental properties and start building a portfolio.  You're very young so if you keep at it, even with your limited time off from work, you could accumulate a pretty decent portfolio by the time you're 35.  There are tons of people who do it in a matter of just a few years, but with your work hours 35 might be a more realistic goal.

Good luck and keep learning.

Welcome to BP @Brandon Vannier You're fortunate to have found a place like this at such a young age.  This is certainly a great resource of information.  Browse the forums, read the articles, and interact with the many seasoned investors on here and you'll be well on your way to being successful.

@Nicholas Baughman I have a lot of family in St Louis, MO and Dallas, TX, so the main cities I'm looking at for turn key are:  Dallas, TX; Houston, TX; Kansas City, MO; and Chicago, IL.

I've considered Detroit because I keep reading a lot about the rebound the city is trying to make, but I'm not sure I'm ready to take a risk there quite yet.  Maybe in a few years.

Now, to address your question about residential real estate. I definitely agree you need to try to educate your wife on the benefits of REI. I also agree that SD buy and holds can be a good purchase. That said, finding a property that cash flows in SD is difficult. You'll need to look off market and find properties that need extensive rehabbing so you can buy it cheap and bring the value up through the rehab, while still not spending more than 80% of the After Market Value to try and leave enough room for cash flow (plus it gives you immediate equity in your new property). I personally own a duplex in SD and I'm looking to buy another property also in SD this summer. However, as much as I believe in SD's future, I am not putting all my eggs in one basket. I also own two other rental properties out of state and within the next year I'm purchasing two more out of state. All of these will cash flow better than my SD property, but may not appreciate in the long term as well. My point is, if your mind is set on buying a rental property my suggestion would be to use your money to put a downpayment on 3-4 'B' neighborhood properties out of state. There are some cities that are currently good buy and hold investment regions. Many cities have local turn key companies that can help make this process for you relatively simple. Personally I'm still debating whether I want to use a turn key company or try and find my own team. With a turn key company your profits will be reduced because you'll end up paying more for the property, but you'll save a lot of time and experience much less stress (especially as a brand new investor). Just be sure to shop around if you decide to use a turn key company because from what I've seen, some are basically worthless.

In any case, good luck getting your wife on board and good luck with your investments.

I realize this is mostly about real estate investments such as rental homes, condos, etc, but with such a sizeable amount of cash available if you cash out refi, have you considered other options besides a rental property?  For example, one of the guys I work with purchased a laundromat last year.  He is stationed with me in California, but purchased this laundromat out of state and hired someone to manage it for him.  I believe his down payment was right around $100K and the monthly cash flow is 5X the cash flow he'd get from a rental property.  That said, he does also have some rental properties, especially for the tax benefits.  I have another guy I worked with at a previous duty station; this spring he purchased a Storage Rental business.  It's a small mom and pop location that is also out of state from where he lives and is also managed by someone else.  Myself, I only own residential rental properties, but in the future I plan to follow in their footsteps and expand to commercial real estate investing.  Just food for thought.